China Watch Blog came across this news item that despite the high growth in exports during June, the overall prospects for 2010 still look bleak as the European debt woes and the monetary tightening policies will crimp demand for the nation’s goods.
The report in the People’s Daily quoted the Ministry of Commerce asÂ urging the government not to tweak the export policies further, as changes will further hamper export prospects. Exports for June jumped 43.9 percent to $137.4 billion, the highest since July 2008.
The growth momentum cannot be sustained and prospects for exports are not so hopeful in the months ahead, ministry spokesman Yao Jian said, adding that the uncertain global economic recovery and domestic challenges like rising labour costs and growing trade friction will make the situation more complicated for exporters.
European debt woes worsened in April this year after Greece had to be bailed out of a debt crisis by other nations. At that time there were also apprehensions that the debt contagion would soon spread to other European nations.
Consequently most of the nations in the region like Spain, Italy and Germany decided to reduce spending. The measures may queer the pitch for exporters, as outside of the US these are the major export destinations for Chinese exporters.
Apart from Europe, exporters are also facing problems in emerging markets like Brazil and India as they are also contemplating austerity measures.
The Brazilian central bank had hiked its benchmark lending rate to 10.25 percent from a record low of 8.75 percent in April. Since March, India has tweaked its interest rate three times, and the next monetary policy decision is likely on July 27.
According to the ministry, during the first half of this year, China’s shipments to emerging markets like India, Russia, Brazil and South Africa grew 58.1 percent to $45.36 billion, 23 percentage points higher than the export growth for the same period.
“It’s not all about foreign demand. There are some domestic factors also that makes it hard for exporters,” Yao said, referring to the yuan’s peg to the dollar as part of its currency reforms.If you think China Watch Blog's information is useful, click on cup of coffee on left hand side and make a small contribution via PayPal