China Watch Blog reports that Chinese companies will face growing risks involving short-term export trade credit in the first quarter.
“Italy, Germany, South Korea, Spain and Mexico are the major countries that Chinese exporters should be particularly concerned about over short-term export credit insurance,” said Ai Renzhi, chief credit analyst with the China Export & Credit Insurance Corp, also knowen as Sinosure.
The China Daily reported that the insurer on Tuesday launched a short-term export trade credit risk index, an indicator tracking the risks of the nation’s major trading partners.
The index is meant to help Chinese companies hedge the risks of doing business overseas.
Italy, Germany and Spain have been primarily affected by the debt crisis, while South Korea and Mexico pose a risk because they rely heavily on exports, said Ai.
Chinese exporters should be more careful about trading in electronic products and metal products, mainly steel, Ai added.
Most economists believe that China’s exports will drop further this year since the global economy is expected to falter in 2012.
“Moreover, as external demand shrinks, the value of orders is also likely to drop and unit prices will be lower because of strong competition, thus leading to higher credit risks with trading partners,” said Xie Zhibin, assistant president of Sinosure.
As more Chinese exporters shift their business from developed countries to developing ones, Xie said the credit risks of export-driven developing economies should not be overlooked.