Despite initiating various measures to boost exports, China has been pushed to the wall on the export front with no signs of recovery in the short term. China, the third largest economy and manufacturing hub of the world has continued its worst four-month export slide to 25.7 per cent in February. On the other hand, the imports too fell sharply by 24.1 per cent during the same period as compared to the previous year.
China has taken a slew of measures to improve its exports including raising value added tax rebates on exports five times since the end of July, alleged non-appreciation of its currency and made available stimulus package to export-oriented entities. It should be recalled that Timothy Geithner, before he assumed office as the US Treasury Secretary accused China of manipulating its currency during confirmation hearings. Many US businesses have expressed their displeasure to the Chinese currency malpractices which created favorable conditions to the Chinese exports in the global market.
Chinese exporters feel that though the country is taking effective steps by exploring to new markets, the falling demand in the Western world would directly impact their exports as the new markets are basically export-dependent ones and their consumption is insignificant as compared to the West. According to sources, the recovery could be anticipated any time later than this year end.
Analysts claim the export-based industry employs more than 80mn people and every minute percentage slide in exports will increase unemployment to an unimaginable magnitude. They added that the country would not be able to repeat several years of 10 percent growth in the coming years. And achieving even a paltry 6 percent growth would be an uphill task since the country is largely confined to manufacturing.
Nevertheless, China’s trade surplus is likely to reduce as domestic demand for oil and iron ore are expected to remain strong in the coming quarters. Some economists even dared to predict that China may even register trade deficit by the end of this year if the crisis worsens as the bailouts in the West has not produced desired results so far.
However, China’s Minister of Commerce Chen Deming has firmly stated that the country would reduce its export taxes to zero so that exporters would not be facing any liquidity crisis. He further added China would take all measures to maintain stable export growth and prevent a large slump in export earnings.
Toboc Trade News