US Subprime Mortgage Crisis Triggers China'S Internal And External Troubles

The US subprime mortgage crisis has led to global economic slowdown and consumption, and rising costs of raw materials and appreciation of the renminbi.

In recent years, the "made in China" which continues to follow the wind and water has begun to feel the difficulty of "sailing against the current".

China East China Import and Export Fair (hereinafter referred to as "China Fair") has always been regarded as a "weathervane" for predicting the trend of the international market.

The eighteenth China Fair, which has just come to a close, has made many exporters feel a little chill in the spring.

Statistics from the Organizing Committee of the China fair show that the number of customers from North America has slowed down due to the subprime crisis, and the overall market structure has changed. The turnover in the US market is about 583 million dollars, down 1.5% from the same period last year.

At the same time, to what extent does the subprime crisis affect China's economy and export situation? It has also become a hot topic during the two sessions.

Ma Xiuhong, Vice Minister of the National Committee of the Chinese people's Political Consultative Conference and vice minister of Commerce, said in a joint interview with the media during the two sessions that the growth of China's trade surplus will decrease this year. The US subprime mortgage crisis will have an impact on China's export situation to a certain extent.

The latest statistics released by the General Administration of Customs yesterday confirmed Ma Xiuhong's statement that China's trade surplus in February was US $8 billion 555 million, the lowest in 10 months and the fifth consecutive month of decline since October last year.

The sharp slowdown in exports was the main reason for the sharp drop in the surplus. Exports grew by only 6.5% in February, while imports increased by 35.1%.

The impact of subprime mortgage crisis

"It is expected that our company's export orders to the US will decrease this year, but how much will it decrease?"

Gong Qing, foreign trade manager of Shandong Fu Hao Leather Co., Ltd. said, "although the number of merchants contacted at this year's China Fair is larger than in previous years, the price of orders is difficult to negotiate."

"I must consider the factors of RMB appreciation to reserve certain quotations, but the pressure is really great. Many customers are coming to the Chinese products with high quality and low price. Now they also feel that they can not afford it. This business is really more and more difficult to do."

Gong Qing said.

In fact, many export enterprises are worried about the export situation this year. During the China Fair, many export enterprises said that this year is likely to be faced with the predicament of the loss of orders and the decline in operating conditions.

Ma Xiuhong believes that the subprime mortgage crisis in the United States is spreading more and more widely, and even continues to spread. The United States is a very important export market in China. If the subprime crisis or other factors influence, the domestic consumption will and market demand will drop, which will affect China's exports to varying degrees.

Another group of statistics from the Organizing Committee of the China Fair also confirms Ma Xiuhong's view. During the China Fair this year, exports of textile and clothing products which were highly dependent on the US market also fluctuated, with a turnover of $1 billion 844 million, down 0.54% from the previous one.

In this regard, Wang Qian, the industry expert and general manager of Shanghai World Information Consulting Co., Ltd., pointed out that the United States is the largest garment importer in the world, and more than 15% of the total export of China's clothing has been sold to the United States.

Due to the impact of the subprime crisis, the volume and price growth of clothing exports to the US began to decline steadily last year.

"In January this year, the unit price of clothing exports to the United States rose, up 10.17% compared to the same period last year. However, the price increase has not been fully understood and accepted by US retailers. The number of garment exports showed a sharp decline in that month."

Wang Qianjin said.

The US subprime mortgage crisis has led to global economic slowdown and consumption, and rising costs of raw materials and appreciation of the renminbi.

According to the results of the import and export data model of China's first textile network, the increase in textile and clothing export prices this year will be basically consistent with last year's level, and the overall export price will increase by about 7.18%.

"However, the industry's expectation of RMB appreciation is expected to be around 10% this year, which will exceed the export price of textiles and clothing for the first time and the" critical point "of textile exports.

Wang said that this also means that many enterprises have reached the "life and death crisis".

According to the latest industry report, the RMB growth rate slowed by about 0.3 percentage points to 0.4 percentage points per 1 percentage point increase.

If we consider the cooling of the main export markets such as the United States and other factors, the export competition in the future will be even more brutal. The growth of textile and clothing exports this year will be at least 5 percentage points lower than that of last year.

"Made in China" competitiveness gradually lost?

A foreign trade manager, who does not want to be named, said that one of the problems that can not be ignored is that the advantage of "made in China" has been gradually lost. Tianjin's export oriented enterprises will be more difficult to survive and compete in the future.

"Let's take glassware, for example, China's export products occupy a major market share, but now the tax rebate rate is lowered, and the cost of labor is rising too fast. We can not fully accept the quotations from foreign investors."

"Many of my former customers have pferred orders to manufacturers in Holland and Czech," the business manager said. "The cost of glassware exports in these countries is even lower than in China."

Gong Qing also said that "made in China" seems very difficult to become synonymous with cheap products.

He pointed out that for the labor-intensive manufacturing enterprises such as leather exports, labor costs account for about 40% to 50% of the total cost.

"The labor contract law has been officially implemented this year, the cost of labor has increased by at least 5%, and the cost of raw materials has been rising. Our profits have been squeezed very pitifully."

Gong Qing said.

Prior to this, Swiss Bank economist Jonathan Anderson (JonathanAnderson) also said that this year may be the profitability of Chinese manufacturers suffered heavy losses.

In fact, not only are Chinese local enterprises feeling the rising cost of production, but foreign enterprises investing in China are also facing the test of how to pform them.

Recently, a joint study conducted by the Alan consulting firm and the American Chamber of Commerce in Shanghai found that China's importance as a purely low-cost and export oriented production base will gradually decrease.

The survey is targeted at 66 foreign owned or foreign invested manufacturers in China.

Among them, 54% of respondents believe that China is losing its competitiveness compared with other low-cost countries.

70% the main reason for the decline in competitiveness was the appreciation of the renminbi, while 52% of the companies pointed to rising wage costs.

It is quite noteworthy that nearly 20% of the companies surveyed said they had a clear plan to pfer some of their operations from China to Vietnam and India.

Fu Side, President of the American Chamber of Commerce in Shanghai, said that China's strong economic growth and market pformation, coupled with a vibrant and challenging business environment, will continue to raise higher requirements for manufacturing enterprises.

"Enterprises must make greater efforts to improve their competitiveness and provide more resources for innovation when formulating strategic plans in China."

Fu Side said.

However, there are also industry experts who are optimistic about the export situation this year.

Zhang Xiaoji, the member of the CPPCC National Committee and Minister of the Ministry of Foreign Economic Research of the State Council Development Research Center, said in an interview with our reporter that China's exports will continue to maintain two digit growth this year.

He believes that the US subprime crisis will definitely have an impact on China's export situation, but it will not be as big as it imagined.

"The US economy is slowing down, but you will find that we export large quantities of consumer goods to the United States, some of which are relatively basic consumer goods, clothing, electronic products, toys and so on."

Zhang Xiaoji said, "from the past rule, the US economy is not the first recession, it will have an impact on us, but because of the factors of our export structure, the impact will not be great.

Some products are invested and produced by US companies in China, and there are some special laws within the network of pnational corporations.