Canton Fair Orders Drop Suddenly

The latest figures show that in February this year, China's export growth rate was only 6.5%, the lowest level in nearly 6 years, and the trade surplus was 8 billion 555 million yuan, down 64% from the same period last year.

This is the first time China's trade surplus has declined in the past year.

Guangdong, the largest foreign trade province, achieved a trade surplus of US $4 billion 610 million, down 26.6% from the same period last year, the lowest monthly value since March 2006.

Experts predict that the "inflection point" of China's trade surplus will appear this year. As a barometer of China's foreign trade, the volume of volume of the 103rd Canton Fair to be held in Guangzhou will also fall.

China's trade surplus reached US $262 billion 200 million in 2007, of which Guangdong's trade balance reached US $104 billion 390 million, and the surplus in processing trade amounted to US $88 billion 940 million, accounting for 85.2%.

Feng Xiaoyun, Professor of economics at Jinan University, analyzed that the trade surplus in Guangdong has reached a historic high last year. Influenced by the consumer confidence decline in the US subprime mortgage market, the appreciation of the renminbi and the gradual release and localization of various processing trade policies, the Guangdong trade surplus will have a "watershed" this year. Although the huge trade surplus will still exist, the number will decrease.

Zhang Dexing, vice president of Dongguan Association of foreign investment enterprises, also said that the industry predicted that the export volume of processing trade in Guangdong Province will shrink by 3 to 4 this year.

Drag on us business

Wu Hongbin, chairman of the Hongkong Association of small and medium enterprises, is very worried because he knows for many years that he has no doubt that once the order is gone, it will be hard to come back.

His voice was slightly impatient on the phone, and the grim export situation at the beginning of this year made it hard for him to be optimistic.

No one is happy when they sit together.

"Since last year, he has found that American merchants have dropped sharply at various exhibitions, and that is the reduction of orders.

"A lot of industry orders have gone bad, toys, clothing, shoes, electronics, and jewelry.

"

Reporters noted that in the latest statistics of Guangzhou customs, the industries mentioned by Wu Hongbin have declined to varying degrees in the 1-2 months of this year.

Gao Zhu, chairman of the Hong Kong Jin Yuan footwear manufacturing company, said that the company exported 3 to the United States, 3 to the European Union, and the rest to other parts of the Middle East. However, orders from the world are shrinking by the US subprime.

In the 1-3 months of this year, the number of orders has fallen by 40% compared with the same period last year.

Data show that since last October, China's exports to the United States continued to decline year-on-year, from 11.9% in November last year to 6.8% in December and January this year, to -5.3% in February, indicating that the impact of the US slowdown on China's exports is constantly emerging.

RMB appreciation enterprises fear to receive orders

Compared with the crisis, what the exporters feel more dismayed is the appreciation of the renminbi.

Chen Zhexi, deputy general manager of Wenzhou's Tamar footwear industry, said: "what we most worry about is exchange rate risk. We don't know how much the appreciation of RMB will fluctuate.

"

Lin Guangde, a Hong Kong businessman who is engaged in children's wear manufacturing in the Pearl River Delta, also said that the speed of RMB appreciation has made Hong Kong businessmen feel "terror".

He told reporters that the processing trade enterprises used to pay the cost more than the renminbi. After the goods were exported, they used the US dollar. The period from the receipt to the collection was about 3-6 months. If the RMB appreciates significantly, the exporters may lose their money.

Zhang Dexing, vice president of Dongguan Association of foreign investment enterprises, said that in order to avoid the risk of high cost and RMB appreciation, many enterprises only dare to take small orders, or to split larger orders, so as to shorten the payment cycle.

Export slowdown in processing industry

In addition, the mainland's processing trade adjustment policy has been effective, causing a large number of export enterprises to turn from small profits to losses.

Zhang Dexing said that many new policies were promulgated last year, which have been implemented this year, including tax rate changes and new labor laws. These policies will lead to a 40% - 60% increase in the cost of enterprises, and some SMEs will inevitably withdraw from the market, resulting in a reduction in export volume over a period of time.

Liu Dexue, director of the Department of international economics and trade, School of economics, Jinan University, said that the long-term huge trade surplus made China's trade frictions with developed countries continue.

The forbidden catalogue of processing trade issued by the Ministry of Commerce, though its adjustment is intended to continue to optimize the structure of export commodities, curb exports of "two high and one capital" and low value-added and low technology content exports, and promote the pformation and upgrading of processing trade, but it is inevitable for the entire Guangdong Province, which is mainly manufacturing industry, to slow down substantially.