The Damage Caused By The Financial Crisis To China Can Not Be Ignored.

The adverse impact of the financial crisis on the global economy has not yet ended, and some western media have started to talk about China's absurd theories. One of them is that "China's economy is thriving" because of its benefits from the crisis. Experts interviewed by Xinhua news agency think that the theory of "one branch and one show" is biased and has ulterior motives. China is one of the main victims of the financial crisis. The adverse factors resulting from the crisis have not yet been eliminated.

"There is no egg under the roof." Zhao Jinping, Vice Minister of the Ministry of foreign economy of the State Council Development Research Center, said that the outbreak of the international financial crisis exposed China's economy over reliance on the weak points of the international market, and the slowdown in exports dragged down economic growth.

Customs data showed that China's exports continued to decline sharply in October 2008 and negative growth in November. In the first half of 2009, the cumulative drop was 21.8%. It was not until December 2009 that China's exports began to grow for the first time in 14 months. For the export growth in the first half of this year, experts believe that because of the very low base of comparison last year, this year's value is pretty good, but it has no practical significance. It will take 2 to 3 years to really recover to the pre crisis level.

With the outbreak of the crisis, some Export enterprises In particular, small and medium-sized enterprises and labor-intensive enterprises are facing difficulties in production and operation. Some foreign trade enterprises in Guangdong, Jiangsu and Zhejiang are forced to suspend production or close down.

Some export-oriented enterprises have not been able to recover from the crisis. Jiangsu's Wuxi Sims petroleum special pipe manufacturing Co., Ltd. is one of them. The financial crisis has affected the stock price of the company, which has fallen from the US $8.5 at the beginning of December 7, 2007 (US $1.73) to US $1.73 (June 25, 2010), which has shrunk by nearly 80%.

The annual net income of the company also declined from 912 million US dollars in 2008 to US $557 million in 2009, down nearly 40% from the same period last year. Pu Longhua, chairman and chief executive officer of the company, said: "all this is brought about by the financial crisis."

In the first quarter of 2010, the net income of the company was only $60 million 900 thousand, down 68.9% from the same period last year, and the ratio fell by 59.3%. "The financial crisis has compacted international demand." Pu Longhua said.

Data from customs showed that China's steel exports were 24 million 600 thousand tons in 2009, down 58.5% compared with the same period last year, due to the severe shrinkage of international market demand and the decline in exports.

Zhou Dewen, a Wenzhou SME Development Association, said the crisis caused entrepreneurs to lose confidence in industry. In Wenzhou, 10% of the enterprises went bankrupt and shut down. Some bosses lost confidence and sold their factories.

As a continuation of the financial crisis, the debt crisis in Europe has dragged down the economic recovery of the euro area. In 2010, the euro broke down against the US dollar and the renminbi appreciated passively. This has caused the depreciation of China's foreign exchange assets, while causing huge cost pressures to Chinese exporters, and the substitution effect has reduced the competitiveness of export products.

Commerce Ministry spokesman Yao Jian recently pointed out that in the coming months, Europe debt crisis The negative effects on China's foreign trade export may gradually appear.

Dr. Dong Yan of the Institute of world economic and political research at the Academy of Social Sciences said the financial crisis has enhanced international trade protectionism and increased friction.

Zijin Mountain, Vice Minister of Commerce, recently pointed out at the national countervailing work conference that China has become the first target country and the biggest victim of trade friction.

Frequent trade friction has led China to change its trade policy. The Ministry of Finance and the State Administration of Taxation announced on the 22 day that the export tax rebates for 406 commodities will be abolished from July 15th, while the 48 steel products will bear the brunt.

Qi Xiangdong, Deputy Secretary General of the China Iron and Steel Association, believes that the state intends to reduce trade friction by eliminating the original export tax rebate.

Zhai Zhigao, chairman of Jiangsu wegang Iron Mine Co., Ltd., Zhenjiang, said: "48 kinds of steel products are canceling the export tax rebate. Maybe 40% of the volume of steel exports will be impacted within six months. With the previous anti-dumping duty and countervailing duty, the whole industry is struggling. "

Experts say that the damage caused by the financial crisis is much more than that. Increasing inflation expectations and increasing international pressure on the appreciation of the RMB exchange rate are also the consequences of the financial crisis.