Where Will China'S Economy Go From Inside To Outside?

The unprecedented pressure of survival is suffering foreign trade enterprises, especially small and medium-sized enterprises.

The tightening of international demand, the accelerated appreciation of the renminbi, the rising cost of labor and raw materials, and the tightening of monetary policy mean that every medium and small business with an average life span of only 3 years is fatal.

The crisis of survival has already emerged, and policy decisions are particularly critical. At this moment, what is the future of China's export driven growth and employment?

The word "export recession" has entered the context of China's macro-economy for the first time in 8 years.

Trapped in rising costs and shrinking overseas demand, Guangdong, Fujian and Zhejiang are losing ground in competition with other Asian manufacturing bases. Everyone has reason to worry about the future of export enterprises.

"Internal worries and external difficulties" forced China's industrial upgrading to correct the once crazy investment in fixed assets.

However, the so-called "industrial upgrading" caused by understatement may be a heavy social and economic cost.

Guangdong is the seat of the Pearl River Delta, which accounts for about 1/3 of China's total exports.

However, in 2008, tens of thousands of factories had been or were disappearing.

From January to May this year, the footwear export enterprises in the Pearl River Delta region dropped by 2331 year-on-year, and half of them did not export.

In the first half of the year, Dongguan, which is proud of manufacturing industry, has been experiencing negative growth for the first time in 30 years.

In Guangdong's report, it is clear that the advantages of cheap labour in the PRD are no longer there.

As a pillar of Zhejiang's economy, private enterprises are facing the same predicament. The capital chain of enterprises is on the brink of breaking up, and the interest rate of private lending continues to rise.

The two result is likely to follow: the employment problem is going to be very severe as a result of heavy labour, which is mostly labour intensive, cheap products. For many manufacturing cities, the destruction of manufacturing capacity will be difficult to rebuild.

The wave of layoffs has been mounting in Dongguan recently.

By the end of 2007, a town in Humen had left 200 enterprises, which is more serious this year than last year.

Worries about "Industrial Hollowing" spread in the Pearl River Delta region.

How to avoid the internal and external attack of domestic policies should become an important consideration for policy makers.

What makes the manufacturing industry heartening is that, in the official position for the latter half year plan, "maintaining steady economic growth" has been placed before the policy of "keeping inflation under control".