China Export Finance News

Labour shortages hit China export hubs at fragile time

info@chinaexportfinance.com (China Export Finance) — Tue, 23 Feb 2010 14:50:00 GMT

"We plan to recruit 40 or 50 workers," said Gou Jie, a factory recruiter who was appealing to a crowd of people. "But we have only found 10 people. If you drive around Shenzhen you'll find many factories are recruiting now, as many of their workers haven't returned after the Lunar New Year." Unlike last year when workers swarmed back early from the annual holiday to secure scarce jobs during the financial crisis, this year China's coastal export hubs are facing fresh labour shortages with far fewer migrant workers returning from inland provinces.

At major transport gateways to the Pearl River Delta which churns out a third of China's exports, steady spurts of migrant workers have begun spilling off trains at places like Dongguan's East Railway station after the annual break. But their numbers appear sparser this time round as rising wages and more plentiful employment opportunities back home have seemingly dissuaded many from returning to factory floors. Officials in Shenzhen made the rare admission this week that the city suffered a shortage of 819,000 workers in the final quarter last year, according to media reports, while the labour shortfall facing the entire Pearl River Delta has now been estimated by officials to range from around two to three million.

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China's textile, garment exports up 2.2% in Jan

info@chinaexportfinance.com (China Export Finance) — Fri, 19 Feb 2010 17:14:00 GMT

The export value of textiles and garments in China reached US$15.57 billion last month, up 2.2% from the same month of last year, according to statistics from China's General Administration of Customs.

The export value of textile products surged 18.2% year on year to US$5.58 billion, while that of garments and accessories fell 5% from a year ago to US$9.99 billion.

The value of shoe exports rose to US$2.93 billion, increasing 1.4% year on year.

In December 2009, the export value of Chinese textile and garment products grew 4.48%, with exports to the U.S. increasing 27% from the same period of the previous year.

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Taiwan laptop maker warns of China labor shortages

info@chinaexportfinance.com (China Export Finance) — Thu, 18 Feb 2010 09:37:00 GMT

A leading Taiwanese laptop maker has warned labor shortages in China's booming coastal cities could affect the supply of computers amid an expected surge in world demand.

Ray Chen, president of Compal Electronics Inc., said the labor situation could also lead to shortages of components ranging from memory chips to hard drives to computer cases, the Economic Daily News quoted him as saying Thursday.

He said the labor shortfall could worsen following this week's Lunar New Year holiday because many factory workers visiting their home towns might not return to the major coastal manufacturing zones where Compal and other electronics companies produce personal computers.

A year ago when the global financial crisis was battering China's exporters, millions of migrants were told to stay home because there wouldn't be much work in Guangzhou and other southern cities. Then, as business started picking up during the middle of last year, factories were caught short-handed.

Many businesses now say they expect labor shortages this year to be worse than previous episodes. Migrants are finding jobs closer to home as the poor interior provinces become more prosperous and the supply of young laborers is decreasing as an effect of China's one-child policy. Fewer, meanwhile, are willing to work for sweatshop wages as their parents did.

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China sells $34.2bn of US treasury bonds

info@chinaexportfinance.com (China Export Finance) — Wed, 17 Feb 2010 14:26:00 GMT

China relinquished its position as the largest overseas holder of US treasury bonds by selling $34.2bn (£21.7bn) worth of the securities in December, according to new treasury figures.

The move means that Japan, which boosted its purchases, is once again in the top spot. China's sale contributed to a record drop in foreign holdings of short-term bills: in all, net overseas holdings of bills fell by $53bn. The previous record was $44.5bn in April last year.

But overall, the US saw a net inflow of $60.9bn as investors bought longer-term securities.

Analysts are divided on the significance of the Chinese shift. Some see it as a typical switch back to riskier assets as confidence in the economy grows, while others believe it reflects serious concerns about the US deficit – projected to reach a record $1.56tn this year.

The sales also come amid friction over issues including the value of the yuan, which the US argues is far too low.

But some observers argue that the figures do not accurately reflect Chinese holdings. Not only could China be buying other dollar assets, but it could be buying treasuries through funds, they pointed out.

Alan Meltzer, an economics professor at Carnegie Mellon University, told the Associated Press that China's shift should be a wake-up call for Washington.

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Optimistic economic outlook

info@chinaexportfinance.com (China Export Finance) — Tue, 16 Feb 2010 10:14:00 GMT

The global economy is definitely on a path to recovery, but there are still many hidden crises and risks lurking ahead.

Taiwan took a beating during the global economic crisis, with its economy contracting 9.6 percent in the first quarter of last year, which was the worst stage for Taiwan.

However, with the massive economic stimulus measures taken by the governments of the leading economies, global financial markets rebounded and the economic slide halted in the second quarter of 2009. Since then, the good news has included a 5.7 percent economic growth posted by the United States in the last quarter of 2009 -- its highest since 2003 -- and the 8.5 percent growth in China last year.

For Taiwan, the economy has bottomed out for sure, as the stock market has rebounded from its decline since early last year and a 6.89 percent GDP growth was recorded in the fourth quarter of 2009.

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Goldman’s O’Neill Says ‘Something Brewing’ in China on Currency

info@chinaexportfinance.com (China Export Finance) — Mon, 15 Feb 2010 15:29:00 GMT

Goldman Sachs Group Inc. Chief Economist Jim O’Neill said China may be poised to let its currency strengthen as much as 5 percent to slow the world’s fastest growing major economy.

“I have a strong opinion that they’re close to moving the exchange rate,” O’Neill said in a telephone interview from London after China’s central bank told lenders on Feb. 12 to set aside larger reserves. “Something’s brewing. It could happen anytime.”

Chinese policy makers are seeking to restrain credit growth after their economy grew the fastest since 2007 in the fourth quarter. Banks extended 19 percent of this year’s 7.5 trillion yuan ($1.1 trillion) lending target in January as property prices climbed the most in 21 months.

Officials in Beijing have resisted allowing gains in the yuan, having controlled its value since July 2008 after it strengthened 21 percent against the dollar in the previous three years. The status quo has drawn criticism from foreign policy makers who say keeping the currency undervalued has handed China’s exporters an advantage and inflated asset bubbles.

O’Neill, who coined the term “BRICs” in 2001, anticipating the boom in the emerging economies of Brazil, Russia, India and China, said China may allow the yuan to rise as much as 5 percent in a one-off revaluation and to then trade within a bigger band or against a larger basket of currencies. That would help counter international pressure, he said.

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China pulls on reins as economy booms

info@chinaexportfinance.com (China Export Finance) — Fri, 12 Feb 2010 14:50:00 GMT

China has started slowly pulling in the reins on loans and liquidity to stave off inflationary pressures and prevent the world's third-largest economy from overheating. The central bank said on Friday it was raising banks' reserve requirements for the second time this year. Global markets are rattled that tighter monetary conditions will dampen demand from an economy that has led the global recovery from the financial crisis.

The following shows key developments this year:

Feb 12: People's Bank of China surprises markets by raising banks' reserve requirements by 50 basis points, effective Feb 25, its second increase this year. Few traders had expected a move so soon after a surprisingly low inflation reading for January.

Feb 11: PBOC says it will guide monetary measures away from anti-crisis footing but maintain appropriately loose policy with domestic demand still not on solid ground; vows to ensure stable growth while controlling inflation expectations.

Feb 11: Chinese banks extend 1.39 trillion yuan in new local-currency loans in January, up from 379.8 billion yuan in December and more than expected, data shows.

Feb 03: A major Chinese bank, Bank of China, raises mortgage rates in one of the first signs of how government credit clampdown could tame turbo-charged growth.

Feb 02: Reserve Bank of Australia surprises markets by skipping a rate rise, noting tighter policy in China among other factors in its statement. Before the meeting, a rate rise had been almost fully priced into markets.

Feb 01: China orders banks to ensure excessive credit has not illegally entered the stock or property markets in latest bid to bring pace of lending under control.

Feb 01: Shanghai stock market closes at lowest in more than three years on fears of more tightening measures.

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China orders retreat from risky assets

info@chinaexportfinance.com (China Export Finance) — Thu, 11 Feb 2010 09:48:00 GMT

China has ordered managers of its vast currency reserves to withdraw from risky dollar assets and retreat to core debt guaranteed by the US government, a clear sign that Beijing is battening down the hatches for fresh trouble on global markets.

A Communist Party directive leaked to the Chinese-language edition of the Asia Times said dollar reserves should be limited to US Treasuries or agency mortgage debt such as Freddie Mac that enjoys Washington's implicit backing. BNP Paribas said the move has major implications for global risk assets. "The message from Beijing is that we don't like this environment," said Hans Redeker, the bank's currency chief.

"When the world's biggest investor turns risk-averse, that is something you take notice of. We think this could become the new theme for the markets in the medium-term," he said. The directive covers both the State Administration of Foreign Exchange (SAFE) and China's state-controlled commercial banks. Together they have an estimated $3 trillion (£1.9 trillion) of foreign holdings.

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China's export prowess confirmed

info@chinaexportfinance.com (China Export Finance) — Wed, 10 Feb 2010 08:59:00 GMT

China's exports and imports grew substantially in January year on year. This suggested that global demand for Chinese made goods is continuing and Chinese consumers are spending too. The figures for January were slightly lower than in December but analysts say they show the country's trade with the rest of the world has stabilised. The data came a day after figures from Germany confirmed that China had overtaken it to become the world's largest exporter last year.

January's exports from China were up 21%. Imports rose by almost 86%. The totals were boosted by the comparison with a period a year ago when many factories had closed for Chinese New Year. This year the holiday falls in February. Oil and commodities were also much cheaper a year ago than they are now, because of the slowdown in global demand, and that too helps to account for the huge growth in the cost of imports.

But analysts say the data confirms that China's recovery is on track. Some are worried to about Chinese manufacturers' profitability. Reports this week suggested some of the provinces where lots of exporters are based have already, or are planning to raise their minimum wages. Local governments kept wage rates low during the downturn to help firms remain profitable, but now appear to be more willing to address workers' concerns. Inflation is also worrying some experts. The country's Central Bank Governor insisted on Tuesday that price rises seen so far this year remain relatively low, but acknowledged his officials were keeping a close eye on the inflation data.

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Stop Press: China Export Figures 2009

info@chinaexportfinance.com (China Export Finance) — Tue, 09 Feb 2010 13:54:00 GMT

China surpassed Germany as the world’s largest exporter after German exports slumped 18.4 per cent in 2009, the sharpest fall since 1950. China has become the world’s production base as major Japanese, US and European companies have move or built new manufacturing plants there. China also replaced the United States in domestic new vehicle sales in 2009 and is expected to become the world’s second-largest economic power in terms of gross domestic product in place of Japan this year. Trade in December, according to figures from China's customs office, showed a massive 17.7% year-on-year jump in exports, dramatically outpacing a forecast for 4% growth. The huge increase came after 13 months of decline.

The attached report collates the export figures from January to December 2009 by:

Month
Destination
Sector

The Chinese Ministry of Commerce used to publish Import-Export Data. However, since the end of 2008, and the start of the financial crisis, the government has not made this data readily available in English.

Download the latest China export figures report here.