BEIJING - Chinese companies will face growing risks involving short-term export trade credit in the first quarter, the country's only export and credit insurer said on Tuesday.

"Italy, Germany, South Korea, Spain and Mexico are the major countries that Chinese exporters should be particularly concerned about over short-term export credit insurance," said Ai Renzhi, chief credit analyst with the China Export & Credit Insurance Corp, also knowen as Sinosure.

The insurer on Tuesday launched a short-term export trade credit risk index, an indicator tracking the risks of the nation's major trading partners.

The index is meant to help Chinese companies hedge the risks of doing business overseas.

Italy, Germany and Spain have been primarily affected by the debt crisis, while South Korea and Mexico pose a risk because they rely heavily on exports, said Ai.

Chinese exporters should be more careful about trading in electronic products and metal products, mainly steel, Ai added.

Most economists believe that China's exports will drop further this year since the global economy is expected to falter in 2012.

"Moreover, as external demand shrinks, the value of orders is also likely to drop and unit prices will be lower because of strong competition, thus leading to higher credit risks with trading partners," said Xie Zhibin, assistant president of Sinosure.

As more Chinese exporters shift their business from developed countries to developing ones, Xie said the credit risks of export-driven developing economies should not be overlooked.

"As the economies of those countries, such as Vietnam and those in East Europe, rely heavily on exports, (they) will be vulnerable to the slowdown in the global economy.

"The trade credit risks for domestic-driven economies, such as Indonesia, will be comparatively lower," Xie added.

The World Bank has warned developing countries to prepare for a possible slump similar to the 2008-09 global downturn as the eurozone crisis persists and escalates.

Entering 2012, continued political uncertainty, including ongoing tensions between Iran and the West, is likely to increase trade credit risks, according to Sinosure.

"Meanwhile, as 2012 is also an election year for major developed countries, such as the US, Russia, France, Germany and Japan, trade policies in those countries may also face a change due to political concerns, thus posing trade credit risks for Chinese exporters," Xie said.

China Daily