Exporters urged not to lose faith as EU trade shrinks
Updated: 2012-04-13 13:55
By Yan Yiqi (China Daily European Edition)
Economists suggest Chinese exporters, such as clothing companies, target emerging markets. Provided to China Daily
BRICS can help support China during crises, analysts say
Even though trade between China and the European Union, China's largest trading partner, continues to shrink, Chinese exporters should have faith in developed economies while growing their presence in emerging economies, analysts say.
In the first quarter, trade between China and the EU hit $126.9 billion (97.1 billion euros), growing only 2.6 percent year-on-year, according to figures issued by the General Administration of Customs.
Exports fell 1.8 percent to $75.2 billion year-on-year, and imports rose 9.8 percent to $51.7 billion.
"The debt crises in the EU are not over yet," says Bai Ming, a researcher at the Chinese Academy of International Trade and Economic Cooperation, a think tank under the Ministry of Commerce.
"Although Greece and Italy are stabilizing, the overall economy is still weak, which led to weaker demand," Bai says.
Chinese exporters should begin to focus on the domestic market or emerging markets such as Brazil and India, he says.
"China's trade with the members of BRICS accounts for a very small amount of overall trade, and their economies are growing fast."
Traditionally, the EU, the United States and Japan are China's top three trading partners, accounting for almost 40 percent of the country's trade.
China's partners in BRICS - Brazil, Russia, India and South Africa - account for only 7.9 percent.
"There is large room to improve," Bai says. "We don't necessarily need to stick to the developed markets."
Commerce Minister Chen Deming said in a recent interview that the economic plight of the EU had been exaggerated. Spending in Europe was still as it should be, only slightly influenced by the crises, he says.
Zheng Yuesheng, head of the statistics department of the General Administration of Customs, said in a news conference that after low growth in the first quarter, things would improve.
Song Hong, director of the international trade office of the Chinese Academy of Social Sciences, says weak demand might provide opportunities to Chinese exporters.
"Spending in Europe seems to be weak. Demand is obviously shrinking. But on the other hand, people may be more favorable to products made by Chinese exporters, which are relatively cheap."
However, Song acknowledges that low-end products were not a panacea.
"In coming months, export growth will remain low but steady."
China's overall annual export growth slowed from 18.4 percent in February to 8.9 percent in March; for imports, growth slowed from 39.6 percent to 5.3 percent.
"Import growth came in weaker than expected," Barclays Research said in its report for March.
"This is in contrast to the recent improvement in the PMI import index, but would nonetheless be in line with expectations of weakening domestic demand and investment growth."
While imports are expected to remain soft, trade with the US is reflecting signs of economic recovery there.
Trade with the US grew 9.3 percent year-on-year to $106.8 billion in the first quarter. In the same period exports rose 12.8 percent to $74.6 billion and imports rose 2.1 percent to $32.2 billion.
"The recovery in the US is better than expected, which is bringing relatively strong exports," says Li Jing, a professor at Capital University of Economics and Business.
"Nevertheless, we should avoid being too optimistic."