Currency depreciation by some of China's trade rivals means Beijing faces a daunting task to support exporters and help keep economic growth on track, the Ministry of Commerce said on Tuesday. The global economic downturn, a tightening of credit for importers and rising protectionism added up to a "grim" situation for China's exporters, the ministry said.
"Although there are some positive economic signs, indicators show that future optimism about China's exports is not warranted," the ministry said in a statement published on its website, www.mofcom.gov.cn. It said currency depreciation in export-driven economies including South Korea, Indonesia, Malaysia and Mexico had deepened the plight of Chinese exporters.
"Many countries are devaluing their currencies, which has weakened the competitiveness of Chinese exports," it said, noting the real effective exchange rate of the yuan increased 2.58 percent in the first quarter. China's exports fell 22.6 percent in April from a year earlier, while imports fell 23.0 percent, the General Administration of Customs said on Tuesday.
"Most exporters have fewer orders in hand, while foreign buyers are replacing long-term orders with short-term ones and big orders with small ones," the commerce ministry said. A drop in foreign direct investment inflows also indicated that processing trade and exports by foreign-funded firms would be weak in coming months, it said.
Stabilisation in external demand was vital for the 80 million people whose jobs depend on foreign trade, 60 percent of whom are migrant workers from rural areas, the ministry said. Trade-related taxes generated 916.1 billion yuan in 2008, or 15.4 percent of China's total tax revenue, it added. In value terms, 70 percent of made-in-China shoes, 80 percent of chinaware, 40 percent of furniture and 40 percent of toys, were manufactured for overseas markets in 2007.
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