Rise in exports shrinks to 1.5pc for Guangdong

PUBLISHED : Tuesday, 15 September, 1998, 12:00am
UPDATED : Tuesday, 15 September, 1998, 12:00am

Guangdong exports, which account for more than 40 per cent of mainland trade, in August fell to their lowest monthly growth rate this year due to the financial crisis.

Exports for the month increased year on year by 1.5 per cent.

During the first eight months, the province's exports increased by 8.1 per cent, or slightly above one-half of the 15 per cent export growth targeted by provincial officials for this year.

Nationwide, exports in August dropped 2.9 per cent year on year to US$15.6 billion - the second drop in nearly two years - while imports fell 1.7 per cent to US$10.9 billion.

To boost exports, the Guangdong branch of the People's Bank of China (PBOC) has ordered provincial commercial banks to provide working capital loans to loss-making industrial and foreign-trade companies.

Loss-making firms manufacturing products enjoying overseas demand are eligible for lending to support production, sales and exports, the bank said.

The scheme comes as Guangdong's foreign trade from January through August amounted to $84.9 billion, representing growth of 6.1 per cent.

The PBOC measures are aimed at helping loss-making firms continue to manufacture and export in the present difficult environment, an official with the PBOC's currency management department in Guangdong said.

Both state-owned and private enterprises are eligible for lending under the scheme, the official said.

However, nine eligibility requirements are likely to limit the effectiveness of the measure.

Only firms where more than 50 per cent of the entire manufacturing basket is comprised of profitable products - and where the production-to-sales ratio of those goods exceeds 95 per cent - are eligible.

Other stipulations include a 10 per cent after-tax profitability on sales of the goods.

Moreover, the PBOC requires all funds lent under the scheme to be handled in sealed accounts and with special accounting rules.

A similar scheme introduced in Shenzhen earlier this year was criticised, with many of the city's loss-making firms failing to meet the eligibility requirements. Shenzhen firms are ineligible under the plan.

Guangdong also announced it was budgeting an additional 23 billion yuan (about HK$21.4 billion) for fixed-asset investment to help ensure economic growth in the second half of the year.

The amount would raise to more than 250 billion yuan the province's spending on fixed assets this year. In the first eight months, Guangdong chalked up investment of 95.31 billion yuan in fixed assets - up 16.1 per cent on the same period last year.