Guangdong to roll out rescue plan for exporters
Measures come amid first decline in exports in seven years
Guangdong's provincial government will roll out a fresh package of rescue measures for beleaguered manufacturers in the next few days as the latest statistics show exports from the province shrank last month for the first time in seven years.
Overseas shipments dropped 6.8 per cent to US$32.36 billion compared with a 16.1 per cent rise in December 2007, according to figures released yesterday by the Guangdong Bureau of Statistics.
This dragged down full-year growth in exports to 9.4 per cent last year, the lowest since 2001. Exports grew 22.2 per cent in 2007.
To bolster the economy and stem job losses, Guangdong is expected to launch about 30 rescue measures to help companies in Hong Kong, Macau and Taiwan.
Details of the package are to be announced within days, according to Liang Yaowen, the director-general of the Department of Foreign Trade and Economic Co-operation of Guangdong, who was quoted in the Nanfang Daily yesterday.
The measures are expected to include financial aid for upgrading industries and arrangements for cash-strapped Hong Kong manufacturers to gain access to funding.
In recent months, the province has offered to waive administrative charges for producers, freeze an annual increase in minimum wages and exempt part of the social welfare and security payments for workers.
As bad as exports fared, imports did even worse, tumbling 22.9 per cent to US$19.65 billion last month. This compared with a 21.6 per cent jump in December 2007.
For the full year, imports rose 5.4 per cent compared with 17.5 per cent in 2007.
Because imports dropped more than exports, the trade surplus grew 37.8 per cent to US$12.71 billion in December. It grew 19.61 per cent for all of 2008 to US$124.93 billion.
Slumping trade slowed Guangdong's economy to 10.1 per cent growth last year from its annual growth average of 13.8 per cent since mainland reforms began in 1978.
Guangdong contributed 29.1 per cent of the country's exports last year.
Economists warned that the fate of Guangdong's exports hinged largely on whether and when the financial crisis would be resolved.
'The fall [in Guangdong's exports] in the final quarter of last year was very drastic,' Credit Suisse chief economist Tao Dong said. 'Overall demand was bad, not just in the United States, but also in Europe and the Middle East. A shock in global trade finance made the bad picture worse.'
Since Lehman Brothers collapsed in September last year, international trade finance has been in distress because banks have been reluctant to lend to trading middlemen. US retailers, such as Wal-Mart Stores, refuse to make down payments until they see the goods they have ordered, while manufacturers want to get paid before shipping finished goods.
'The trade situation in Guangdong will continue to be difficult,' said Mr Tao. 'Whether it worsens depends on how fast the trade finance crisis is resolved.'
Hong Kong Small and Medium Enterprises Association chairman Danny Lau Tat-pong urged the provincial government to increase funding for Hong Kong producers. Many are struggling to settle wages and bills by the Lunar New Year.
Mr Lau said Hong Kong companies that did not have assets to use as collateral for loans had been denied access to bank financing.
The association said at least 10,000 of 60,000 Hong Kong-owned processing trade plants across the border had gone out of business.
