Beijing expects export decline for the first half
The Ministry of Commerce, pessimistic about an imminent turnaround in the mainland's battered export sector, is resigned to seeing a decline in the first half of this year.
In a meeting aimed to beef up insurance coverage for exporters,Vice-Minister Zhong Shan said the export sector was still troubled with 'unprecedented difficulties' and its prospect in the second half 'could not be optimistic', according to the ministry's website yesterday.
He said the ministry would pursue a plan to pump US$84 billion in short-term export credit insurance into the foreign trade sector this year to preserve the mainland's market share in world trade as the global financial crisis continued to bite.
'The fate of an export decline is almost sealed in the first half of this year, and there are increased difficulties in turning the situation around in the short term,' Mr Zhong said.
'We will use every means to stabilise external trade, expand domestic demand, spur investments and create jobs.'
Some economists said China, like other regional economies such as South Korea and Japan, had fallen victim to overseas retailers' moves to clear inventory before reordering.
'I agree with the vice-minister's view that the first half is going to see negative growth in exports, which I think will probably be in double digits,' Nomura International economist Sun Mingchun said yesterday.
'Retailers' destocking caused a sudden freeze in global trade in the first six months, but the situation will become less severe in the latter half.'
Last month's export figures, due out next week, were expected to show the market shrank 19.5 per cent from May last year, compared with a 22.6 per cent drop in April, Mr Sun said.
He estimated exports would end the first half with a 19.6 per cent fall against 28 per cent growth last year.
Morgan Stanley chief economist Wang Qing expected the month-on-month decline in exports to have slowed to 20 per cent in May.
'[As] in April, we see further normalisation in credit growth while the rest of the economy realises the stimulative effect of earlier expansion,' Mr Wang said, referring to the central government's 4 trillion yuan (HK$4.54 trillion) economic stimulus package.
He believed the worst was over for the country's export sector and the situation improving gradually.
Some economists said Beijing had raised value-added tax rebates on exports eight times and restored processing trade policies, but the root of the problem was inadequate overseas orders.