SENIOR Chinese trade officials are warning against over-optimism about business volume at the China Export Commodities Fair which opens today. Mr Lu Ruguang, deputy secretary-general of the fair, said the amount of contracts might be hurt by poor economic conditions in Western countries. ''At present, the market is not very favourable because the economies of Western countries have not shown significant improvement. I believe this will more or less affect their purchasing power,'' he said. Mr Lu said it was difficult to predict total volume during the 10-day fair because there were some changes in the format. This year, for example, minerals, large machinery, machine tools and vehicles are not included. ''There are still chances for the total business volume to exceed that of last year, but I would say this would require considerable efforts from the participants,'' he added. He believed the products most likely to suffer would be raw materials, noting that light industrial products were daily necessities which tended to be less income elastic. Mr Lu's cautious sentiment is shared by Mr Zhou Zhilin, a senior official from the Ministry of Foreign Trade and Economic Co-operation. Mr Zhou, deputy director of the Ministry's Department of Policy and Development, said that apart from the economic situation in Western countries, the yuan exchange rate had led to slower export growth in the first quarter. While final trade figures for the period were not available, Mr Zhou said preliminary statistics showed that growth in exports was not as high as last year. ''The problem is not serious. It is just the growth rate of exports was not as high as last year. It doesn't mean there was no growth at all. There was still growth compared with same period last year. Mr Zhou said that while the depreciation of the yuan seemed favourable to exports, it also caused problems. ''When the value of the yuan kept falling, it in theory would be good for exports. But people would expect the exchange rate to fall further. This expectation made businessmen take a wait-and-see attitude,'' he said. Mr Zhou added that if raw materials had to be imported for export products, the devaluation of the yuan would push the cost even higher, offsetting the benefits of devaluation on exports. Meanwhile, Mr Lu has rejected suggestions that decentralisation of power this year would lead to a price war among different provinces. There were concerns that the relaxation of government control over the production and exports would lead to unhealthy competition among the 45 delegations, which come from different provinces, major cities and government departments.
