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China export recovery hampered by rising costs

China is now losing an increasing number of export orders to other emerging countries because of rising costs at home. That’s driving the government to consider supportive measures including tax rebates and reduced transportation fee

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Thai exports in February were valued at US$19.03 billion, a growth of 0.91 per cent compared to the same period last year.

China is now losing an increasing number of export orders to other emerging countries because of rising costs at home. That’s driving the government to consider supportive measures including tax rebates and reduced transportation fees, a commerce official said on Saturday during an investment and trade expo held in Changsha, Hunan province.

“Rising costs of labor and land as well as enhanced environment protection criteria has reduced the competitive edge of Chinese exporters,” said Wang Shouwen, director of the department of foreign trade at the Ministry of Commerce.

Chinese labor-intensive exports, including textile, apparel and light industrial products, increased rapidly in such traditional markets as the US, the EU and Japan before 2010. But the first four months of 2012 saw China’s textile and apparel exports to Japan expand only slightly, by about 7 percent year-on-year, while Japanese imports from other emerging countries surged by more than 40 percent in the same period, Wang said.

 

“Overseas buyers’ strategy, called ‘China plus one’, also contributed to the shifting away of Chinese exporting order. China remained the main supplier for overseas buyers but one alternative procurement source in other emerging countries is established to compare the cost with China.

“Further rising costs at home will drive buyers to rely more and more on their plus-one countries,” the director said.

China’s exports in the first four months edged up by 6.9 percent from the previous year, 20.5 percent lower than the growth in the first four months of 2011. Trade from January to April slightly increased by 6 percent while the country set a 10-percent goal of trade growth in 2012, according to Deputy Commerce Minister Wang Chao.
China seeks export recovery

Some economists believe that Chinese economic growth has been in fact understated during much of the 1990s and early 2000s, failing to fully factor in the growth driven by the private sector and that the extent at which China is dependent on exports is exaggerated.

China has acquired some highly sophisticated production facilities through trade and also has built a number of advanced engineering plants capable of manufacturing an increasing range of sophisticated equipment, including nuclear weapons and satellites, but most of its industrial output still comes from relatively ill-equipped factories.

China now ranks as the fifth largest global investor in outbound direct investment (ODI) with a total volume of $56.5 billion, compared to a ranking of 12th in 2008

Agriculture is by far the leading occupation, involving over 50% of the population, although extensive rough, high terrain and large arid areas – especially in the west and north – limit cultivation to only about 10% of the land surface.

Oil fields discovered in the 1960s and after made China a net exporter, and by the early 1990s, China was the world’s fifth-ranked oil producer.

China is among the world’s four top producers of antimony, magnesium, tin, tungsten, and zinc, and ranks second (after the United States) in the production of salt, sixth in gold, and eighth in lead ore.

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