China’s January exports fell 17.5%, the fastest pace in nearly 13 years and worse than most preliminary forecasts.
Shipments to the United States fell 9.8%. And exports to China’s largest trading partner, the European Union, fell 17.4%. China exports fell a slight 2.8% in December.
China imports also plunged 43.1% in January, nearly double December’s drop, and further stretching China’s $39.1 billion trade surplus and salting tensions between their many trading partners - most of whom are under severe economic duress.
The falling demand overseas for Chinese products is pinching China’s factories and manufacturing sector. Many are bracing for a continued drop in orders, which will shrink profit margins from around 10% to between 5% and 8%. “With banks having cut credit lines… the situation is becoming much more dangerous, even with orders, they still need the credit or cash to buy the (raw) materials,” adding that 5% of the estimated 60,000 Hong Kong factories are “sitting on the danger line” and could fold.
Government Aid, Instruction
Just as news on its exports broke, China’s cabinet approved a plan to bolster its domestic shipbuilding industry, which on top of falling shipments has a fleet of outdated ships that often run at overcapacity and the plan will encourage production of newer ships and promote consolidation via merger and acquisitions within the industry.
