Outlook in H2 is not optimistic
China continues to face grave challenges in the export market export over the coming six months, and prospects for the next quarter remain poor.
Zheng Yusheng said a survey in June established that 49.2 percent of enterprises are seeing a fall in the value of new export orders, a figure which is 1.9 percentage points higher than last month. This is now the second month in succession that domestic companies have reported that their foreign order books are falling.
According to Zheng, among China’s largest trading partners the US economy is unstable, Europe is still dealing with its debt crisis, and diplomatic issues between China and Japan have penalized economic and trade cooperation.
Chinese exchange rates are a crucial factor constraining China’s economy. In the course of the year a number of major developed countries have implemented money-supply expansion and lowered interest rates, leading to inflation of the yuan. The yuan’s appreciation has eroded the profit margins even of some enterprises whose export order books are healthy.
International trade friction has also played a restrictive role in developing markets. This year, China faced growing problems in this area, with 12 countries initiating trade investigations against China, an increase of 22 percent.
Weaker industrial production has depressed the demand for imported materials. Surplus capacity in iron and steel, cement, shipbuilding and the photovoltaic industry has led to reduced profitability and falling demand for imported raw materials.
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