» 02/11/2009, 00.00
China's exports collapse, more than 20 million jobs lost
Exports dropped by 17.5% in January, more than the most downbeat projections. Imports are down by 43%: the markets of the Asia-Pacific region are in crisis. It is feared that growth will not exceed 6%. Now attention is on what the government will do, after focusing so far only on public investment and bank financing.
Beijing (AsiaNews/Agencies) - Chinese exports fell by 17.5% in January, compared to January of 2007, the worst figure since October of 1998, increasing fears of job losses and a slowdown in Chinese growth.
The hardest hit sectors are textiles, toys, electronics, and other manufactured goods, the very products that have always driven Chinese exports and are the main products of the factories on the coast. The government says that 20 million migrants have already lost their jobs, but the real number is believed to be much higher, since many migrants work in the underground economy. The official figure also does not consider the fact that many already receive less pay, or none at all, even though they continue to work.
Experts say that the country may grow by 6.1% in the first quarter of 2009, the slowest rate since 1999.
Imports also fell sharply in January, by 43.1% year on year, as a result of lower demand for foreign components and raw materials for production. But the drop is also a symptom of the contraction in consumption because of growing economic difficulties. Because of the reduced imports, China's trade balance increased by 39.11 billion dollars in January. The trade gap with the United States grew in China's favor by 1.9%, or 12.3 billion dollars.
Experts forecast a further slowdown in exports, and therefore in production as well, since it does not seem likely that demand from the United States and Europe will pick up soon. But this could have a dampening effect on the economy of the entire region, since nearby countries sell raw materials and partly finished products to China. In December, exports from Taiwan dropped by 42%, Japan's by 35%, and South Korea's by 17%: these are the three largest providers of semi-finished products that are assembled in Chinese factories.
China's domestic demand seems to be slowing in spite of increasing deflation, with producer prices falling by 3.3% in January, and consumer prices increasing by only 1%, the lowest rate in 30 months, with a rise of 4.2% in food prices (19.6% for vegetables), but steep drops for clothing, transportation, and real estate. Experts maintain that the government will intervene to contain deflation, in order to avoid eroding the already slim profit margins of producing companies, and to stimulate domestic consumption. There is eager anticipation for initiatives from Beijing, which so far has limited itself to announcing large-scale public investment, and to providing incentives for bank financing.
Chinese leaders admit serious economic crisis for first time
The conference on economic and labor questions highlighted the lack of immediate solutions. Subsidies and tax breaks have been promised in order to increase incomes and consumption, but without concrete details. Experts: long-term strategy and structural reforms are needed.
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Inflation at 7.1% in June, while producer prices increase 8.8%, a more than 10-year record. China faces the dilemma of containing inflation without impairing production too seriously. Meanwhile, the worst energy crisis in years approaches.
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A researcher warns that unemployment is much higher than the official numbers, and that the increase of social injustice could generate a situation out of control. Meanwhile, the government is revising fuel prices, and increasing taxes on it.
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It is the Asian country hardest hit by the global crisis. Unemployment and inflation are on the rise. The prime minister announces plan to draw on foreign currency reserves.
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