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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (3505)	5/13/1998 12:13:00 PM
From: Michael Sphar	Read Replies (2) \| Respond to of 9980

China News: Evidently the US is not the only market for Chinese exports. Exports sag, but devaluation not (yet) the party line. Western technical analysis fails to factor in the bigger shovel effect... The following is reprinted here for personal use only: * * (This line unabashedly ripped from Stitch) Asian crisis takes toll on China's exports Wed, 13 May 1998 6:28:28 PDT Story from AFP / H. Asher Bolande Copyright 1998 by Agence France-Presse (via ClariNet) BEIJING, May 13 (AFP) - The Asian financial crisis had a chilling impact on China's trade in the first four months of 1998, with export growth plummeting 15.3 percentage points from a year earlier, the state media reported Wednesday. While the figures showed much clearer damage than in the unexpectedly rosy first quarter, analysts said the result was heavily anticipated by the government and would not prompt any panic moves to devalue the yuan. Exports in January-April grew just 11.6 percent year-on-year to 56.2 billion dollars, compared to 26.9 percent during the same period last year, the official Xinhua news agency said, quoting the General Administration of customs. Shipments to Southeast Asian countries fell 9.5 percent to 3.2 billion dollars, while those to South Korea shrank 24.5 percent to 1.9 billion dollars, the China Daily said. Bolstered by the yuan's strength against crisis-battered Asian currencies, overall imports growth surged 3.1 percent to 41.3 billion dollars. South Korea led the way, expanding its shipments to China 13.6 percent to 4.7 billion dollars. China's overall trade growth slowed 5.1 percentage points to 7.9 percent. Trade with the European Union and Russia -- which saw exports accelerate and imports slow -- partially offset the damage however, Xinhua said. Trade with Hong Kong and the United States, meanwhile, saw continued expansion of both imports and exports. Xiao Geng, a Hong Kong University economist, said the fall in exports was unlikely to spark any panic among Beijing leaders -- or a change of position on holding stable the yuan's exchange rate. "This was fully anticipated by both the government and the markets," he said, dismissing chances of any devaluation in 1998. "Exports are still growing ... it's still a (trade) surplus," he said, adding that the figures were actually favourable than some had predicted. Academics and bureaucrats in Beijing arguing for devaluation are doing so using Western technical analyses that fail to take into account the country's overall situation. But top-level Chinese leaders are more focused on the big picture and are prioritising long-term reforms to the inefficient state sector over short-term performance. Premier Zhu Rongji "won't sacrifice efficiency for growth," Xiao said, adding that the government had refrained from extending loans to state-sector manufacturers as an easy means of spurring flagging economic activity. In a separate report, Xinhua said the government aims to bolster sagging exports by extending foreign-trade rights to far more companies. Central and local governments, which have been selective in granting such rights, are relaxing approval requirements and encouraging all qualified firms -- including private- and foreign-owned firms -- to apply, it said. To open up doors to overseas markets, the right to foreign trade will in the future be obtained upon registration rather than government approval, Vice Trade Minister Long Yongtu told a conference here on Tuesday. China hopes the strategy will help it meet its 1998 export target of 200 billion dollars, or 10 percent year-on-year growth. While it will help, the supply of exporters is already high enough that such moves are unlikely to make a significant impact, economist Xiao said. Foreign-funded firms, which until recently were only allowed to export their own output, are now being allowed to form their own trading companies. Exports are a pillar of the Chinese economy, and analysts fear the impact of the Asian crisis could damage the country's economic growth, which came in at 7.2 percent in the first quarter -- below the government's annual target of eight percent. Eight percent growth or higher is believed necessary to cope with fast-rising unemployment caused by the goverment's current restructuring of bloated state-sector industries. The reforms are expected to produce more than 11 million lay-offs this year, adding to the already high potential for social unrest.