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Last Updated:[08-07-2013 01:54:23 EDT] Zoom in Zoom out Back to Tradenews

Storms on the Horizon for Chinese Trade

tradenews The latest analysis and predictions from reliable trade sources in China paint a picture of a somewhat bleak immediate future for Chinese trade- nationally and internationally. In a world wherein the fortunes of the US Dollar is closely tied to the economies and fortunes of the countries of the world, a confirmed recovery of sorts from the former hasn’t had any positive impact on the warning bells ringing for Chinese trade. Adding to the emergent problem is Beijing’s hesitation to deploy any kind of positive stimulus that could pose as a check to this steady decline. While China’s robust manufacturing sector is hanging on- certain subsectors could use a little positive reassurance.

The Chinese Federation of Logistics and Purchasing has noted that its purchasing managers’ index has fallen from 50.8 in May to 50.1 in June, while the new orders sub-index and new export orders sub-indexes have dived from 51.8 & 49.43 in May to 50.4 & 47.7 in June. While these drops might seem marginal and prone to the market ups and downs, a similar analysis from the banking behemoth HSBC has pegged the decline to be steep and disturbing- especially for smaller private companies in China. HSBC reports that China’s manufacturing activity has fallen from 49.2 in May to 48.2 in June, the lowest in nine months. Disturbingly, new export orders, primarily from the US and Europe, are also seen to have shrunk from 48.9 in May to 44.9 in June. HSBC has downgraded its forecast for GDP growth in China from the initially foreseen 8.2% to 7.4%, with a scary expectation that the GDP will abseil below the dreaded 7% mark in the second half of the year. The warning bells are clanging harder and harder.

Chinese manufacturers are citing a shortage of credit sources for this emerging problem. The bold move by the Chinese President Xi Jinping to rebalance the economy by reducing its reliance on exports has also been seen as a probable cause that has led to this chaos. The Chinese economy owes its current distress to the collapse of the buy-up price index in April that led the numbers to currently stagnate below 45- while the purchased goods inventory has been buried under 50 for five straight months- a clear indicator of the decline thanks to stagnant trade activities. The Chinese economy needs its critical sub-sectors to bounce back, and fast, to avoid further damage.

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