A foreign visitor exchanges name cards with a Chinese exhibitor at the 103rd China Import and Export Fair in Guangzhou yesterday.

EXHIBITING at China's largest trade fair may not be a pain-killer for tens of thousands of Chinese exporters who have felt a pinch under the spell of the United States credit crisis.

It is too early to see how many orders would be signed during the ongoing biannual China Import and Export Fair, or Canton Fair, held in Guangzhou, capital of south China's Guangdong Province, but gloomy prospects have prevailed among domestic manufacturers and traders who have witnessed a slower increase, or even a drop, in their orders.

"The growth of export orders in the first quarter of this year fell sharply to 20 percent from 140 percent in the same period of last year," said Cao Xiaojian, vice chairman of the Jiangsu Shuntian Co Ltd at the fair.

Meanwhile, the accelerating rise of the yuan makes things worse. Cao said that a 1-percent rise in the yuan would result in a fall in sales profit of 2 percent to 6 percent. He admitted a quarter of managers in factories under the largest Chinese textile enterprise have been sacked.

The impact of the lower external demand on small and medium enterprises is catastrophic. "A US client used to order 5 million meters of jean fabric a year, but this year's order reduced to only 1 million meters," said Zhang Meng, a businessman with Lanyan Group, a major domestic jeans material producer based in Zibo, Shandong Province. In Zhoucun District in the same city, only 70 out of a total of 100 clothing factories opened after the Spring Festival this year, said Zhang.

Tough times

"The export increase of machinery and electronic products to the US slowed to 18.9 percent in 2007, down from 26.4 percent in 2006," said Zhang Yujing, vice chairman of the China Chamber of Commerce for Import & Export of Machinery & Electronic Products. He predicted the growth would slow further this year.


From January to March, China's total exports rose 21 percent to US6 billion, down 6.4 percentage points from a year earlier. The exports to the US grew 5.4 percent to 53 billion yuan, 15 percentage points lower than the same period of last year, according to customs statistics.

In Guangdong, the growth of exports to the US fell to 4.8 percent in the first quarter of this year from 15.5 percent in the same period of 2007, said Wu Gongquan, vice director-general with the provincial department of foreign trade and economic cooperation.

"Given the sluggish US market, this year will be tough for exports," Wu said.

"Chinese goods are popular among US consumers, yet we still have to reduce purchases because of decreasing US demand," said Ben Noonan, sourcing manager of Smartful Home, a US textile importer.

"Not only the US market, but a global slowdown under the impact of the global credit crisis would affect China's export industries," said Zhang Yansheng, director of the International Economic Research Institute under the National Development and Reform Commission, the country's top planner.