China’s exports have slumped to the lowest levels in more than a decade as a result of the widespread slowdown in the global economy, sparking fears of massive job losses and general unrest.
Estimates are that some 20 million migrant workers have already lost their jobs in recent months mainly due to factory closures along the Eastern Seaboard.
In November, the Chinese government announced that they were planning to inject the equivalent of $586 billion into their economy to help stimulate growth.
The collapse in global demand for Chinese goods resulted in sales abroad falling by 17.5% in January 2009 as compared to the previous January’s figures. The last time export levels saw such a dramatic drop was over 10 years ago.
Economist Ken Peng from Citigroup said “The numbers are terrible. The environment is awful,” and “The pressure on unemployment will be huge”.
Some analysts have said that these latest figures aren’t quite as bad as they might appear because the Chinese New Year fell in January this year so a lot of businesses would have been closed for a week or so reducing the number of working days in the month. Last year the New Year was celebrated in February. However, despite this being taken into consideration, trade has still dropped.
There was a 2.8% drop in December and a 2.2% drop in November compared to the previous year and although January showed a sharper decline, it is the third month in a row that Chinese exports have fallen.
Overseas sales of Chinese motorbikes, toys and textiles have all suffered and are unlikely to pick up until Europe and the USA recover from their financial crisis which doesn’t look to be any time soon.
Imports have dropped too, by 21.3% in December and by 43% in January when compared to last year’s figures, which will undoubtedly have a knock on effect for other economies that rely on Chinese manufacturers buying their raw materials.
The whole of Asia Pacific will inevitably be impacted by the global financial turmoil. Indeed Taiwan, Singapore, South Korea and Japan have all reported a decline in their exports.
According to Sherman Chan, an economist at Moody’s “For 2009 Chinese export prospects are grim”.
With no immediate economic recovery in sight, the same grim outlook goes for the rest of us by the looks of things.
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