China’s export slows

Everybody realized that China’s export slows in the worldwide financial turmoil and economic slowdown. Here is the concrete example: overseas orders showed significant decline at the recently concluded Canton Trade Fair, China's largest and most well-known fair for international buyers. The total value of contracts signed at the fair was $31 billion, down 17.5% from the fair held this spring and down 16% from the autumn fair last year. The last time export orders declined was in 2003, when China was hit by the SARS epidemic.

According to a survey at the fair, many overseas customers are concerned about the global economic slowdown, which has led them to either cancel the orders or only make purchases for the short term. Because most of the foreign buyers at the fair placed orders for next spring's delivery, we expect more exporters will find themselves in trouble in 2009.

The other side of the coin is the deteriorating consumption in major importers of China products. In U.S. the October unemployment numbers came out were ugly, showing a loss of 240,000 jobs. But the really bad part was the negative revision to August and September, by a further loss of 179,000. As the unemployment and recession accelerating, U.S. consumers might and are forced to change their consumption behavior. Household debt, including mortgages, skyrocketed from 47% of personal income in 1959 to 117% in the fourth quarter of 2007. It’s predictable that consumption - the strongest U.S. economy drive will cool.