US Economic Slowdown Impacts Little on Chinese Exports

The recent slowdown of the US economy is expected to have but only a limited impact on China's exports, according to local analysts.

Since the beginning of the year, the United States has lowered interest rates three times in a row in a bid to restore investors' confidence and steer the US economy off the trend toward a sharp downturn.

Matt Salmon, former member of the US House of Representatives and executive vice-president of APCO Worldwide in Beijing, said the current upheavals at the US stock market are caused by the psyche of consumers. The US economy has adequate vigor to keep growing and will pose no serious threat to China's exports to the US, he said.

A report the US Interparliamentary Committee released last Thursday indicated that the US economy has not shown any signs of recession, as the anticipated economic index remained at a high level during the first two months of the year.

However, some economists warned that the weakening consumer confidence is still a big problem of the US economy, which is expected to see zero growth in the first quarter this year following a drastic drop since the latter half of last year.

Zhao Jinping, economist with the think tank Development Research Center under the Chinese government, said that as long as the US economy does not go through a recession or major upheaval, China's exports to the US will remain basically unaffected.

China's exports to the US account for about one-third of its total and are mainly cheap labor-intensive products such as textiles, apparel, shoes, toys and umbrellas.

Given an economic slowdown in the US, consumers would reduce their demand for luxury goods and turn to cheap commodities, which Zhao believes will not have a big impact on Chinese products in the US market.

Official figures showed that China's exports grew 14.5 percent year-on-year in the first two months this year, compared to 41.2 percent in the same period of last year.

Minister of Foreign Trade and Economic Cooperation Shi Guangsheng attributed the sharp drop to the record growth rate gained in the last two years and a slowdown in the world economy. But he said the achievements of the last two months indicated that China is expected to maintain a steady growth momentum in exports this year.

Salmon was optimistic about the huge potential market in China. He said "The Chinese market has become increasingly attractive to overseas investors through times of global economy slowdown."

He predicted that given a slowdown of the US economy, multinational companies would quicken their steps to invest in and move their operations to China. Many international companies, such as Motorola, have taken China as an important production base in their global strategy, he added.

Local analysts estimate that the China's exports growth rate may decrease to less than 10 percent this year, but exports would contribute one percentage point to the growth of industrial production.

(Xinhua 03/28/2001)

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