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China's export slows amid debt crisis

0 Comment(s)Print E-mail CNTV, November 25, 2011
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The debt crisis that is sapping confidence and growth all over the eurozone is also squeezing the exports that make up a quarter of China's output, threatening to undercut the global economy's strongest engine at a crucial time.

Overseas sales by Chinese exporters grew at the slowest rate in almost two years last month, as shipments to Europe slowed. Exports to Italy plunged 18 percent from a year earlier.

Chen Fengying, director of World Economy Studies, China Institute of Contemporary International Relations, said: "The shrinking European market will definitely have an impact on China's economy, especially on exports. We should be prepared for it."

Chen Xin, director of Economic Division, Chinese Academy of Social Sciences, said: "Lower demand in Europe is already affecting Chinese exports. During this year's Guangdong trade fair, many manufacturers experienced what they did in 2008."

Reporter: "China sends one fifth of its exports to the European Union; the slowdown in demand is hitting every sector. Some analysts are even speculating that China could see its first trade deficit in 2 decades. The global slowdown could also accelerate china's switch from an economy dependent on exports to one that's fueled by internal demand."

China's trade surplus has declined for three years running. Some economists are warning about a sharper slide in the years to come.

Chen Fengying said: "Domestic consumption is driving the recovery of the Chinese economy. Our average GDP-per-capita is already over 4000 dollars, in a few years Chinese consumer demand could be huge. Export oriented companies should realize the importance of the Chinese market."

Spain's ambassador to China also sees the great potential of the Chinese market, and believes that trade protectionism would be hurtful for both Chinese and European economies.

Eugenio Bregolat, Spanish Ambassador to China, said: "One of the biggest stories for the world's economy in the next few years is that China will be the largest consumption. It makes very little sense to start trade protection now so China can use it as an excuse to exclude us from its market. The worst thing we can do is to close off our markets. We learnt that from history. We have to promote globalization and keep our markets open. "

Analysts say Europe's financial problems are affecting not only exports, but also capital flows and the nation's foreign exchange reserves.

Investment in China from the 27 EU countries rose just over 1 percent in the period from January to October this year, a huge drop from the more than 10 percent increase in 2010.

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