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MENAFN - ProactiveInvestors - Australia - 23/10/2012

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(MENAFN - ProactiveInvestors - Australia) Chinese exporters at Asia's largest trade fair expect orders for made-in-China products to remain resilient for the rest of this year and even grow slightly despite shriveling demand from debt-stricken Europe and the strengthening yuan currency.

A Reuters poll of 85 small to medium-sized exporters at China's Canton Fair found that while around a quarter of firms surveyed expected orders to drop this year, overall, orders were seen rising an average 4 percent in 2012 and 7.4 percent in 2013.

The results are reflected in Chinese trade data in September which showed exports growing 9.9 percent year-on-year, almost twice the rate expected, while imports returned to expansion after a period in the doldrums.

Chinese officials have warned however that it was just one month's data and not enough to predict a trend.

While trade sentiment can be difficult to gauge across diverse and seasonally-influenced sectors, the Canton Fair, crammed this autumn with an estimated 24,000 exporters, is a closely watched biannual indicator of China's gargantuan export market.

Forty-six percent of those polled across a range of sectors including chemicals, machinery, electronics, household appliances, construction materials and computing hardware, were optimistic about their prospects, while 41 percent were neutral and 13 percent pessimistic.

The steady strengthening of the yuan has also been a burden on exporters who have borne a nearly 30 percent appreciation of the currency against the greenback since 2005, making Chinese products relatively more expensive.

Exporters at the Canton Fair indicated that should the yuan appreciate just another 4 percent to 5.99 to the US dollar, they would start to lose money. The yuan closed on Friday at 6.25 yuan to the greenback.

"China is losing its competitiveness," said Pradip Mithani, an Indian businessman at the fair who was looking for bicycles and other products for African markets. He said he was now buying a large number of lower-end products from India.

"In four to five years time, the impact of this (yuan appreciation) policy will be very high."

Despite the recent uptick in September China exports, trade officials have sought to dampen talk of a broad recovery. Canton Fair organizers said the number of foreign buyers in the fair's opening week had fallen 11.4 percent compared with the same period in the spring session.

Domestically, economists say China likely hit the bottom of a seven-quarter long economic downturn between July and September, but recovery prospects remain tepid.

 






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