According to data provided by a Research Institute in the of Ministry of Commerce, China's export dependence in 2008 was about 32.5 percent while overall foreign trade (imports and exports) reliance was about 58.3 percent. These ratios are much higher compared to mature economies in the world. Data show that Japan's dependence on exports was only about 15.6 percent in 2007.
The higher degree of export-oriented industries and sectors, a greater hit and heat, the economy is expected to receive in the ongoing recessionary trends affecting the globe. Guangdong Province, which has a high concentration of export oriented companies, has experienced a sharp drop in recent few months. Foreign trade of this province accounts for 34 percent of China's total overseas trade.
The industrial output value of the secondary industry forms half of its total GDP and the secondary industry reliance is more so on exports, due to which the effects are more obvious on the secondary export sectors like clothing, automobiles and many other sectors, where the finished products are meant for directly the consumer, since consumers, worldwide have tightened their purse strings.
The financial crisis has curbed the excessive consumption trend witnessed in the US in the last few years and according to estimates has declined by nearly 20 percent. So in spite of 80 percent of overall consumption still existent, the loss of 20 percent, which when converted in to value is a huge amount, has brought about the depression in the secondary industries in China.
A study of Deutsche Bank shows that export contribution to China's economic growth will face downward pressure this year. The industry believes that China must seize the opportunity to carry out adjustment and reconstruction of the development model and aver by saying that internal conditions for such adjustment and reconstruction are ripe and the crisis has stressed its necessity and urgency for change.
Chinese experts say that it will be a long and gradual process and since the parameters and features of domestic and export oriented enterprise are dissimilar, it will be a long drawn out process. They add by saying that it took three decades to complete the development and reach this stage, it will take at least half the time to partially disassociate from the process.
Fibre2fashion News Desk - China
marketing@alchempro.com
