December 21, Manufacturers in cities along the Pearl River Delta, China’s export hub, are experiencing a huge decline in export orders even with the traditional peak season of Christmas just around the corner.
South China’s Guangdong province, known as the country’s workshop, has seen export growth decline for 5 consecutive months.
Exports rose by just 5% in November year-on-year, the slowest pace of expansion for 2 years, as local enterprises saw their orders take a hit due to the eurozone crisis and the bleak economic outlook in the U.S., the Guangdong Sub-Administration of China Customs said in a statement on its website on Dec.19.
Guangdong’s export volume grew 18.8% year-on-year during the first 11 months, 2.3 percentage points lower than the national average growth of 21.1%, sub-administration data showed.
Harsh Conditions
The November purchasing managers index (PMI) in Guangdong shed 0.7 points from October to 49.06, the second month in a row the index stayed below the 50 line that demarcates expansion from contraction.
The national PMI stood at 49 in November, compared with 50.4 in October, according to data released by the China Federation of Logistics and Purchasing.
Guangdong Acting Governor Zhu Xiaodan said the province’s export outlook would be even gloomier next year, as conditions in Europe and the U.S. continue to pose a threat to local enterprises, and that the situation could be as severe as in 2008 at the height of the financial crisis.
Chong Quan, an official with the State Council, China’s cabinet, said earlier this month that China’s foreign trade would face a grim 2012, “as we don’t expect any substantial improvement in Europe or the U.S., and the pressure from higher costs internally keep rising”.
Exporters Suffer
In Shenzhen, most local toy manufacturers have seen a drop of 20-30% in overseas orders this year, with some seeing orders down by as much as 50% from a year earlier, according to Liu Yanfang, secretary general of the Shenzhen Toy Industry Association.
“Christmas should help to boost our toy makers’ overseas sales, but many local businesses have already given holidays to their employees ahead of schedule due to shrinking orders,” Liu was quoted as saying by the official Shanghai Securities News.
According to Liu, both the economic downturn in developed markets and the upgrading of toy safety standards issued separately by the European Union and the U.S. earlier this year have caused exports to fall.
“The sharp rise in costs of labor and raw materials also play their part in the deterioration of the toy market in Shenzhen,” Liu added.