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China exports fall at fastest rate in 10 years

China's exports fell at their fastest rate in a decade as the government said Tuesday the country's trade slump worsened again in December _ a decline that has led to masses of layoffs and growing fears of social unrest.
Analysts and companies expect the pain to get worse.
The global plunge in demand for Chinese goods has forced thousands of Chinese factories to close and freshly unemployed migrants to stream from coastal manufacturing regions back to their rural hometowns. Labor protests have occurred in some areas. The government is pressing companies to avoid more job cuts.
December exports fell 2.8 percent from the same month a year earlier, on top of a 2.2 percent decline in November, the Chinese customs agency said. It was the biggest decline in a decade, according to economists. By contrast, at the start of 2008, January's export growth rate was 26.7 percent.
Things are likely to get worse because exporters have yet to feel the full impact of the drop in demand due to the lag time between orders and shipments, said Sherman Chan, an analyst for Moody's
"It is still difficult to identify a bottom for China's exports, as economic conditions in the U.S. and Europe remain downbeat," Chan said in a report. "Outbound shipments look set to slow further in the first quarter of 2009."
China's 2008 global trade surplus rose 12.7 percent over 2007 to a record $295.5 billion, according to customs data, possibly worsening tensions with the government of U.S. President-elect Barack Obama. December's monthly surplus widened to $39 billion _ the second-biggest after November's $40.1 billion.
Beijing is trying to reduce reliance on exports with a 4 trillion yuan ($586 billion) stimulus package announced in November that is aimed at boosting domestic consumption through higher spending on construction and other large projects. But the effect of that spending is not expected to be felt for several months, and success depends on persuading local companies and consumers to increase spending.
The government also has cut taxes for struggling exporters of clothing, toys and other goods and promised steps to help auto and steel producers.
The visiting president of the U.S. Chamber of Commerce appealed to Beijing to resist pressure to respond to the downturn by trying to block imports.
"We're bringing a message here to this government: Be patient, continue to work very hard to avoid protectionism at home as we are doing in an environment where, as economies get tough and unemployment goes up, people are very inclined to figure out how to close the door," said Thomas Donohue in a speech to members of the American Chamber of Commerce in China.
Adding to exporters' misery, China's yuan has risen over the past year against the U.S. dollar. That has squeezed companies that receive dollars for their goods but pay wages, rent and other expenses in yuan.
"I think in 2009 the situation will be very bad," said Bian Feng, manager of Beijing Zhongyan Changxing International Trade Ltd., which exports plastic goods to the United States and Europe. He said orders have fallen sharply since October but the company hopes to avoid cutting any of its several dozen employees.
"If we lay off people, who will do the work?" Bian said. "There are no really good ways to survive the winter so far."
Imports also fell sharply in December, declining 21.3 percent on top of November's 17.9 percent fall, according to the customs agency.
That was due partly to lower prices for oil and raw materials but also weak domestic demand for autos and other goods.
Exports in December were $111.2 billion, while imports were $72.2 billion, the agency said.
China's monthly trade surplus with the United States in December fell by 9.5 percent from a year earlier to $12.4 billion, but the total 2008 surplus with the U.S. rose 4.6 percent to $170.8 billion.
The monthly trade surplus with the 27-nation European Union, China's largest trading partner, fell 1.6 percent from a year earlier to $11.7 billion, while the full-year 2008 surplus was up 19.4 percent at $160.2 billion.
Reflecting the trade slowdown, the central bank reported Tuesday that China's foreign reserves grew by only $45 billion in the three months ending Dec. 31. That was down from the $377 billion increase reported for the first three quarters of the year _ or an average of more than $125 billion per quarter.
The growth in reserves, which stood at $1.95 trillion on Dec. 31, is driven by the central bank's need to drain money from the economy to keep the flood of export revenues from adding to pressure for prices to rise. But the urgency of reducing China's money supply has eased as trade weakened.
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Associated Press Writer Henry Sanderson and researcher Bonnie Cao in Beijing contributed to this report.

Updated : 2021-10-19 00:44 GMT+08:00