A glimmer of hope for Chinese exporters10 September, 2012, 12:01. Posted by Zarathustra
For many months, a lot of “Chinese economy has bottomed” calls have been made, citing a lot of “signs of stabilisation” that we could not see even under microscope.
The “stimulus” that were announced last week, along with a lot of rubbish about how to support the stock market (which, in case you have not noticed, has been destroyed), has made some believe that “this is it, the bottom is in for the economy”.
We are sceptical on whether this is the stimulus for real. As we wrote, it did not appear to be unusual for NDRC to approve large number of projects in a single day, and we think the problem of funding exists for these projects as well as many projects that local governments plan to do. Dong Tao of Credit Suisse also added that most of these projects have been included in the 12th five-year plan anyway, so there is quite possibly nothing new there.
And as for the stock market supporting plan, just don’t be silly.
For the export sector, however, there is a glimmer of hope that things might improve slightly in the near-term. According to Dong Tao of Credit Suisse, export orders have picked up towards the end of August for manufacturers in parts of Guangdong, although the volume of orders remains below last year’s level:
Meanwhile, in our recent trip to Dongguan, Guangdong, one of China’s export hubs, manufacturing exporters indicated that orders have picked up in the past weeks after a very bad July and early August. Exporters suggested that the pace of orders have picked up by at least 20% from a month ago, though the volume is still below what was seen the same time last year. August and September are critical times for Christmas orders. The late arrival of orders from US and emerging markets is good news for the exporters, although none of them know if the recent pick up can be sustained. A similar trend has been reported by Taiwanese electronics producers, who produce a large part of their products in Guangdong as well.
It is a little too early to call a turning point, but this is an interesting new development that has yet shown in the statistics. Typically, the pick up in orders should be materialised in the export data in November. Rush orders in late September or early October should be reflected in trading volume of late November or early December.