By Hu Yuanyuan (China Daily)
Updated: 2007-12-20 09:57

Chinese companies saw lower trading risks globally this year, especially in emerging economies, according to a report by export and credit insurer Sinosure.

"Trading risks from emerging markets such as Russia, Eastern and Central Europe and Africa have seen an obvious drop," said Tang Ruoxin, general manager of Sinosure.

Of China's major trading partners, Russia saw the biggest decrease, with its rating downgraded from 7 (high risk) to 5 (medium risk).

"Strengthened economic power is the major reason for reduced risk in those countries," a Sinosure analyst said.

"As raw material prices rise, many developing countries, especially mineral-rich nations, have seen improved export remittance and more fiscal income, leading to stronger solvency capacities."

Of the 53 countries in Africa, 22, or 41.5 percent, had a lower risk rating this year and only four countries, or 7.5 percent, had their rates downgraded, according to Sinosure's risk-analysis report, which covered 191 countries.

It was the company's third risk report, aimed at helping Chinese firms to better hedge risks when doing business overseas.

"Despite the improved trading situation in emerging markets, Chinese firms are still facing comparatively higher risks in those countries - mainly political turbulence, potential terrorist attacks and changeable investment regulations," said Tang.

The Sinosure report assesses risk based on indicators like average default risk on corporate payments and the extent to which a country's business, financial and political situation affects companies' financial commitments.

Around 30 percent of countries pose an increased level of trade risk for Chinese companies, the report said.

Export credit insurance is playing an increasingly important role in Chinese exports as more local firms foray into overseas markets.

"We've been cooperating with Sinosure for several years, especially in financing and tapping the Southeast Asian and African markets," said Hiromitsu Yoshizawa, vice-president of trade finance and financial institutions at Sumitomo Mitsui Banking Corp (Shanghai).