- Language Tips
The rising value of the yuan has made it difficult for exporters in the Pearl River Delta region to make money, even though they saw an increase in orders in April, an industrial survey said on Tuesday.
"Exports from the delta region increased a lot last month, but exporters have found it hard to make profits given the yuan's appreciation," said Xiao Feng, deputy general manager of One Touch Business Services Co, a Chinese provider of foreign-trade services.
Exports of 2,000 companies included in the Shenzhen-based company's survey, released on Tuesday, rose 47.3 percent in April year-on-year, and an increase of 8.5 percent over March, Xiao said.
According to the survey, 64.3 percent of the companies conducted trade deals in April, 4 percentage points more than in March.
"A rising number of exporters in the region have secured orders since March, showing a steady recovery of demand for Chinese goods in the overseas market," Xiao said.
China's exports in April rose 14.7 percent from a year earlier, compared with 10 percent growth in March, mainly driven by improving external demand, according to the General Administration of Customs.
"However, most exporters in the delta region have told us that the rising yuan value has led to a big profit decline," said Xiao, without elaborating on how much profits have declined.
The People's Bank of China last week set the daily reference rate of the yuan against the dollar at 6.1980, the highest in 19 years. Indicators show that capital flows into China have accelerated in recent months.
Liu Ligang, chief economic analyst at the ANZ Bank (China), said China's exports will return to normal in the coming months because the State Administration of Foreign Exchange has issued measures to crack down on hot money inflows under the guise of trade.
"Some companies have borrowed in dollars, converted them into yuan and bought into yuan-denominated assets, waiting for the Chinese currency to strengthen further. The inflows have brought about pressures for the yuan exchange," Liu said.
With the introduction of measures to crack down on hot money inflows, there is a possibility of a weak yuan exchange rate in the near future, Liu said. "A weak yuan exchange rate will benefit Chinese exporters, who are facing many challenges, including rising labor and production costs and weak demand in the European and the US markets," Liu said.
Zhang Zhenghu, deputy general manager of the overseas sales branch of Gree Electric Appliances, said the company had to increase the price of its products early this year because of the yuan appreciation before attending the Canton Fair, or China Import and Export Fair, which concluded on May 5.
"Yuan appreciation burdens most Chinese exporters heavily. We had to increase the price to make a sustainable business profit in the overseas market," Zhang said.
Zhang Xialing, deputy director general of the Foreign Trade Department of the Ministry of Commerce, called on Chinese exporters to conduct more deals by cross-border yuan settlement to avoid risks brought about by the rising value of the yuan.
Trade settled by cross-border yuan payment during the 113th Canton Fair, China's largest biannual trade event, was still small, Zhang said.
"We will promote more use of cross-border yuan settlement in trade to help Chinese exporters better avoid the risks," Zhang said at a recent financing forum in Guangzhou, the capital of Guangdong province.
(China Daily 05/15/2013 page14)