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ReturnChina Exporters Blame Yuan in ‘Life and Death’ Crisis
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PublishDate：
2009-03-05 15:48:00
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China’s exporters are calling on the government to weaken the yuan after the biggest slump in overseas sales in more than a decade, putting them on a collision course with the central bank’s intent on keeping the currency stable.
“A 2 to 3 percent depreciation in the yuan against the dollar would help as we are on the line between life and death,” Wang Hanmin, a sales manager at Yixing Bochangyuan Garments Co. in Jiangsu province, said at the East China Trade Fair in Shanghai this week. The company, which makes workers’ outfits for Asian markets, closed two workshops and operates on a four-day week at its remaining two factories.
China’s overseas sales slid 17.5 percent in January from a year earlier, the biggest drop in almost 13 years, customs bureau data showed last month. The world’s third-biggest economy expanded 6.8 percent in the fourth quarter, the slowest pace in seven years.
Policy makers halted the yuan’s appreciation against the dollar the past eight months to aid exporters, after allowing the currency to climb 21 percent since the end of a fixed exchange rate in 2005. U.S. Treasury Secretary Timothy Geithner accused China of manipulating its currency on Jan. 22. The International Monetary Fund said four days later that the yuan is still “undervalued.”
The People’s Bank of China denied the U.S. allegation and pledged in a February report to keep the yuan “basically stable at a reasonable and balanced level.” Premier Wen Jiabao repeated that policy when he opened the annual session of parliament today.
Regional Currencies
The yuan dropped 0.09 percent against the dollar in the past six months to 6.8431, while South Korea’s won, Indonesia’s rupiah and India’s rupee plunged more than 13 percent in the same period.
“It’s certainly our hope that the yuan can weaken moderately to around 7 per dollar, but we don’t know whether the government will listen,” said Lu Junteng, an executive at the corporate management department of Zhejiang Province Changxing Silk Co. “We don’t want to ask for more devaluation, because that would result in great foreign pressure on our exchange rate policy.”
Domestic Stimulus
China will “significantly increase” investment in 2009 to counter a slowdown in the world’s third-biggest economy, Premier Wen said. Stocks rallied worldwide yesterday on speculation increased spending will spur earnings after China’s export collapse slowed economic growth and cost the jobs of 20 million migrant workers.
While stable against the dollar, the yuan rallied 17 percent against the euro the past six months, 22 percent compared with the Canadian dollar and 27 percent versus the British pound. The appreciation forced WD Fashion, which sells knitwear to the U.S. and Europe, to cut workers by almost a half this year and settle all the trade in dollars, according to Kary Yu, a department manager at the Hangzhou-based company.
“The value of the currency is rising at a faster pace than the development of the country,” said Abid Ahmed, director at Macro Apparel Group, which came to the trade fair from Hong Kong to buy garments for consumers in the U.K. Weakening the yuan “is something the Chinese government should look at,” he said.
Exhibitors at the annual trade fair sponsored by the Ministry of Commerce, which started March 1 and drew about 3,500 exporters, said business was quieter this year.
“This place used to be so crowded with buyers from all over the world that you couldn’t even walk out,” said John Wang, export division chief at Fujian-based Jinjiang Difeni Sportswear Co.
This year, he had time for a 30-minute interview without a single interruption from a visitor.
Source: Bloomberg
“A 2 to 3 percent depreciation in the yuan against the dollar would help as we are on the line between life and death,” Wang Hanmin, a sales manager at Yixing Bochangyuan Garments Co. in Jiangsu province, said at the East China Trade Fair in Shanghai this week. The company, which makes workers’ outfits for Asian markets, closed two workshops and operates on a four-day week at its remaining two factories.
China’s overseas sales slid 17.5 percent in January from a year earlier, the biggest drop in almost 13 years, customs bureau data showed last month. The world’s third-biggest economy expanded 6.8 percent in the fourth quarter, the slowest pace in seven years.
Policy makers halted the yuan’s appreciation against the dollar the past eight months to aid exporters, after allowing the currency to climb 21 percent since the end of a fixed exchange rate in 2005. U.S. Treasury Secretary Timothy Geithner accused China of manipulating its currency on Jan. 22. The International Monetary Fund said four days later that the yuan is still “undervalued.”
The People’s Bank of China denied the U.S. allegation and pledged in a February report to keep the yuan “basically stable at a reasonable and balanced level.” Premier Wen Jiabao repeated that policy when he opened the annual session of parliament today.
Regional Currencies
The yuan dropped 0.09 percent against the dollar in the past six months to 6.8431, while South Korea’s won, Indonesia’s rupiah and India’s rupee plunged more than 13 percent in the same period.
“It’s certainly our hope that the yuan can weaken moderately to around 7 per dollar, but we don’t know whether the government will listen,” said Lu Junteng, an executive at the corporate management department of Zhejiang Province Changxing Silk Co. “We don’t want to ask for more devaluation, because that would result in great foreign pressure on our exchange rate policy.”
Domestic Stimulus
China will “significantly increase” investment in 2009 to counter a slowdown in the world’s third-biggest economy, Premier Wen said. Stocks rallied worldwide yesterday on speculation increased spending will spur earnings after China’s export collapse slowed economic growth and cost the jobs of 20 million migrant workers.
While stable against the dollar, the yuan rallied 17 percent against the euro the past six months, 22 percent compared with the Canadian dollar and 27 percent versus the British pound. The appreciation forced WD Fashion, which sells knitwear to the U.S. and Europe, to cut workers by almost a half this year and settle all the trade in dollars, according to Kary Yu, a department manager at the Hangzhou-based company.
“The value of the currency is rising at a faster pace than the development of the country,” said Abid Ahmed, director at Macro Apparel Group, which came to the trade fair from Hong Kong to buy garments for consumers in the U.K. Weakening the yuan “is something the Chinese government should look at,” he said.
Exhibitors at the annual trade fair sponsored by the Ministry of Commerce, which started March 1 and drew about 3,500 exporters, said business was quieter this year.
“This place used to be so crowded with buyers from all over the world that you couldn’t even walk out,” said John Wang, export division chief at Fujian-based Jinjiang Difeni Sportswear Co.
This year, he had time for a 30-minute interview without a single interruption from a visitor.
Source: Bloomberg
