China's trade expansion is expected to be hampered by greater uncertainties amid world economic slowdown risk, rising prices of raw materials on the international markets and the swiftly appreciating yuan, according to a report issued by the Ministry of Commerce on Wednesday.
The report said the impact of the U.S. credit crisis had spread from financial markets to consumption and investment fields. The slowdown of the U.S. economy will undoubtedly shrink China's export to the United States.
Chinese exporters have also felt a pinch from the rising prices of raw materials in international markets. Meanwhile, the accelerating rise of the yuan makes things worse, according to the report.
"As one of the major manufacturers and exporters, China has become one of the major countries to bear the burden of the rising costs of raw materials. Chinese exporters will have to scrabble for dropping profit margins under greater operation pressures," the report said.
Official data show the import prices of crude oil, iron ore, soy beans and eating oil increased by 66 percent, 80.6 percent, 77 percent and 69.3 percent, respectively, in the first quarter over the same period of last year.
"With sluggish external demands, increasingly fierce competition, and lower growth of industrial products prices than that of the primary products, it will be increasingly difficult to absorb rising cost of raw materials by raising export prices," said Liu Haiquan, the Deputy Director of the General Department with the ministry.
The report said the competitiveness of China's labor-intensive industries, such as textiles, garments, shoes and the toys sectors, will possibly be dampened and some of them will even see financial losses.
Chinese labor-intensive industries should update technology and products to add value to their products, suggested Li Yushi, vice president of Chinese Academy of International Trade and Economic Cooperation of MOC.
Li predicted China's trade volume will grow by between 10 and 15 percent in 2008.
Source:Xinhua
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