INFLATION was starting to slow China s mighty export machine, as buyers from Western multinational companies baulked at higher prices and had cut back their planned spring shipments across the Pacific, overseas media said yesterday.
Markups of 20 to 50 percent on products like leather shoes and polo shirts had sent Western buyers scrambling for alternate suppliers. But from Vietnam to India, few low-wage developing countries could match China s manufacturing might and no country offered refuge from high global commodity prices, reported said.
Already, the slowdown in American orders had forced some container shipping lines to cancel up to a quarter of their voyages to the United States this spring from Hong Kong and other Chinese ports.
The trend, if continued, could ease tension by beginning to limit America s huge trade deficit with China.
Manufacturers and distributors across a range of industries say the likely result of the export slowdown is higher prices for American shoppers in the coming months, and possibly brief shortages of some products if Western retailers delay purchases too long while haggling over prices.
China exported more than US$4 in goods to the United States for each US$1 it imported from America, creating a trade surplus of about US$275 billion, overseas media said. The higher Chinese prices would tend to show up mainly in products like inexpensive clothing and other commodity goods in which labor and raw materials represented a bigger part of the final value rather than in sophisticated electronics like Apple iPads, in which Chinese assembly was only a small fraction of the cost, overseas reports said.
The slowdown in the volume of imports could also prove temporary, if American consumers accept higher prices and Western corporate buyers end up renewing contracts at much higher costs. In the meantime, if the average price for each imported product rises faster than the volume of shipments falls, China s surplus with the United States could continue increasing temporarily.
But, whatever the eventual impact on trade, Chinese inflation might also reduce Washington s pressure on the Chinese Government over its currency, the renminbi. For more than a year, the Obama administration has been pushing China to let the renminbi rise in value against the dollar.
The first signs of a potential slowdown in Chinese exports have shown up in shipping. As factories closed Friday across much of China in preparation for the weeklong Chinese New Year celebrations, ports in Hong Kong and elsewhere along the coast were working long hours to meet last-minute shipments.
But the annual pre-New Year rush has been nothing like that of recent years, causing shipping lines to reverse rate increases and cancel sailings they introduced last summer as the American economy improved. This winter, the scurrying started only two weeks before the holidays, instead of the usual four weeks, according to shipping executives. That was because many Chinese factories simply cut back production last month as their Western customers began resisting steep price increases.
China imposed price controls on food in mid-November to limit inflation. But domestic media began warning the public Wednesday that those controls might be ineffective, as a drought in northern China had damaged the winter wheat crop and frost had spoiled part of the vegetable harvest in the south.(SD-Agencies)
