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Firms urged to diversify export markets

By Diao Ying (China Daily)
Updated: 2008-12-24 07:38

The country faces "grim prospects for exports" next year and so enterprises should look beyond traditional markets, the commerce minister said Tuesday.

More than 60 percent of the country's exports are destined to the United States, the European Union and Japan, the three major economies worst hit by the economic crisis, Chen Deming told a national commerce work conference in Beijing.

Related readings:  China's foreign trade to hit $2.6 trillion in 2008  Chinese exporters face payment risks  Chinese toymakers in trouble amid crisis  Firms told to be bold in expanding abroad

"We need to work very hard in other markets to make up for the drop in exports to the three major economies, but exports to emerging markets are getting more difficult, too," Chen said.

He urged companies to "fully recognize the importance of emerging markets" in Asia, the Middle East and South America.

Customs data show that trade with emerging countries has been increasing rapidly. For instance, trade with India went up 41.6 percent to $48.4 billion during the first 11 months, compared with an 11.6 percent increase in Sino-US trade.

The country's foreign trade volume is expected to rise 18 percent and surpass $2.5 trillion this year, he said. Foreign direct investment, or FDI, is to reach $90 billion, making China the largest recipient among developing countries for 17 years in a row.

But as the effect of the global financial crisis spreads, exports and capital inflows next year face a challenge, he said.

Latest Customs figures show that both exports and FDI shrank in November, indicating the global economic downturn hit China's economy harder than expected. Exports in November fell by 2.2 percent to $114.9 billion, the first monthly decline in seven years. FDI dropped by 36.52 percent year-on-year in November to $5.3 billion.

Chen said the government will try to stabilize exports by revising tax policies and providing more financial support to domestic firms, especially small- and medium-sized enterprises.

The government increased export tax rebates for the industries most severely hit, including textiles, garments and toys.