China News, Inflation Hits Exporters Where It Hurts

Growing inflation, declining resources and dropping production and sales; It looks like the economic woes in the US and the global slowdown are starting to catch up with the Chinese economy.

Any casual observer of the Chinese economy would have to say everything is far from rosy in the middle kingdom.

The dollar has continued it’s upward climb gaining against all currencies except for the Australian dollar since April 10.

While this is good news for consumers in China it won’t be welcomed by exporters and tourism operators, who generate a large portion of the country’s GDP.

In fact, the strengthening Yuan, and rising material costs are already taking their toll on labor-intensive export industries, like clothing with the China Daily (english.people.com.cn/90001/90776/90884/6402284.html) reporting that the increase in toy export levels had dropped from 29.9 percent last year to 3.3 percent this year.

Many market analysts predict this trend will continue as China continues to pursue higher value exports.

However, even that looks to be a problem with analysts saying China mobile phone production slowed in the first quarter due to overproduction.

Taiwan PCB makers reported production and profit dips in the first quarter, predicting lower revenues for 2008 according to market analyst Global Sources.

While makers blamed the longer holiday period in the first quarter they say orders for the PCB used in MP4 and mobile phone markets look like they will be volatile for the remainder of the year, which will probably cause a dip in profits.