Chinese Economics Thread
- Thread starter Norfolk
- Start date
the inflation in china is making china uncompetitive.
manufacturing costs have soared.
things like energy, raw materials, transportation costs, labour costs, etc have risen so much that china is losing its edge in manufacturing and companies are moving production out of china.
china must stop increasing the M2 so much, must start to drain some of that excess liquidty to bring inflation under control.
inflation remains the biggest risk to china's growth. the excess liqudity has gone into the real estate sector which has created a price bubble (not credit bubble), this bubble is now popping. this is healthy for the economy in the long term, not good for short term though.
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escobar
Brigadier
The fourth round of Strategic and Economic Dialogue has wrapped up in Beijing, with concrete results. After two days of talks, Chinese Vice Premier, Wang Qishan, State Councilor, Dai Bingguo, U.S. Secretary of State, Hillary Clinton, and Secretary of Treasury, Timothy Geithner, attended a joint press conference. That follows a work conference hosted by Wang Qishan and Tim Geithner, and a strategic dialogue headed by Dai Bingguo and Hillary Clinton.
Deepening strategic trust and building new relations. Through two days of dialogue and exchange, China and the US are closer to managing their differences, and promoting greater cooperation.
Chinese Vice Premier Wang Qishan says the two sides agreed to further explore the potential for bilateral trade and investment, and made concrete commitments.
"The US committed to take into account China’s concerns in reforming its high-tech export control policy, encourage exports of high tech products for civil use to China. The US also welcomes Chinese enterprises to invest in the US, and promised to facilitate Chinese investment. The two sides agreed to start the 7th round of bilateral investment treaty talks as soon as possible," said Wang.
US Secretary of State Hillary Clinton says this: through dialogue the two sides have built trust that enables them to have open and candid conversations. She notes, the two countries will continue this conversation, respect each other’s core interests, and seek common ground.
Hillary Clinton said, "You have to look at the trend line, not just the headlines. That is especially true in China-US relationship. The trend is clear. Our country is growing more interdependent. So we need to build a resilient relationship that allows both of us thrive and meet our regional and global responsibilities."
US Treasury Secretary Tim Geithner says this round of talks have resulted in significant progress in economic issues. He welcomes steps China has agreed to take, to boost US exports and protect intellectual property rights.
"We welcome these changes, we welcome as well the recent increase in Chinese businesses and investment in the US, the closer integration of our economies, the greater role that China assumes with our support in the IMF and world bank, and other international institutions, and the increase in cooperation we built on a very broad and diverse range of economic and financial issues," said Geithner.
---------- Post added at 07:31 PM ---------- Previous post was at 07:31 PM ----------
The fourth round of Strategic and Economic Dialogue has wrapped up in Beijing, with concrete results. After two days of talks, Chinese Vice Premier, Wang Qishan, State Councilor, Dai Bingguo, U.S. Secretary of State, Hillary Clinton, and Secretary of Treasury, Timothy Geithner, attended a joint press conference. That follows a work conference hosted by Wang Qishan and Tim Geithner, and a strategic dialogue headed by Dai Bingguo and Hillary Clinton.
Deepening strategic trust and building new relations. Through two days of dialogue and exchange, China and the US are closer to managing their differences, and promoting greater cooperation.
Chinese Vice Premier Wang Qishan says the two sides agreed to further explore the potential for bilateral trade and investment, and made concrete commitments.
"The US committed to take into account China’s concerns in reforming its high-tech export control policy, encourage exports of high tech products for civil use to China. The US also welcomes Chinese enterprises to invest in the US, and promised to facilitate Chinese investment. The two sides agreed to start the 7th round of bilateral investment treaty talks as soon as possible," said Wang.
US Secretary of State Hillary Clinton says this: through dialogue the two sides have built trust that enables them to have open and candid conversations. She notes, the two countries will continue this conversation, respect each other’s core interests, and seek common ground.
Hillary Clinton said, "You have to look at the trend line, not just the headlines. That is especially true in China-US relationship. The trend is clear. Our country is growing more interdependent. So we need to build a resilient relationship that allows both of us thrive and meet our regional and global responsibilities."
US Treasury Secretary Tim Geithner says this round of talks have resulted in significant progress in economic issues. He welcomes steps China has agreed to take, to boost US exports and protect intellectual property rights.
"We welcome these changes, we welcome as well the recent increase in Chinese businesses and investment in the US, the closer integration of our economies, the greater role that China assumes with our support in the IMF and world bank, and other international institutions, and the increase in cooperation we built on a very broad and diverse range of economic and financial issues," said Geithner.
escobar
Brigadier
Germany has always been the cornerstone of the European economy but Europe is not as important to Germany as it used to be.
For the first time China has become German companies' top foreign investment destination, totaling 1.36 billion U.S. dollars by the end of last year, according to a survey by the Association of German Chambers of Industry and Commerce. The amount was more than the combined German investment in France, Spain and Italy.
The profound shift is visible in the case of Knauf Gips KG, a German-headquartered plasterboard manufacturer.
When asked what helped turn the family-owned workshop into the world's second-largest gypsum board maker, Mark Norris, the company's China chief executive officer, said one particular factor stands out - China.
After its entry into the Chinese market in the 1990s, Knauf built three plants in Beijing, Shanghai and Guangzhou. The initial investment soon gave Knauf a solid foothold in the country's dry-wall market.
Norris said he was quite bullish about the future and remained committed to continuing investment, despite decelerating economic growth in China, compounded by the European crisis and stagnation in the United States.
"In relative terms, China remains a dynamic growth engine compared with places like Spain and Greece, where there is absolutely no growth," he said.
"And people seem to forget that the market is so big, the demand for good quality is there.
"As we noticed over the past five years, a mid-to-upper class has emerged and the quality of life is increasing. People are prepared to pay for green building materials. Even though it's not comparable to the European or US standard, it is catching up quick."
While Knauf is poised to continue investing in the world's fastest-growing economy, its plans this year are set to be more reserved.
Knauf's ongoing project portfolio includes the completion of its largest plant in China in Taicang, Jiangsu province, a manufacturing base close to Shanghai. It will become the most advanced factory in the Asia-Pacific region that strives to stay carbon-neutral, according to the company.
But rather than expansion, Knauf will focus more on upgrading its existing plants. Starting from this year, Knauf is devoting millions of dollars to ensuring that all of its existing plants are purely steam-driven and no coal or heavy oil is used.
"If you look at the 12th Five-Year Plan (2011-15), you will notice that the previous one was much about quantity, growth and volume, whereas the current one is about quality, better living standards and a good environment," said Jan Kreibaum, president and CEO of Knauf Asia-Pacific. "It attaches importance to quality, where we exactly fit in.
"You can't have 20 coal plants with oil burners and say, 'yes, we are going green'. Chinese customers now do care that the green process is from start to finish," Kreibaum said.
Confident but rational, and putting quality before quantity - Knauf's China strategy this year is shared not just by other German companies but many European and US firms.
According to a poll conducted by the American Chamber of Commerce in Shanghai in February, the majority of US companies are bullish about China's economic outlook and will expand their investment this year.
According to Sarah Butler, managing director of consultancy Booz & Company's China division, for foreign firms, investing in China is no longer an option but a necessity.
"This reality is driven partly by the natural and inevitable saturation of their home markets as the Western economies mature and companies are driven by the need to continuously seek growth opportunities internationally."
Despite forecasts that China's economy will slow - which was verified by the latest year-on-year GDP growth of 8.1 percent in the first quarter - General Motors China is planning to double its sales volume to 5 million units over the next five years, said president and managing director Kevin Wale.
"It will still come between 7.5 to 9 percent of GDP growth, I believe. We will have a continuous and very strong presence here," he told China Daily.
GM has set aside 1 billion U.S. dollars to 1.5 billion U.S. dollars to support its China business, and will focus on renovating its current plants. For instance, the company just opened an extension to its plant in Qingdao and is extending another plant in Yantai.
"We will not consider major moves such as mergers and acquisitions any time soon," he said.
Jeff Kirwan, managing director of clothing retailer Gap Inc, said although the company is fairly new to the country, he still sees chances to do well.
Kirwan told China Daily that Gap plans to have 30 more stores, up from the current 15, and its presence will reach 10 cities by the 2012 fiscal year. Besides, China will be its largest growth vehicle in terms of both sales and investment.
"China is a competitive market and is becoming more so as more international retailers enter the marketplace. I foresee multiple brands coming under one company over the next five years," he said.
The downward adjustment of China's GDP growth target has failed to deter multinational corporations, as many see the opportunities to turn the current government goal to their advantage.
"From China's 12th Five-Year Plan, we see a clear strategic switch for China to be more focused on the quality of growth instead of speed. We think that is a right direction. In fact, we see more opportunities in that direction, especially in the fields of improved living standards, innovation of new materials and biotechnology," said Jiang Weiming, DSM's China president.
Headquartered in the Netherlands, the specialty chemical company has in the past five years aggressively entered life sciences, particularly food nutrition, which witnessed a 10-fold jump in sales.
DSM has developed vitamin and mineral mixtures to meet the needs of Chinese children suffering from anemia. Its net sales in China increased 30 percent year-on-year to 2 billion U.S. dollars in 2011.
Jiang said DSM will continue its strong focus on China and expects to more than double its China sales to more than 3 billion U.S. dollars by 2015, supported by planned investment of 1 billion U.S. dollars.
But it will shift from "an intensive portfolio to maximizing sustainable and profitable growth, with concentrated efforts to meet high-end demands for health and nutrition in China", Jiang said.
Only 8.5 percent of surveyed US companies in the AmCham survey are set to build new offices in China in 2012, whereas the majority would "evaluate" the pros and cons before making such a move.
This is a trend which will be sustained over the next decade or so, said Butler. Companies need to make the necessary investments to sustain their presence and competition over time.
According to Dan Steinbock, research director of international business at the India, China and America Institute in the US, it is only reasonable for European and US companies to shift from "going for presence" to "going for quality".
"When foreign companies established their operations in the mainland, China was still a low-cost nation. Now several regions are moving toward innovation-based competition and, over time, relatively poorer cities and provinces will follow. If foreign companies want to compete successfully in China's rapidly changing environment, they cannot remain complacent."
Maturing market
As the China market continues to develop, companies increasingly are treating it as a mature, fiercely competitive market with all the attendant benefits and challenges of such a status.
First, China has become a growth engine for most multinationals, so that to advance beyond a merely supportive role, a growing number of them see the necessity to introduce key technologies, or build research and development centers in the country.
Dow Chemical Co established its flagship 100,000 square meter innovation center in Shanghai in 2009, which now has more than 500 scientists and researchers working in 84 world-class laboratories.
According to Peter Sykes, president of Dow China, the lab has facilitated Dow's overall research and development globally and helped China to become its second-largest international market. In March, it opened a new center in Chengdu to explore more investment and innovation opportunities.
Likewise, General Motors signed an agreement with SAIC Motor Corp late last year to jointly develop electric vehicles in China. Tim Lee, president of GM's international operations, told China Daily that the two sides want the partnership to serve as the global test ground for new energy cars over the next five years.
The cooperation will leverage GM's expertise in electric vehicle development and global know-how and the techniques will be carried out in China.
In an earlier interview with China Daily, DSM's global CEO Feike Sijbesma said the company's decision to establish a global R&D center in Shanghai was a result of his "four-phase China" theory.
"It is a country with four different development phases. The first phase was to show the world how big a market it is. The second phase was flexing its muscles to become a productive manufacturer and a strong competitor. In the third phase, China was home to the industrial bases of Western companies," he said.
Now the fourth phase is coming with the Chinese realizing they can no longer depend on low-cost manufacturing and need to create a base for innovation and global brands.
Butler from Booz agreed. As China is climbing the global value chain, companies are no longer treating China as a "market to tap into" or a "manufacturing base", but rather placing an increasing portfolio of capabilities there.
According to Norris from Knauf, his company started to operate an innovation center in Taicang this year. "We have six senior research fellows up to now and we expect the team to have some 20 people when fully established."
These scientists mostly have to be Chinese people with knowledge of cutting-edge German technology, Norris noted.
"We need to come up with products that meet the demand of the locals here but you really can't expect German scientists to understand the environment or living conditions here in China".
What Norris said brings up a related issue for multinationals' China businesses: the "in China for China" trend.
In the AmCham survey, a maturing China market is forcing companies to target their product development toward China, with 71 percent responding that they have and also plan to sell and support products and services uniquely designed for the Chinese market.
Trumpf, the world's largest maker of laser cutting machines, has designed a special cutting machine to meet Chinese customers' needs.
"We are not producing in China to be less expensive, or to export to other parts of the world," said Nicola Leibinger-Kammueller, the company's chief executive officer.
"We are producing for the Chinese market."
Also a German family-owned enterprise, Trumpf took a similar approach to Knauf - it runs a plant in Taicang and is currently overhauling the factory to double its production capacity.
Her company also lowered its forecast for the Chinese market's growth rate from 100 percent in 2011 to a moderate 15 to 20 percent this year.
"We want a steady growth that focuses on the premium market, where demand for quality in China is absolutely rising."
And this trend may be good for another reason, according to Steve Ganster, managing director of Technomic Asia, a market entry consultancy.
"Given the challenges that will emerge in 2012, service companies will be in a good position to help their clients navigate the increased complexities, uncertainties and inevitable difficulties, as companies adjust their strategies, organizations and resources to align with a more dynamic economic environment," he said.
"The 'in China for China' trend is here to stay and service firms need to reshape their own priorities to accommodate this critical shift."
Challenges ahead
While foreign players have long wrestled with human resource constraints and intellectual property rights protection issues, they now rate rising costs and geographic diversity as emerging concerns.
More than nine in 10 companies surveyed by AmCham said rising costs hinder their business, with two-thirds saying price pressures are becoming more severe.
"Nobody is immune to the rising costs of labor, raw material and energy," Norris said. But as every enterprise has to tackle these issues, Norris sees opportunities.
Knauf will introduce one of its hit products, spray plaster, to China in 2012. The building method is up to three times faster than manual plastering, enabling a three-man team to complete up to 150 square meters of high-quality plasterwork every day. And by applying such practices, Knauf helps his clients save labor costs.
It is the same story with Trumpf. Although its products are generally two to three times more expensive than those from its domestic counterparts, Leibinger-Kammueller said their machines offer great advantages.
"Ten years ago, labor was very cheap in China, but not any more. As our Chinese customers also face soaring labor costs, they gradually turn to our machinery to save labor," she said.
Companies cite China's vast geographic diversity as another challenge.
And this has led multinationals to cautiously expand to inland cities, not for the sake of expansion, but out of various considerations.
"In terms of geographic coverage, the Chinese market is huge. Our customers always require a rapid and effective response to fulfill their critical demands. It's quite challenging for us to move our products in an efficient way from our manufacturing sites in the coastal areas to customers across China," Sykes from Dow said.
In order to cope with this, Dow pays close attention to the supply chain, distribution, and logistics capabilities. It has invested 200 million U.S. dollars in a terminal and logistics center and a transactional processing service center in Tianjin.
Knauf is also considering heading west but the plan is still under evaluation. Such a move could help the company cut its freight costs by up to 25 percent..
While reducing costs is one concern, Kirwan from Gap has his own reasoning.
"In the US, when we are doing particularly well in one area and not so well in another, we are able make adjustments accordingly. But here we found it a little bit more difficult in China, where each key area and city has its unique circumstances," he said.
The company is steadily expanding so that it can learn more about how to cope with situations, he added.
According to Steinbock, companies must adapt to local needs to remain relevant in China. Most importantly, they must learn to think in terms of China's diversity, which will be an increasing reality.
There is also increased competition. The AmCham study showed most respondents identify Chinese private companies, followed by other foreign firms, as the source of the largest surge in competition.
Regarding regulation, companies will be held to an increasingly mature set of standards in realms such as food safety, workforce protection and manufacturing safety, said Butler.
"We believe the disciplining effect brought on by the maturation of the market is overall positive for Western players but may pose short-term challenges."
Evolving agenda
And companies noticed an interesting phenomenon - the evolving attitude toward foreign companies from local governments.
In the past, governments welcomed any foreign investors who could push up local GDP and raise the employment rate. Now they tend to be more "selective and picky" in terms of who to get to invest.
Wale from General Motors said a particular city will welcome your investment if what you are doing happens to coincide with its strategic layout.
In the case of General Motors, some local governments would like to utilize its presence to either reform the overall industrial sector or to catch up in areas such as safety regulations and emissions.
The one thing Norris found is that government officials speak about "sustainability" all the time, which was a rare occurrence even three years ago.
"When we were looking west, we found some great zones. But the officials in these places would turn down our requests because they found us hard to fit into those parks that are designed as either a pharmaceutical zone or an automobile zone," he said.
And the governments are now looking for role models to stay energy-efficient. "We were driven and challenged by the Taicang government to hit this level of green and sustainability. This is rare," he said.
Steinbock believed that local governments should focus on attracting only appropriate foreign investment that supports their overall growth policies. In turn, foreign multinationals should focus on appropriate localities that best serve their strategies.
"Let's compare this with the US market. With more than 310 million people, the US has some 50 states, which have grown increasingly specialized focusing on different comparative advantages.
"China is in a different stage of development, but the same process of differentiation has begun on the mainland as well. Being selective and picky is a good thing."
AssassinsMace
Lieutenant General
8 May 2012 Last updated at 19:03 ET
China: The world's cleverest country? By Sean Coughlan
BBC News education correspondent
This is the most extensive insight into how China's school standards compare with other countries
China's results in international education tests - which have never been published - are "remarkable", says Andreas Schleicher, responsible for the highly-influential Pisa tests.
These tests, held every three years by the Organisation for Economic Co-operation and Development, measure pupils' skills in reading, numeracy and science.
Pisa tests - the Programme for International Student Assessment - have become the leading international benchmark.
The findings indicate that China has an education system that is overtaking many Western countries.
While there has been intense interest in China's economic and political development, this provides the most significant insight into how it is teaching the next generation.
'Incredible resilience'
The Pisa 2009 tests showed that Shanghai was top of the international education rankings.
But it was unclear whether Shanghai and another chart-topper, Hong Kong, were unrepresentative regional showcases.
The OECD's Andreas Schleicher: "Fairness and relevance are not the same thing"
Mr Schleicher says the unpublished results reveal that pupils in other parts of China are also performing strongly.
"Even in rural areas and in disadvantaged environments, you see a remarkable performance."
In particular, he said the test results showed the "resilience" of pupils to succeed despite tough backgrounds - and the "high levels of equity" between rich and poor pupils.
"Shanghai is an exceptional case - and the results there are close to what I expected. But what surprised me more were the results from poor provinces that came out really well. The levels of resilience are just incredible.
"In China, the idea is so deeply rooted that education in the key to mobility and success."
Investing in the future
The results for disadvantaged pupils would be the envy of any Western country, he says.
Mr Schleicher is confident of the robustness of this outline view of China's education standards.
In an attempt to get a representative picture, tests were taken in nine provinces, including poor, middle-income and wealthier regions.
High school students shout slogans such as "I must go to college" in a pre-exam event in Nanjing
The Chinese government has so far not allowed the OECD to publish the actual data.
But Mr Schleicher says the results reveal a picture of a society investing individually and collectively in education.
On a recent trip to a poor province in China, he says he saw that schools were often the most impressive buildings.
He says in the West, it is more likely to be a shopping centre.
"You get an image of a society that is investing in its future, rather than in current consumption."
There were also major cultural differences when teenagers were asked about why people succeeded at school.
"North Americans tell you typically it's all luck. 'I'm born talented in mathematics, or I'm born less talented so I'll study something else.'
"In Europe, it's all about social heritage: 'My father was a plumber so I'm going to be a plumber'.
"In China, more than nine out of 10 children tell you: 'It depends on the effort I invest and I can succeed if I study hard.'
"They take on responsibility. They can overcome obstacles and say 'I'm the owner of my own success', rather than blaming it on the system."
Education's World Cup
This year will see another round of Pisa tests - it's like World Cup year for international education. And Mr Schleicher's tips for the next fast-improving countries are Brazil, Turkey and Poland.
GLOBAL EDUCATION RANKINGS
Pisa tests are taken by 15-year-olds in reading, maths and science. Previous leaders in these subjects:
2000: Finland, Japan, South Korea
2003: Finland, Hong Kong, Finland
2006: South Korea, Taipei, Finland
2009: Shanghai, Shanghai, Shanghai
Mr Schleicher, a German based in the OECD's Paris headquarters, has become the godfather of such global education comparisons.
Armed with a spreadsheet and an impeccably polite manner, his opinions receive close attention in the world's education departments.
The White House responded to the last Pisa results with President Barack Obama's observation that the nation which "out-educates us today will out-compete us tomorrow".
The next round of global league tables will test 500,000 pupils in more than 70 countries - with the results to be published late next year.
Education ministers will be looking nervously at the outcome.
"In the past, politicians could always say we're doing better than last year - everyone could be a success," he says, describing the tendency for national results to rise each year.
The arrival of Pisa tests sent an icy draught through these insulated corridors.
No excuses
Perhaps the biggest discomfort of all was for Germany - where "Pisa shock" described the discovery that their much vaunted education system was distinctly average.
Finland was the education world leader in rankings a decade ago
And the biggest change in attitude, he says, has been the United States - once with no interest in looking abroad, now enthusiastically borrowing ideas from other countries.
"Education is a field dominated by beliefs and traditions, it's inward looking. As a system you can find all kinds of excuses and explanations for not succeeding.
"The idea of Pisa was to take away all the excuses.
"People say you can only improve an education system over 25 years - but look at Poland and Singapore, which have improved in a very short time, we've seen dramatic changes."
The biggest lesson of the Pisa tests, he says, is showing there is nothing inevitable about how schools perform.
"Poverty is no longer destiny. You can see this at the level of economies, such as South Korea, Singapore."
Fair comparison?
A criticism of such rankings has been that it is unfair. How can an impoverished developing country be compared with the stockpiled multiple advantages of a wealthy Scandinavian nation?
Here Mr Schleicher makes a significant distinction. It might not be fair, but such comparisons are extremely relevant. "Relevance and fairness are not the same thing," he says.
South Korea is identified by the OECD as an example how education can drive economic growth
Youngsters in the poorest countries are still competing in a global economy. "It's a terrible thing to take away the global perspective."
He also attacks the idea of accepting lower expectations for poorer children - saying this was the "big trap in the 1970s".
"It was giving the disadvantaged child an excuse - you come from a poor background, so we'll lower the horizon for you, we'll make it easier.
"But that child has still got to compete in a national labour market.
"This concept of 'fairness' is deeply unfair - because by making life easier for children from difficult circumstances, we lower their life chances."
'Sorting mechanism'
So why are the rising stars in Asia proving so successful?
Mr Schleicher says it's a philosophical difference - expecting all pupils to make the grade, rather than a "sorting mechanism" to find a chosen few.
He says anyone can create an education system where a few at the top succeed, the real challenge is to push through the entire cohort.
In China, he says this means using the best teachers in the toughest schools.
The shifting in the balance of power will be measured again with Pisa 2012, with pupils sitting tests from Stockholm to Seoul, London to Los Angeles, Ankara to Adelaide.
"I don't think of Pisa as being about ranking, it tells you what's possible. How well could we be doing?"
escobar
Brigadier
Continuously weak demand from developed economies has already led some experts to forecast that China may miss its 2012 foreign trade growth target.
But a slowdown may not be an entirely bad thing, they said, because it could spur more companies to undergo technological upgrading and come up with better products and services.
Anbound, a Beijing-based consultancy, said it is highly unlikely that China's foreign trade can grow by the 10 percent that was anticipated earlier this year.
This comment was made prior to the publication of China's April trade data on Thursday, which saw exports grow 4.9 percent year-on-year, reaching $163.25 billion, while imports grew just 0.3 percent, to $144.83 billion.
Both figures are a far cry from the 10 percent mark set for the year.
Although coastal provinces and municipalities are working hard to regain their glory as the nation's champion exporters, their adjustment is obviously painful and taking more time to show results.
In the first quarter of the year, China's export growth was 7.6 percent year-on-year, reaching $430.02 billion, and import growth was 6.9 percent, hitting $429.35 billion.
In April, China's trade with its traditional main partners - the European Union, the United States and Japan - fell to single-digit year-on-year growth, while one year ago, China's trade with all three partners grew by more than 15 percent.
According to Qu Hongbin, HSBC chief economist for China, the eurozone is definitely in the "second dip" of its crisis, and this will have a serious impact on China's export growth.
In the first four months of the year, China-EU trade grew by just 0.3 percent year-on-year.
But, according to Hu Yanni, an analyst with China Securities Co, Europe is not the only cause for concern.
The prolonged sluggish state of the global economy as a whole would put a damper on China's foreign trade.
April's trade data, which showed even less growth than the difficult first three months, may have dashed the hopes of those economists who had forecast that China would recover relatively easily to double-digit trade growth.
In early April, in a survey of 26 research bodies and economists by Caijing.com.cn, a financial information website, most respondents said China's overseas trade would do better in April than in March. In reality, however, the hoped-for improvement did not materialize.
Other economists argued that apart from a few bright spots such as Russia, Brazil and India, China's exporters would have few chances to maintain their business growth unless they become more innovative.
In the first four months, around a dozen provinces saw their export growth fall to single-digit figures, including the traditional trading powerhouses of Guangdong, Shanghai, Zhejiang and Shandong.
Coastal Jiangsu province even registered a 1 percent decline. In Guangdong, the largest exporting province, while its GDP growth slowed to 7.2 percent year-on-year, foreign trade growth trailed far behind at just 3.3 percent.
"But a fall in the growth rate may not necessarily be a bad thing," said Ding Li, a researcher with the Guangdong Academy of Social Sciences.
Maybe, he said, this will be the only way to get companies to seek technological upgrading and new ways of development.
Guangdong leaders' intentions are quite obvious from Nanfang Daily, the province's Party newspaper.
The newspaper is trying to encourage the entire province to emulate Foshan, a manufacturing city in the Pearl River Delta which is famous for making 100 microwave ovens a minute, more than 200 washing machines an hour, over 20,000 refrigerators a day, and 23 million home air conditioners every year.
Foshan's foreign trade volume increased from $11 billion in 2001, when China joined the World Trade Organization, to $50 billion last year. Local companies have no interesting in chasing growth by volume any longer, Nanfang Daily reported.
Instead, they are turning to technology-based, high value-added growth - by clinching large orders from large buyers. The strategy seems to have given the city a competitive edge, as its exports of electrical appliances continued to rise in the first quarter.
The dilemma faced by Guangdong's exporters is the same one that confronts their counterparts across the country.
In the first four months, garment exports totaled slightly less than $40 billion, showing a year-on-year increase of only 1 percent. Textile exports fell 0.3 percent to $28.85 billion, and footwear exports increased 4.2 percent to $12.4 billion.
In contrast, exports of electronic goods and machinery totaled $346.79 billion, showing an increase of 8.5 percent. In this category, machinery exports totaled $115.05 billion, growing by 11 percent.