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US recovery a boon for Chinese exporters

President’s fiscal largesse leads to Americans’ rising demand

2021/4/8 9:45:03   source:Global Times

Is the US going through a strong wave of consumption rebound as the country's economy restarts after the coronavirus' impact? Taking the business of some Chinese exporters who rely heavily on the US market, the answer is yes.

From fireworks to medical equipment makers, Chinese businesses are seeing increasing orders from US customers, a situation they attribute to multiple factors such as rising appetite of some US clients and decreasing shipping fees.

US President Joe Biden's $1.9 trillion American Rescue Plan also played a part in lifting the demand, although the impact was not as large as Chinese exporters had expected.

Zhong Fang, a manager at Dongxin Firework, one of the largest fireworks exporters in Liuyang, Central China's Hunan Province, said that the orders from the US had increased "evidently" this year.

"Because we started work at a relatively late time after the Spring Festival holiday, our supply has fallen short of demand, and we are working at full capacity now in order to meet US customers' orders for the US Independence Day," Zhong told the Global Times.

Last year, Dongxin Firework's exports of consumer fireworks to the US rose 20-30 percent from the previous year, but Zhong hoped that the volume of exports would grow further this year.

Liu Hongyuan, CEO of Hangzhou Zhongzhi Industry Co, said he felt that trade conditions have been "well enough" this year. The company's exports to the US grew about 30 percent in the first quarter, compared with 2020. The company, which makes compression socks based in East China's Zhejiang Province, sees about 60 percent of its revenues coming from the US now.

Liu said that some of his company's US clients on amazon.com had "developed fast" despite the COVID-19 pandemic, as their orders had remained steady in previous years, but surged 20 percent this year.

"In our discussions, (the clients) were upbeat about the US market recovery," he said.

Another factor that has pushed US orders higher is the drop in shipping costs, Liu said. He noted that the cost of air delivery halved in early 2021 compared with late 2020, although the fees have rebounded lately. The cost of sea shipping has not changed too much.

Liu said that Biden's rescue package, which includes $1,400 checks for most Americans, should stimulate US consumers to spend more, though he said that the actual impact on Chinese exports is to be seen.

Ying Daijun, manager of a Yiwu-based decorative lighting company, told the Global Times that online orders from the US exploded in 2020 and early this year.

"Our US orders are increasing, and we are confident that when the pandemic is controlled in the US, the US economy will turn better, and so will our US-bound trade," he noted.

Chinese exporters' booming business has partially validated analysts' and organizations' rosy expectations for the US' economic recovery in 2021. The IMF, for example, has raised its estimate for US GDP growth this year from 5.1 percent about two months ago to 6.4 percent.

Goldman Sachs' head of hedge fund sales Tony Pasquariello also reportedly said that US economic activity might see peak growth in April and May, a growth rate he described as "perhaps as robust as anything we'll see in the remainder of our careers."

Gao Lingyun, an expert at the Chinese Academy of Social Sciences who closely follows China-US trade relations, said that "chances are high" that US GDP growth this year would surpass that of 2019, as the economy roars thanks to President Biden's fiscal largesse.

"The US' economic reset has exceeded expectations, as the US' simulative policies will lead to a significant consumption rise. However, whether the trend will last is hard to say, as many risks have not been resolved, like cumulative debts and pandemic threats," he told the Global Times.

According to Gao, the US' economic reset will benefit China and other emerging economies, but risks also exist, as moves by the US to unwind its balance sheet will cause capital to flow back to the US.

Chinese exporters said that US orders brought some challenges for them. Guo Chun, an executive with Zhejiang KangKang Medical Devices Co, a large syringe producer based in East China's Zhejiang Province, said that the company is finding it harder to recruit workers now.

"Now, working around the clock has become somewhat of a normal state at our factory, while rising material costs are an added burden," he told the Global Times.

The company's orders, mostly from US clients, have risen by about 20-30 percent compared with the period before the Spring Festival holiday. The company is working to expand its manufacturing lines, which will allow it to quadruple production.

A manufacturer of liquid crystal displays in Central China's Hubei Province said that it faces a severe shortage of displays, which has hindered exports to the US.

"Pent-up US consumption should be a result of the pandemic, but no one can accurately evaluate the extent of such a trend. For us, the supply of materials has drop about 40 percent since the fourth quarter in 2020, and the shortage could get worse in the coming two months," he said. 

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