Chinese Manufacturers Suffer as Exports Growth Slows

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Chinese factories are struggling as the export growth-rate slows down. Tough domestic conditions are also hitting their profits. They are facing high borrowing costs and high inflation. And this summer power is in short supply, with blackouts frequently interrupting their operations.

Wu Zhongjun owns two textile factories in the eastern manufacturing city of Yiwu in Zhejiang province. He says power cuts have forced him to shut down production every two working days.

[Wu Zhongjun, Director of Lianfa Clothing Factory]:
"Sometimes, we feel so powerless and helpless. Since my factory is already set up here, I have to take it step by step. I can't just say I quit tomorrow."

Electricity is a scarce this summer in China due to coal supply problems and the effect of drought on hydroelectric supply. Regular blackouts are causing more problems for manufacturers.

Beijing's customs agency found export growth slowed from a 29.9 percent pace in April last year to 19.4 percent in May this year. In contrast, import growth accelerated.

Small manufacturers have suffered this year due to rising wages and inflation driving up the cost of property and raw materials.

The Chinese regime's efforts to control inflation by tightening banks' lending criteria, has made it harder for small and medium businesses to get financing.

And some say conditions will only get tougher.

[Connie Bolland, Chief Economist of Economic Research Analysis Ltd]:
"Externally the demand is not going to pick up very, very strongly because, the growth is there, in the global economies, in the developing economies, but it won't be a large one, it will probably be a low trend."
Ben Yang

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