A rising desperation in China as new year comes

‘‘China must change its policies, including its foreign exchange policies, so that it relies less on exports and more on domestic demand for its growth,’’ - President Obama

By Keith Bradsher
Jan 01 2009 , Hong Kong

At the docks here, the stacks of shipping containers that used to loom above the highway overpass are gone. Logistics managers say they negotiate deeper discounts every week on ships that are leaving half empty.

In nearby Guangdong Province, so many factories are closing without paying employees that some workers are resigning pre-emptively and demanding immediate pay before their employers go bankrupt.

In Sichuan and other interior provinces, municipal officials are desperately searching for ways to provide jobs for millions of out-of-work migrant laborers whose families no longer need them for farming.

Those are the effects of millions of Americans’ cutting their spending.

Exporters, worried the retailers will fail before paying for their purchases, are reluctant to let goods be loaded onto ships. And banks, for the same reason, have cut back on guaranteeing retailers’ payments to exporters.

‘‘Trade finance is collapsing,’’ said Victor Fung, the chairman of the Li & Fung Group, the giant supply chain management company that connects factories in China with retailers in the United States and Europe.

‘‘We’ve got orders we can’t ship right now.’’ Fung estimates that 10,000 of the 60,000 factories in China owned by Hong Kong interests have closed or will close in the coming months.

Consumer electronics manufacturers have been hit the hardest, according to customs data. ‘‘No one has any money anymore, so demand for our mini hi-fi systems has declined a lot,’’ said Lion Yuan, the sales manager at Shenzhen Yidashi Electronics, where exports have dropped 30 percent in a year.

American quotas on the import of a wide range of Chinese garments expired Thursday. Even before the Chinese began announcing their latest programs for exporters, the United States filed a legal challenge Dec. 19 at theWorld Trade Organization, accusing China of having already provided illegal subsidies to exporters in a long list of industries as part of a programof trying to build recognizable export brands.

American quotas on the import of a wide range of Chinese garments expired Thursday. Even before the Chinese began announcing their latest programs for exporters, the United States filed a legal challenge Dec. 19 at theWorld Trade Organization, accusing China of having already provided illegal subsidies to exporters in a long list of industries as part of a programof trying to build recognizable export brands.

China’s measures to help exporters are starting to cause concern in other Asian countries that compete with it, and raise the risk of a protectionist reaction against China.

Indonesia, one of the largest Asian markets, imposed a series of administrative measures Thursday that were meant to reduce smuggling but will have the practical effect of making it harder to import Chinese goods.