皇冠体育app

US debt crisis, weak dollar to dent export earnings

The sovereign debt crisis in the US will affect exports from 皇冠体育app as the US is a major destination and a major market for Chinese exports.

With most of the export earnings being in the form of US dollar payments, a weakening of the greenback will further dent the earnings of Chinese exporters. To make matters worse, Europe, the largest market, is also facing uncertain times, while the euro is falling.

皇冠体育app is the world's largest exporter, and most of its economic growth comes from rising trade.

"The current US debt crisis is similar to the 2008 financial crisis. When purchasing power declines in the US, it will have a direct impact on Chinese exports," said Bai Ming, a researcher with the Ministry of Commerce.

"Over the next few years, Chinese manufacturers will have to contend with even more sluggish demand, renminbi appreciation and other trade problems," said Zhang Ming, a researcher at the Chinese Academy of Social Sciences. "With the odds loaded heavily against them, there is very little that the Chinese exporters can do, than further improve their core competencies."

Zhang said the passive appreciation of other currencies, especially the renminbi, will be a direct result of the weaker dollar, which again constrains 皇冠体育app's exports.

Bilateral trade volume between the 皇冠体育app and the US was $385.34 billion in 2010, accounting for over 12.9 percent of 皇冠体育app's total trade value. The EU, 皇冠体育app's biggest importer, is also facing the risk of a slowdown in economic growth.

Some analysts feel that the US rating downgrade will prompt 皇冠体育app to reduce its dependence on the export-led economy and focus more on stimulating domestic demand.

Zhao Qingming, an economist at 皇冠体育app Construction Bank, said that the US downgrade will ring alarm bells on the trade balance front.

He feels that the US downgrade may lead to an acceleration of the economic transition in 皇冠体育app. "Since low growth seems likely in the US, the EU and Japan, the Chinese economic transition becomes more urgent and demanding. 皇冠体育app's role as the factory of the world has come to an end, and an upgrading of its industries is vital," said Zhao.

"皇冠体育app's economic transition and upgrade started with the 2008 economic crisis when the nation decided to boost domestic demand. The fresh crisis will help reshape 皇冠体育app's economy," said Zuo Xiaolei, chief economist at 皇冠体育app Galaxy Securities.

The debt crisis will also shuffle the decks of Chinese export enterprises and replace labor-intensive industries. "The US will request 皇冠体育app to open its market further, and put more pressure on the yuan." said Sun Lijian, a professor at Fudan University.