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Where buyers, sellers meet, China offers signs of hope Add to ...

In 20 years of travelling to China to do business, Hasan Ipek has learned to take the historic halls of the Canton Fair as a barometer for the country's economy.

This spring, when the sports-equipment dealer travelled from his native Istanbul to Guangzhou to place his biannual order at China's largest trade fair, he had never seen the aisles so empty. As the economic crisis gripped the world, China's exports plummeted as much as 25 per cent in February alone from the year earlier.

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This fall, however, some life has returned to the Canton Fair - just as it has in China's export industry as a whole. Organizers of the 106th Import-Export Fair - better known as the Canton Fair after the former name of this historic southern port city - said the number of purchasers early this week jumped an encouraging 13 per cent to 182,642 from the spring fair and 7 per cent over last year's autumn fair.

"In May there were very few people. Now is so-so. I think people were afraid of the economic crisis effects, so they stopped coming," Mr. Ipek said through his daughter and assistant, Ebru, after signing $3-million (U.S.) in contracts for treadmills and other fitness equipment.

China's export machine is still running several gears below the furious pace set during the boom before the global economic crisis set in last year. But China is leading the world out of recession, with growth expected to top 8 per cent this year.

It is by no means a full recovery, but in a quarterly analysis released yesterday, World Bank economists credited China with leading economic recovery in East Asia.

Gross domestic product of East Asian countries, excluding China, is forecast to grow at around 1 per cent in 2009.

The economies of neighbouring Cambodia, Malaysia and Thailand, also strongly dependent on exports, are still contracting.

China's export picture is brighter: September's exports were up 11.8 per cent over the previous month, though still down 15.2 per cent year-on-year.

The World Bank analysis said exports are "likely to stop being a drag on growth" later this year.

Even so, the Chinese Ministry of Commerce forecasts that exports by year's end will have dropped by just under 20 per cent overall compared with last year, and says the country's trade surplus is expected to fall to around $180-billion to $190-billion this year, down from last year's record $295.5-billion. Indeed, as China's imports remain relatively healthy, some forecasters say China could even run a trade deficit some time next year.

Stimulus spending in China and around the world is providing a temporary boost to economic activity, and the country's exports could sag again along with the economies of its key export markets - North America and Europe - if consumption doesn't pick up on its own.

"In 2010, the world economy will hopefully see a gradual recovery, and the environment for Chinese trade will gradually improve," the Commerce Ministry said in a recent statement.

"But as there is not yet sufficient strength in the global economic recovery, many problems and contradictions have yet to be basically resolved.

"The recovery will be hard and torturous, and it will be hard to see an obvious recovery in international demand in the short term."

Among the endless rows of vendors at the Canton Fair, it was clear not all had returned to normal: many of the salesmen and -women whiled away the minutes or hours between clients by reading, playing with mobile phones or even catching a furtive nap.

The fair is a show of China's economic vastness. Nearly 56,000 stands had displayed their wares by the time the fair's doors closed Wednesday, with sales divided into three phases to accommodate them in a sprawling complex that at more than 1.11 million square metres would fit 18 Air Canada Centres with room to spare.

But while business has not returned to pre-crisis levels, vendors flogging clothing, shoes, leather bags, non-perishable foods, medical supplies and pharmaceuticals said optimistically that buyer traffic was up, even if many of them were collecting information for future orders rather than signing on the dotted line now.

"It was very quiet this spring. It's similar now, but some clients are now placing orders for next spring - in the spring fair, nobody was talking about orders," said Bill Zhou, a salesman for Shandong-based textile firm Loftex, which counts Wal-Mart and Ikea among its clients. "This week has been okay for next year's order. Our production lines have been extended to next year."

Salesman Zhou Zixin of High Hope International Group, a Nanjing-based textiles firm, said his business has improved since the spring. Still, he said, "export companies like ours are facing pressure. We are trying harder to expand our market."

"Last year in China some factories closed but now the economy is recovering and many factories are reopening," Mr. Zhou said. "Business has not been so easy, because of the economic crisis. But China is not the worst [hit]"

The fair is not a perfect barometer: Exports from Guangdong province are thought to represent about 28 per cent of Chinese exports as a whole, down from 38 per cent in 1995, and are concentrated in areas of light manufacturing.

But the numbers provide an indication that China's export industry is on its way back.

"I think it's very clear that the latest export numbers for the economy as a whole have clearly shown there's been a bottoming out in the decline in exports," said economist Arthur Kroeber, managing director of Beijing-based research firm Dragonomics. He estimated that Chinese exports in the last quarter of 2009 would mark a decline of 5 per cent at most, or possibly none at all, year-over-year.

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