Here Comes The Bad News Again

Posted by Kris | Tuesday, January 13, 2009 | | 0 comments »

The recent rally really make people in general think that the recession almost is almost over. Some of my friends even think that the recession will only last like 6 months onward. 

Well, it is only the start. Now, people are starting to lose jobs. :( 

We have not yet see any spillover effect on the shopping malls . Alot of people are thronging the malls.

Crime rates are expected to rise in tandem with the lessening of purchasing power of the majority of the population.

Trade losses rise in China, threatening jobs

HONG KONG: China's exports and imports shrank at an accelerating rate last month, a trend likely to set off more job losses in the country's export-oriented coastal regions.

The job losses, in turn, could cause further worries about social stability as millions of unemployed migrant workers return home to interior provinces.

Train stations across China are already mobbed with workers home early for the Chinese New Year holiday, which does not start until the end of next week.

Millions of workers have lost their jobs, according to Chinese officials. Others have been given extended furloughs by their employers because there is little work for them. And some workers have resigned from their jobs early to collect their paychecks before an expected wave of bankruptcies in the manufacturing sector over the holidays.

Measured in dollars, exports were 2.8 percent lower in December than a year earlier, while imports were down 21.3 percent, according to figures released on Tuesday morning by China's customs agency.

The decline in exports followed a drop of 2.2 percent in November, and was the steepest drop since April 1999. China's trade surplus narrowed slightly, to $39 billion from $40 billion in November. But while China releases its trade figures in dollars, the economic impact of falling exports on the Chinese economy is best seen by converting the figures into China's currency, the yuan.

Exports were down 9 percent from a year earlier in yuan — a jolting deceleration for a country where exports were still growing at an annual rate of nearly 30 percent in the summer of 2007.

The slowdown mainly reflects slumping demand in China's two biggest export markets, the European Union and the United States. The even steeper decline in imports shows that China is benefiting from lower prices for oil and other commodities, but also suggests that many exporters have cut back purchases of imported components in anticipation of continued weakness in their sales abroad.

A lack of trade finance has also hurt exports. Chinese suppliers have become more wary of shipping goods on the promises of American retailers and other overseas buyers that they will wire the payments later.

Exporters are increasingly demanding that overseas buyers obtain letters of credit from banks, and those letters of credit are becoming more expensive and harder to get.

Annualized interest rates for letters of credit can reach 20 percent for troubled companies in troubled industries, said Richard Linebaugh, the senior vice president for Asia treasury products at Bank of America.

"The pricing is changing on almost a daily basis," he said in an interview on Monday.

Jing Ulrich, the chairwoman of China equities at J.P. Morgan, predicted in a research note on Tuesday morning that China's exports would continue to shrink in the first few months of this year compared to a year earlier, and would show no growth for all of 2009 compared to 2008.

"Despite potential tax cuts and stimulus measures in key overseas markets, the outlook for global consumption remains bleak," she said.

By late Tuesday morning, the A-share market in Shanghai was down 1.1 percent as investors responded to an overnight drop on Wall Street as well as China's own weak export performance.

Many Chinese companies are worried that their export revenues could fall further this year because Christmas sales were weak at retailers in the West.

"The department stores are clearing their inventories before ordering more," said Cliff Cheung, the director of Kid's Toy (HK) Ltd., which manufactures paint sets and other crafts for children at a factory in Dongguan, China.