China's Dongguan, Suzhou, Shenzhen Pose Biggest Risks If Exports Fail to Recover Fast
Lin Xiaozhao | Ma Chenchen
DATE:  Apr 14 2020
/ SOURCE:  Yicai
China's Dongguan, Suzhou, Shenzhen Pose Biggest Risks If Exports Fail to Recover Fast China's Dongguan, Suzhou, Shenzhen Pose Biggest Risks If Exports Fail to Recover Fast

(Yicai Global) April 14 -- The four Chinese cities of southern Dongguan, eastern Suzhou, as well as southeastern Shenzhen and Xiamen, are in the most imminent danger amid the rapid spread of Covid-19 in the US and Europe, which has greatly slowed foreign trade.

The value of foreign trade rises above these cities' gross domestic product, which makes them particularly vulnerable, according to Yicai Global's calculations based on public data.

Guangdong province's Dongguan had the highest trade-to-GDP ratio of 146 percent, followed by Suzhou with its 114 percent. Some 14 key cities, mostly located in the two regions of the Pearl River Delta or the Yangtze River Delta, logged a ratio above 50 percent.

Dongguan is home to Chinese smartphone makers Oppo Mobile Telecommunications and Vivo Communication Technology but the city also houses other types of manufacturers, involving clothing, furniture, toys, and chemicals. The factory town has come a long way since the 2009 financial crisis by upgrading production and reducing its dependence on exports.

China's government has tried to help exporters by launching tax rebates and easing access to loans. Thereby, factories could be running at full steam as more than three-thirds of key foreign trade firms have recovered more than 70 percent of their capacity. But the problem is the lack of demand.

In late March, several firms in Dongguan had to shut down due to canceled overseas orders. One of them was Jingdu Watch that started a three-month holiday after US Fossil Group halted its order due to the Covid-19 epidemic.

Others have found ways to go on by appeasing their clients. Guangdong province-based bathroom products maker Meijie Group had negotiated with overseas customers and given discounts to keep its orders for April and May, President Luo Xiaohua told Yicai Global. However, there are fewer orders for June, he added.

The impact of the epidemic on foreign trade is likely to be greater than that of the 2008 global financial crisis, especially during the second quarter, said Xiao Yaofei, professor at Guangdong University of Foreign Studies.

Editor: Emmi Laine

 

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Keywords:   Dongguan,Suzhou,foreign trade dependence(FTD),Covid-19,trade dependency ratio,Trade-to-GDP Ratio,Covid19