Europe’s debt crisis began to affect some Chinese exporters and the worsening situation could jeopardize millions of jobs in China, according to heads of companies and analysts.
Orders received, for example, by a manufacturer of belts in eastern China have fallen by 50% in a year, said Wu Wenlong, the company’s sales director of Zhejiang LF Gifts and Decoration.
The company producing belts and safety belts for vehicles has not yet resorted to layoffs, but Wu is not optimistic.
“It is unlikely that foreign markets to recover immediately, they will need at least two years”, Wu estimated.
Manufacturing activities in China have begun to fall this summer, while euro zone debt crisis worsens.
The European Union is the main destination of Chinese exports worth about 380 billion dollars per year, and their decline would cost China dearly, according to analysts.
“Worsening debt crisis in the euro area will be a disaster for China for several reasons”, said Eswar Prasad, a professor at Cornell University in New York and former head of the IMF for China.
He mentioned the dollar appreciation as a negative factor that would hold European imports and cascading effects on confidence in financial markets and other advanced economies, with repercussions on the demand for products from China.
This view is supported by Ren Xianfang, an analyst at IHS Global Insight Institute in Beijing.
“If there is a falling demand in Europe, the impact will be significant, given that the EU draws about a fifth of China’s exports”, said the analyst.
Xianfang think that if the U.S. economy will withstand, the impact will not be as great as in 2008.
Emerging countries, especially China, contributed to the strong global economic recovery after financial crisis in 2008.
Currently, these countries suffer from excess global liquidity, volatility of international capital flows, sluggish external demand and commodity price volatility, said recently in Washington the Chinese Central Bank governor, Zhou Xiaochuan.