Optimism among Chinese exporters amid trade tensions

Chinese exporters at the country's largest trade fair are generally optimistic about trade prospects.

More than half of companies surveyed by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) expect exports to rise in the second quarter, according to a poll of about 600 companies at the Canton Fair.

The ratio was up from around 43.5 percent last year. For the whole year of 2018, 56.5 percent of the firms expect exports to climb.

Firms were generally cautious on prospects of exports to North America, as uncertainties remain in China-U.S. trade relations.

Some 47 percent of the companies said they were spending more on research and development.

Li Xinghao, chairman of air conditioner manufacturer Chigo, said trade frictions would have limited impact on his business as China has competitive advantages in every part of the supply chain, but short-term effects, such as rising costs, are inevitable.

Rather than trade tensions, exporters at the fair are more worried about exchange rates.

A separate survey by China Chamber of Commerce of Metals, Minerals, and Chemicals Importers and Exporters showed that exchange rate risks topped the list of exporters' concerns, followed by rising raw material prices and product homogeneity.

Wu Jun of automaker Zotye Domy said an appreciating yuan against the U.S. dollar has made the company less competitive. The central parity rate of the yuan is about 10 percent higher against the U.S. dollar than a year ago.

Wu said that the company had to reduce costs to offset the effect while investing heavily in R&D to make products more competitive.

Zhang Hao of Baoding Changan Bus Manufacturing Company is worried that protectionism in the United States could spread to other countries that are major markets of the company. In response, Zhang said the company would focus on innovation and product quality.

"With improved quality, we will have a say no matter how high the entry barrier is," Zhang said.

The upbeat sentiment among exporters at the fair is in line with official outlook on foreign trade: positive, despite seasonal fluctuations and uncertainty arising from protectionism.

Growing demand in a recovering world economy, China's sound economic fundamentals and supply-side structural reform will support foreign trade, spokesperson Gao Feng with the ministry of commerce told a press conference Thursday.