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Market Watch
Business> Market Watch
UPDATED: April 9, 2010 NO. 15 APRIL 15, 2010
MARKET WATCH NO. 15, 2010
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Numbers of the Week

$428.6 billion

China's outstanding external debt reached $428.6 billion by the end of 2009, said the State Administration of Foreign Exchange (SAFE) in a statement on April 6.

240 million

Chinese online video viewers totaled 240 million by the end of 2009, nearly 70 percent of whom spent more time watching videos online than on TV, said a report by the China Internet Network Information Center.

TO THE POINT: Chinese exporters regain steam in a warm embrace of the emerging markets. After a bumper year in 2009, fund managers are skeptical of what lies ahead for the stock market this year. On a broader scale, the Chinese economy remains a source of confidence for U.S. firms, as illustrated by a survey of the American Chamber of Commerce in China. Overcapacity remains a top priority on the government's agenda. China's top automaker SAIC Motor witnessed its net profit surge nine-fold last year.

 

By HU YUE

Searching for New Markets

In a search of export strength, Chinese manufacturers are increasingly turning their eyes to emerging markets that were spared the worst of the financial crisis. 

In a recent survey made by Global Sources, a global B2B platform, hundreds of Chinese exporters said around half of their buyers now come from emerging markets, including Russia, Brazil, India and eastern Europe. 

For recovering economies in need of materials, the Made-in-China goods are a favorable choice due to improved quality and affordable price, said Zhang Yansheng, an economist with the Academy of Macroeconomic Research under the National Development and Reform Commission. "It is also urgent for the exporters to diversify away from their dependence on America and Europe," he said.

The International Monetary Fund predicted emerging economies will grow a robust 6 percent in 2010, well above the 2.1 percent expected for developed economies. This was a much-anticipated opportunity for Chinese exporters to expand and improve their businesses.

"Our exports to Russia and India have almost doubled since January 2010, making up for a collapse in orders from the United States," said Zhong Jianrong, President of Jiahong Industry Co. Ltd., a toy exporter based in Dongguan, Guangdong Province.

"The question for us now is how to find enough workers to fulfill these orders," he said.

But the promising markets are not without risks. Inexperience with the new markets and language barriers are the biggest challenges for Chinese exporters, according to the Global Sources survey.

The most important is adapting to the needs of local customers and finding reliable trade partners, said Craig Pepples, Chief Operation Officer of Global Sources.

Uncertain Stock Direction

For China's fund management companies, memories of last year were full of cheer.

According to a report by Tianxiang Investment Consulting Co. Ltd. based in Beijing, 594 funds operated by the country's 60 fund management companies raked in more than 910 billion yuan ($133 billion) in profits in 2009, receiving a boost from the vibrant stock market.

The benchmark Shanghai Composite Index increased nearly 80 percent in 2009 despite some corrections in the latter half of the year. But investor sentiment turned sour on worries that liquidity could dry up as regulators reopened the door for initial public offerings. 

The best performers were stock-focused funds that reported a combined profit of around 520 billion yuan ($76 billion). The QDIIs (qualified domestic institutional investors) also jumped back into the black last year after a two-year loss-making streak.

In spite of their disagreements on where the stock market is heading, fund managers are clear on one thing: It won't be a smooth ride.

Market prospects look questionable as investors grow jittery about inflation that may prompt policymakers to halt easy monetary policies, said Wang Yawei, Deputy General Manager of China AMC Fund Management Co. Ltd.

There are likely to be tentative swings as investors look for a direction of the government policies, he added.

Yu Jun, Executive General Manager of Citic Securities Co. Ltd., agreed. "Adding to the uncertainty are inflows of speculative hot money looking to cash in on a stronger yuan," he said.

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