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Innovative exporters at Canton Fair signal China's changing economy

2014-October-20       Source: ecns.cn

The winners of the Design Awards at the 116th Canton Fair, which opened Wednesday in south China's Guangzhou, include an apple-shaped rice cooker, a felt watch suitable for cold weather, and a tea-brewing device.

This year's export environment was not easy on Chinese exporters, who complained about weak external demand, rising labor costs and fluctuating exchange rates. Official data show China's exports in the first three quarters grew by 5.1 percent year on year, down from 8 percent a year before.

Exporters of machinery and electronic products, which make up the bulk of the country's exports, felt the pinch. Their exports so far this year grew by only 1.5 percent, said Shi Yonghong, vice head of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

"But I see the gridlock as an opportunity," Shi told Xinhua at the fair. "Enterprises with self-owned brands actually used this process to enhance their competitiveness in the global trade."

Shi's confidence was backed by the industry's export data. Processing trade, which relies on foreign investment and involves little technology, dropped by 1.9 percent. By contrast, general trade, mostly of self-owned brands, jumped by 12.4 percent.

Yu Yi, vice head of the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters, also said Chinese contract factories had seen narrowed profit margins, but companies with self-owned brands are faring well and still reporting growing exports.

"It is a good sign, suggesting the export slowdown coincided with a shift from processing trade to general trade. It shows our competitiveness has risen," Shi said.

China's booming processing trade has fueled decades of red-hot growth of its exports and economy, but the engine is losing steam, and it is not just due to waning global demand after the financial crisis.

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Editor: Caitlin

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