China surprises with her biggest crowded fair despite US tariffs

With a record of foreign buyers, the Canton Fair exceeded expectations and showed the strength of Chinese trade even under pressure from American tariffs

Despite the absence of most US buyers, China’s largest commercial fair has been surprisingly growth in business signed during its three -week spring edition, driven by a foreign audience record. Exporters and Chinese analysts present that the impressive performance of the Canton Fair was unexpected and increased the export sector’s confidence, while strengthened the public’s belief in China’s ability to deal with a prolonged trade war with the US.

The general volume of transactions in the Spring Edition of the Canton Fair, which takes place twice a year, held between April 15 and Monday, increased by 3% over the previous year to US $ 25.44 billion, according to data released by the organizer of the fair.

The number of foreign buyers reached the record of 288,938, an increase of 17.3% over the previous year. Among them, 171,750 buyers attended for the first time, representing more than 59% of the total of foreign buyers.

The organizer did not provide a discrimination of foreign buyers by country, but there were few US participants, according to local post observations.

More than 64.9% of foreign visitors were from countries participating in China’s belt and route and were involved in business that represented more than 60% of the total volume of transactions.

The fair, held at each spring and autumn, is seen as a barometer of foreign trade and manufacturing industry from China over the next six to nine months. But the volume of transactions was still below the fall of the fall 2019-the last fair held before the Covid-19 pandemic-when business reached $ 29.3 billion, with a lower group of foreign buyers, only 186,000.

“In the long run, the US tariff war will likely lead the Chinese economy to accelerate the adjustment of its export structure and to gradually reduce the dependence on the US market,” said David Wong, a professor at Hang Seng University of Hong Kong. The growth of revenues at the Canton Fair indicates that more emerging market buyers are coming to China to purchase products, he said.

The fair’s revenue figures increased the confidence of China’s authorities and exporters in coping with the US tariff war, he added.

Some exporters have observed that although incentives such as an unparalleled entry have attracted many emerging market buyers – especially small and medium -sized retailers who seek to ignore intermediaries and make direct orders – they maintained a cautious approach.
Miya Chen, sales manager of the Xiamen Comfier Tech Electronic Massage Devices, said he is concerned about the future, as his company depends a lot on American and European markets.

“If this continues for two or three years, it will create huge pressure.”

Chen added that purchasing power in emerging markets may be difficult to predict.

Many buyers are just requesting samples. They still need to return to their local markets to test and study distribution channels. This is just the beginning of a long development process.

Judy Liang, an exporter of Nanchang Xinxin Clothing, said buyers from Europe and the US often make orders of 2,000 units of a single model. But a South American client can order only five hundred from six hundred units in various colors.

“This means higher requirements and risks in future operations and production, but smaller profit margins.”

“In the second quarter, we will see the impact of tariffs on China exports become more pronounced”

Liu Kaiming, Institute of Contemporary Observation

“It is important to note that profit margins on emerging market orders are generally much lower than those of US customers,” said Liang Xiong lighting exporter.

In general, the exporters said they saw the numbers of the transaction as good news, but most expected the tariff pressures to intensify from May.

China’s total foreign trade reached US $ 1.434 trillion in the first quarter of this year, an increase of 0.2% over the previous year, according to customs data. Exports increased 5.8%to US $ 853.67 billion, while imports fell 7%to US $ 580.7 billion. In March, US dollar exports increased 12.4% over the previous year, while imports fell 4.3%.

Washington’s high rates should also intensify competition for Chinese exporters, who may have to sacrifice profit margins to gain in the US markets, said Liu Kaiming, founder of the Contemporary Observation Institute, a Shenzhen -based supply chain study center.

“In the second quarter, we will see the impact of tariffs on China exports become more pronounced.”

With information from South China Morning Post*