China exports hit by rising costs

Rising labor and raw materials costs, along with appreciation of the yuan, have hit exports of China, the world\'s second-largest economy, exporters say. They are seeking new markets for growth in developing countries because of limited opportunities in traditional markets such as the United States and the European Union, the China Daily reported Monday in a 2,250-word article. China currently is the world\'s largest exporter. Matthew Yang, sales executive at Guangdong Zhongcheng Chemicals Inc., which competes with Germany\'s BASF, the world\'s leading chemical company, says he is looking at countries such as Brazil and Colombia for new business opportunities to offset loss of markets in developed countries in the wake of the global financial crisis three years ago. Government data shows China\'s exports grew by 24 percent year-on-year in the first six months of this year to $874.3 billion, down from 35.2 percent during the same period last year. \"Although there is still double-digit growth for China\'s exports, the situation for its exporters is getting worse,\" a senior official at China\'s Commerce Ministry said. China already has said it will rely more on domestic consumption to drive economic growth in the next five years rather than exports. Since 2008, wages for contract workers have been rising, forcing the closure of some of the toy and textile factories in China\'s coastal regions. In the first quarter of this year, 13 municipalities and cities raised the minimum wage by an average of 21 percent. The yuan has appreciated more than 5.6 percent since June 2010, the report said. The government has been under pressure to allow its undervalued currency to appreciate to level the trade playing field and to check China\'s explosive trade surplus growth. The report quoted some economists as saying the yuan could rise another 2 to 3 percent in the second half of this year.