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Exclusive: Chinese exporters concerned about U.S.-China trade spat - survey

Reuters  |  GUANGZHOU, China 

By James and Venus Wu

GUANGZHOU, (Reuters) - As Washington and face off in a simmering trade dispute, Chinese exporters are expressing concerns about an escalation, although many say they expect the worst to be averted as negotiations continue.

In a survey of 135 Chinese exporters, including 84 from the Canton Trade Fair, China's largest, and 51 from an event in Hong Kong, 65 percent expressed some "worries" about a trade war.

But only 26 percent expected a "full-blown" trade war to play out as negotiators on the Chinese and U.S. sides draw up tariff lists that currently stand to affect some $100 billion in goods on both sides.

"The thunder is very loud," said Stephen Chow, a at Provision, a flat-screen television maker from "But the raindrops may be very small." He added: "things won't end up as severely as they say now."

With only Chinese factories with business in the in certain targeted categories likely to be directly affected by the tariffs, there was more a sense of foreboding than outright panic on Monday, with the halls at the fair teeming with buyers.

The survey conducted by showed that Chinese exporters are more preoccupied with production costs, new orders and currency issues rather than fears of growing trade protectionism.

While trade fairs have proliferated across in recent years, alongside like Alibaba, the biannual Canton Trade Fair is still unsurpassed in scale.

The fair lures more Chinese manufacturers and foreign buyers than other rivals, serving as a barometer on China's export sector that accounts for around 18 percent of the country's The Hong Kong trade fair is one of the biggest in the region.

While some three-quarters of exporters said they had dealings with the United States, 46 percent said they expected "no change" to their businesses this year as a result of the trade spat, while around a quarter expected a dip.

The manufacturers surveyed at the Canton Fair included those in affected sectors like lighting, machinery, auto parts and STOCKPILING KEY COMPONENTS

Some who do envisage an impact, like China's lighting makers, whose products could be slapped with a 25 percent tariff, say extra costs have already rippled into supply chains.

Benson Ho, the boss of an plant in the southern city of Foshan, said the stockpiling of things like the needed for his products had already driven up some chip prices by around 10 percent.

Similar stockpiling has been taking place for heat-conducting materials made by firms including of the and Japan's Shi-Etsu, he said.

"50 percent of the chips we use are from the U.S. because the ones made in are very poor, so we've been forced to pay more for these," Ho said at his stall. "People are buying these chips like stocks, speculating the price will go up."

He said that he thought the had an advantage in the dispute. "They're fighting with technology, but we're just fighting with our muscles, with labour. So the impact on us will be very great."

As a possible mitigating measure, four of five exporters surveyed said they would try to reduce their reliance on the by seeking new business in regions including Europe, Central and South America, and the

But an overwhelming majority - 93 percent - said they wouldn't consider shifting production out of for now.

Of those polled, 72 percent said they thought should allow the yuan to depreciate, making their goods more competitive.

Such a move would likely be frowned upon by U.S. On Monday, he accused and of "playing the Currency Devaluation game".


Balazs Kovacs, a buyer from looking for electrical heating equipment, said his business wasn't affected directly, but a worsening trade standoff could eventually weigh on the entire global economy, posing a longer term threat.

Trevor Sisco, the vice of Global Retail Partner, whose like drones, TV wall-mounts and walkie-talkies for U.S. including and Best Buy, said aggressive posturing on both sides could lead to an expansion of tariffs into other more

"You've got a and a consumer nation. So if you start a trade war between the two of them, at the end of the day the consumer nation is the one that's going to pay the price, because they're the one buying it."

He added: "The cost is always going to go to the consumer."

(Additional reporting by and Sam Vadas; Tina Ge and Alexis Tan in Hong Kong; Editing by Philip McClellan)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, April 17 2018. 15:57 IST