Exporters take heart as Europe, US rebound

Unexpected economic strength in the eurozone and United States in the second quarter has positive implications for China and other emerging countries.

The rebound may support demand in the global markets in the second half of the year and lead the indebted eurozone out of recession, analysts said, but the recovery won't be a smooth one.

The eurozone's GDP rose 0.2 percent in the second quarter, compared with the first, exceeding market expectations. GDP contracted 0.3 percent in the first quarter, according to the European Union statistics office.

European Central Bank President Mario Draghi said last week that the latest statistics show that the eurozone has emerged from its most serious recession, and he anticipated stable economic conditions in the future.

Meanwhile, real US GDP grew 1.7 percent quarter-on-quarter in the first three months, above the market's expectation of about 1 percent.

"I'm looking forward to seeing a quick recovery of the economy in the US and Europe, which can help my company get through its toughest times," said Pan Xiansheng, the owner of Yiwu Liansheng Glass Co Ltd, which sells many of its products overseas.

Yiwu Liansheng's export orders fell in the first half, and the gross profit margin narrowed from 20 percent previously to about 10 percent so far this year,

To minimize expenses, the company shut some production lines starting in May, said Pan.

China saw improved trade data in July, with 5.1 percent year-on-year growth of exports and a 10.9 percent increase in imports. In June, exports dropped 3.1 percent, while imports only rose 0.7 percent, according to the General Administration of Customs.

Wang Tao, chief economist in China at UBS AG, said: "The renewed life in external demand could provide important support to China's economic growth in the second half, helping the government to achieve the 7.5 percent growth target for this year".

She forecast a modest quarter-on-quarter rebound in the third quarter.

Ye Mingchun, the manager of Zhejiang Tianyiqi Shoes, based in Taizhou, Zhejiang province, said falling export volumes among trading companies over the past seven months reflected sluggish global demand.

"But I've seen modest new signs of export growth since June, which probably was an indication of an improving external economic environment - or maybe just a boost from Christmas orders," said Ye.

Ye's company achieved slight profit growth in the first quarter, but it couldn't make up for the huge losses in the past year.

However, as economic imbalances and debt issues persist in the eurozone, and countries including Spain and Greece are still mired in a recession, the economic recovery may not be so fast, analysts said.

Byron Wien, an economist at Blackstone, still worries about the US economy in the second half, although he agrees with the average forecast that the US may achieve 2 percent GDP growth this year.

"The US economy is suffering from a lack of demand ... and there are also structural problems in employment," Wien said.

"The measured global recovery is putting a ceiling on how fast Chinese exports can grow," said Alaistair Chan, an economist from Moody's Analytics.

"But manufacturers continue to point to a lack of export demand in purchasing manager surveys. While the worst seems to be over, the upturn will be relatively flat," said Chan.