Industry officials play down risk of Chinese “hard landing”

Industry officials play down risk of Chinese “hard landing”

Industry officials play down risk of Chinese “hard landing”

   Several industry officials do not believe that measures announced by the Chinese government to slow down its economy will result in a drop in oceanborne cargo volumes to and from the big Asian country.
   “We remain optimistic,” said Philip Green, chief executive officer of Royal P&O Nedlloyd, while announcing the company’s first-quarter financial results. “Of course, it’s unlikely that the heavy rate of growth we’re seeing at the moment will continue indefinitely,” he cautioned. Green added he expects a “soft landing” of the Chinese economy.
   About 20 percent of P&O Nedlloyd’s 3.7-million-TEU worldwide traffic is from or to China.
   “We’re reasonably optimistic about the medium term,” Green added, referring to Chinese cargo volumes.
   Jon Monroe, a shipping consultant experienced in the Asian trades, said a fall in Chinese exports is far from certain.
   “The question is what the government of China will do with the tax rebates,” he told American Shipper. Production capacity continues to migrate to China and “it’s a massive buildup,” he added. “You’re not necessarily going to slow that down.”
   “I believe the growth is still tied to the American consumer,” Monroe said.
   But U.S. consumer spending rose 0.4 percent in March, below market expectations of a 0.7 percent gain, the latest U.S. Commerce Department statistics. Adjusted for inflation, real spending advanced only 0.1 percent in March.
   Paul Windfield, director of P&O Nedlloyd in charge of sales, agreed that the rate of consumption in the U.S., Europe and other consuming countries is the main driver of growth for China-made exports, rather than the economic growth rate in China.
   Overall, Chinese container exports now account for more than 60 percent of the 9.1-million-TEU-a-year Asia/U.S. cargo volume.
   Other industry officials have warned that inflation, lower export tax rebates and restraints on the opening of new factories in China could reverse the previous trend of spectacular growth in the country’s exports.