Is China showing signs of nabbing Aust's export confidence?

Whilst the NAB Business Confidence survey suggested that domestic business confidence has been buoyed by the fiscal stimulus package, a new survey by HSBC shows how important China has been in boosting the fortunes of Australian exporters.

According to the new HSBC Trade Confidence survey, the overall fall in demand for Australian exports globally has been counteracted by the strong economic performance of China, and that Beijing’s stimulus across China will help export orders in the next 3 months and beyond. Some of the key findings of the survey (which surveys exporters and importers in Australia, Singapore, China, Hong Kong, UAE, Vietnam and India) are summarized below:

- The Global Financial Crisis (GFC) has been adversely affecting demand. 62 per cent of Australian exporters and importers mentioned lack of demand as their most pressing issue.

- China is definitely helping Australia with over two-thirds of traders already in China and one third seeing China as the place where they’ll get an increase in trading opportunities over the next 3 months (followed by South East Asia and the rest of Asia).

- Regional traders in most of the economies surveyed – India, China, Vietnam, UAE and Singapore, are more optimistic than Australia about the global economy overall over the next 3 months.

- The exchange rate was the major issue for traders from Hong Kong, Vietnam and India and the second-major issue for Australian and Singapore. 35 per cent of Australian traders thought the exchange rate would remain in the same range, 34 per cent thought it would be more favourable and 21 per cent thought it would be come more unfavourable.

- Trade finance - the need to increase access trade finance was a major issue regionally especially in Vietnam, India, China and the UAE but not in Australia where 79 per cent of traders thought trade finance would stay at the same level over the next 3 months. However, there was a slight increase in the number of traders expecting default on payment from customers in other countries, although a clear majority (almost 60 per cent) thought it would remain unchanged.

- Financial services - Most exporters planned to use more trade services from banks to minimise risk, as well as accepting smaller orders, doing less with particular buyers, accessing export credit insurance, and offering more flexible payment terms. Traders saw a clear need for specialist banking services in exporting and importing and offshore investment.

- Government regulation. In Australia, traders were mainly satisfied with the current levels of government regulation. 85 per cent said it would remain at the same level and 8 per cent said it would improve. The results were similar in other countries in the region, except Vietnam which expected a net decline in government regulation.

The bottom line?

There’s no doubt, times have been tough trade-wise in the GFC and global trade is still expected to fall by at least 11 per cent in 2009.

The NAB survey showed similar results on the export front, although the fiscal stimulus had helped domestic activity. But the HSBC index shows that traders are coping and are better placed in the this region – stretching from Shanghai to Hong Kong and Ho Chi Minh City, and then Singapore to Sydney, and on to Delhi to Dubai.

However, the good news from China in particular and the region as a whole, shows that Australia, trade-wise has found ourselves, despite the GFC in the right place at the right time.