Chinese Exporters Grapple with Plummeting Prices and Shrinking Business

Chinese exporters, particularly smaller firms, are facing a dire situation as tumbling prices threaten their profitability and survival. Prolonged factory deflation, marked by 15 consecutive months of falling producer prices, has led to relentless price wars and squeezed profit margins to dangerously low levels. For many exporters like Kris Lin, owner of a lighting factory in Taizhou, China, accepting orders at a loss has become a distressing reality to retain clients and preserve livelihoods.

The current economic woes, compounded by a property crisis and debt crunch, have heightened the urgency for policymakers to address deflation as a higher priority than achieving growth targets. With industrial output and jobs at risk, the vicious cycle of price cuts impacting staff salaries and consumer demand poses significant challenges to China’s export-dependent economy.

Despite efforts to stimulate growth through financial injections into the manufacturing sector, smaller exporters find themselves struggling to compete in an increasingly cutthroat market environment, leading some to consider drastic measures like workforce reductions or even business closure.