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Chinese Exporters See Flickering Signs of Recovery

China says the decline in its exports slowed slightly in March compared with the first two months of the year. Could this be an early sign of an uptick in demand?

At the China Sourcing Electronics and Components Fair in Hong Kong, more than 2,000 China-based manufacturers tried to lure as many buyers as possible to try their products.

They displayed prototypes of shiny plasma TV screens, brightly colored pocket-sized notebook computers and other cutting-edge gadgets.

Economic decline slows

From the deep dive in export demand late last year, some Chinese suppliers are seeing hints of better days ahead. Last month, the decline in Chinese exports was slower compared with the first two months of the year.

Some suppliers say they are benefiting from changes adopted by U.S. and European retailers, and from demand from emerging markets in Asia, Africa and South America.

The sales director of a company that makes notebook computer cooling units says he has seen more buyers than last year.

"A lot of the major hypermarkets, major retail stores and stationery [stores]," he explained. "Because the increase in notebooks goes into the office category. Things like notebook coolers are beginning to attract office buyers. They see it as a great product where they can make lots of margin."

He might be optimistic, but according to a recent survey of international buyers by trade show organizer Global Sources, 26 percent said they will increase spending this year. Although, 54 percent said they will spend less on imports.

Fair attracts buyers from emerging markets

Buyers from emerging markets such as Brazil, India, and Russia appear to be the stars of the trade fair. Mateus Conde Cima, a buyer from Intelbras, a Brazilian telecommunications manufacturer, has held several meetings with Chinese suppliers this week.

He says the global economic slump opens opportunities for his company to expand market share in Latin America and that requires more equipment imports from China. He says the decline in demand elsewhere in the world means that he now has a wider selection of suppliers to choose from.

"We see an opportunity for us to get closer to our suppliers because we know that orders from other countries are dwindling," he said. "So we are getting more attention from some suppliers that were not so interested in our company and in our market."

Slowest economic growth in a decade

While there may be pockets of growth, the slump in exports continues to drag on China's economic growth. China says in the first three months of the year its economy expanded just more six percent, its slowest quarterly growth in a decade.

Hong Kong Trade Development Council economist Pansy Yau closely follows the Chinese export market. She says it is too early to tell whether a trade recovery is under way.

"Some leading indicators will be the inventory level of the major retailers and importers of the U.S., European and Japan market," said Yau. "They [exporters] hope that the inventory will be adjusted to a certain level and as the stimulus packages of different governments begin to take effect, consumer demand will also start to grow again. These are the underlying factors, which mean more orders will come back."

But data from the United States this week brought more bad news for Chinese exporters. U.S. retail sales in March dropped almost 11 percent from last year.

Yau says it may take until the second half of the year to determine whether China's export industry has finally turned a corner.