Chinese Exporters Face Payment Risks

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China warns exporters to be more cautious in dealing with some companies abroad due to the growing payment risks caused by global economic slowdown. This looming problem is aggravated by financial crisis experienced by foreign banks caused by factors including importers’ unpaid debts and breach of contracts and insufficient liquidity.

China warned exporters to be more cautious in dealing with foreign companies because some of these may not have the ability to pay caused by the global economic slowdown.

In a statement, commerce ministry said that there are foreign banks which are suffering from countless incidents of unpaid debts and breach of contracts by importers and insufficient liquidity.

To avoid bankruptcy and to protect themselves from financial burden, the country’s top financial experts encouraged exporters to have export credit insurance.

Last year, China Export and Credit Insurance Corporation, which is the only export credit insurance provider in the country, paid more than $200 million worth of indemnities, a dramatic increase of 174.5 percent compared in 2007, according to Xinhua news agency.

Because of the growing payment risks involved in exporting goods to foreign companies, insurance industry, exporters, and government departments were urged to observe financial status and business operations of foreign importers and to monitor credit ratings of commercial banks from abroad.

In December 2008, the insurance provider reduced the credit ratings of 48 countries including US.

Last year, China surpassed US and became the world’s second biggest exporter, almost deadlocked with Germany which is the top placer.

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Chinese Exporters Face Payment Risks

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