China’s largest trade fair to re-open in full glory but mood could be sombre

By David Kirton and Ellen Zhang

SHENZHEN, China (Reuters) – China’s largest trade expo, the sprawling Canton Fair, will be welcoming overseas attendees in person for the first time in three years from Saturday, but a soft outlook for global growth is expected to dampen the mood.

The first major trade event since China abruptly dropped draconian COVID-19 curbs and re-opened its borders comes as sharply higher borrowing costs in the United States and Europe hits demand for Chinese-made goods.

“The foreign trade situation is severe and complicated this year,” Wang Shouwen, China’s vice commerce minister, told reporters last week.

An online survey of 15,000 exhibitors conducted by the ministry showed many cited weakening external demand and insufficient orders as the main challenges they faced, he added.

China makes a third of all products purchased globally and the fair is located in Guangzhou, the capital of the southern Guangdong province which is often described as the factory of the world.

Some 35,000 exhibitors have set up booths over roughly 1.5 million square metres – or 280 football fields – to showcase fridges, gearboxes, anoraks and all manner of products over the next three weeks. Thousands of companies from more than 200 countries and regions are expected to send representatives.

Although data on Thursday showed a surprising surge in exports for March after five straight months of declines, analysts cautioned the jump might reflect suppliers catching up with unfulfilled orders from last year as production recovers after lockdowns.

Another reason for pessimism was a sharp drop in factory gate prices in March.

“Factories are fighting cruelly in a tight market. Companies like ours which still have a backlog of inventory to move are still being impacted,” said the deputy manager of a Guangdong-based lighting business, who will attend the fair. She was not authorised to speak to media and declined to be identified.

‘OPEN FOR BUSINESS’

China has nurtured its manufacturing sector with heavy subsidies and expensive infrastructure development over many decades. But with household demand not getting similar levels of support, many factories are over-reliant on the health of the global economy and exposed to geopolitical tensions.

Since COVID-19 curbs were lifted in December, large delegations of Chinese city and business officials have made hundreds of trips to Asia and Europe to drum up investment and product orders.

In recent weeks, Premier Li Qiang has said China needs to “try every method” to stabilise its exports to developed countries and make deeper forays into emerging markets. He has also vowed to win over foreign investors and support private enterprises, saying the world’s second-largest economy was “open for business.”

The Canton Fair is held twice a year and each of the six sessions held between 2017 and 2019 brought orders of around $30 billion, even though Washington imposed trade tariffs on Chinese goods during that period.

The pandemic caused subsequent fairs to be cancelled, moved online, or held without overseas visitors.

Chris Sillitoe, owner of a British tools and hardware sourcing company, said he was eager to attend in person again as some of the dozens of factories he works with had faced technical problems when the fair was held online.

“It’s been incredibly difficult not being there,” Sillitoe said. “We are all feeling optimistic and quite excited about going, it’s been a long time.”

($1 = 6.8855 Chinese yuan)

(Reporting by David Kirton in Shenzhen and Ellen Zhang in Beijing; Editing by Marius Zaharia and Edwina Gibbs)