US stimulus raises exporters' hopes
Impact on Chinese products limited as average payment is small
Published: Mar 14, 2021 07:48 PM
A sign of face mask requirements is seen at a movie theater in New York, the United States, March 5, 2021.(Photo: Xinhua)

A sign of face mask requirements is seen at a movie theater in New York, the United States, March 5, 2021.(Photo: Xinhua)

As US President Joe Biden has signed the $1.9 trillion COVID-19 relief bill to stimulate the economy, Chinese exporters from different sectors including toy manufacturing and home appliances are eyeing the market, which could be boosted by the huge stimulus plan. 

According to the White House, the US government started procedures for the relief plan on Friday, and will officially pay recipients starting on Wednesday. 

Under the plan, one of the biggest fiscal stimulus plans in US history, most Americans will get a $1,400 direct payment from the government. The plan will also offer $350 billion in relief to state and city governments.

According to an analysis of how US households used previous stimulus payments, published by Liberty Street Economists last October, "as of the end of June 2020, a relatively small share of stimulus payments - 29 percent - was used for consumption, with 36 percent saved and 35 percent used to pay down debt."

However, despite the small previous share on consumption, the massive stimulus plan has drawn Chinese exporters' attention to the US market, where consumption could be boosted, with some evaluating the potential for industry and market growth and possibly adjusting their production plans.

"I believe this [the relief plan] will be very powerful to boost consumption in the near future," John Ng, the factory manager of Maisto, a maker and exporter of model toys, told the Global Times on Sunday.

Maisto, a Dongguan-based company in South China's Guangdong Province that cooperates with some world-famous companies including Ferrari, exports to more than 140 countries worldwide. It enjoyed a more than 10 percent sales increase in the US market last year despite the pandemic, according to Ng.

"Our sales increased more than 10 percent in the US market in 2020, without large-scale stimulus measures, and I believe that after the relief plan, sales will see a further increase," Ng said, adding that he may adjust the company's production plan.

Liu Hongyuan, legal representative of Hangzhou Zhongzhi Industry Co, a Chinese manufacturer of compression socks based in East China's Zhejiang Province whose products mostly go to the US, said he thought that the US stimulus bill could have some "stimulating impact" on US home consumption.

"When Americans have more money to spend, it's a good thing for driving up consumption, and we hope that would drive up market demand for our products as well," he told the Global Times.

"The stimulus plan would be beneficial for Chinese home appliance companies, because Chinese products have a large share in the US market," Hong Shibin, deputy executive director of the marketing committee of the China Household Electrical Appliances Association, told the Global Times on Sunday.

Driven by the stay-at-home economy caused by the pandemic, many small household products such as meat grinders are getting popular in the US, according to Hong.

"Thanks to swift operation resumption in China, many Chinese companies that export small household products to the US market have experienced 50-70 percent increase in export since the beginning of the year, and more growth is expected," Hong said.

However, Hong and other entrepreneurs also voiced caution.

"The impact on Chinese products will depend on consumers' preferences, because the US is offering money instead of coupons, and people have varied individual spending patterns," Hong said.

"The money could promote consumption by US households that have little or no home debt. But in general, the benefit to China's exports should be modest. After all, the handouts are small and mainly used to pay down household debt, so the boost to discretionary spending won't be obvious," a staffer surnamed Lan of Hangzhou Boniu Co, a company that designs websites for e-commerce companies, told the Global Times on Sunday. "The actual impact of the stimulus might be limited, considering that it is not a very large amount of money for each person," Liu acknowledged.

According to some analysts, the stimulus plan, which adds to the US fiscal deficit, could result in inflation. Due to the US dollar's role as the major reserve currency, inflation could also affect many developing economies, reported. 

Liu said that he hoped the stimulus bill would not affect the yuan's exchange rate against the dollar too much. "Currency stability is very important for exporters like us," he said.

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