New benchmark for China currency

China domestic manufacturers who settle their business deals with customers in US dollars are forced to bite the bullet as the dollar continues to slump.

Alibaba posted a story, revealing the damage that a stronger yuan would have on Chinese exporters.

China Daily (中国日报), a China state-run English-language newspaper, also reported that rising costs in labor, materials, energy and yuan appreciation attributed to the closure of many factories in the Pearl River Delta.

Last Thursday, the dollar ended trading at 6.9916 yuan on the over-the-counter market, after dipping to an all-time low of 6.9907.

These are hard times for us,” said Wei Yaoting, a textile trader in Shanghai that exports to the United States.

A typical U.S. order, received July and delivered in November last year, was not paid for until February this year, said Wei, manager of Shanghai HTC Holdings Import & Export Co. Over those seven months, the dollar-denominated payment slumped.

“We end up swallowing the losses,” he said.

“The more exports, the bigger the losses. We just break even,” Wei said. “We’re even considering giving up selling to foreign markets that trade in U.S. dollars.”
In your mind, what’s the biggest challenge that Chinese small and medium manufacturers are facing now?