• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Revaluation of Chinese Currency May Boost Exports Through Hampton Roads, Va.

Posted on: Friday, 22 July 2005, 18:01 CDT

Jul. 22--China's decision to cut its currency's ties to the dollar could boost exports of coal, steel and other commodities through Hampton Roads, but the change will have little immediate effect on international trade in the region, trade experts and others said Thursday.

American companies, including retailers, will continue to rely on China's goods because of that country's manufacturing skills, low labor costs and transportation logistics, predicted Thomas D. Capozzi, senior managing director of marketing services at the Virginia Port Authority in Norfolk.

China said Thursday it was no longer pegging its currency -- the yuan -- to the value of the dollar and was relying instead on a basket of currencies. The change makes Chinese exports slightly more expensive when purchased in dollars and makes American exports to China less expensive.

Trade with China has become especially important to Hampton Roads in recent years as Wal-Mart, Target and other retailers built large distribution centers close to the port. In addition, Hampton Roads cargo terminals have benefited from congestion at California ports, prompting some shipping lines to redirect more Asian cargo to the East Coast.

For Hampton Roads, China is the largest source of imports via cargo containers and largest destination of containers with exports, Capozzi said.

Because the value of the dollar has slipped against the yuan, shipments of price-sensitive commodities from Hampton Roads to China are likely to pick up, he said.

Dollar Tree Stores Inc., the Chesapeake-based chain that prices all of its merchandise at a dollar, said it was too early to assess the impact of China's change on Dollar Tree's purchases.

Shelly Gagliano, a spokeswoman, said the company relies on suppliers in Hong Kong and China for nearly 40 percent of its merchandise. However, "Dollar Tree has always been able to manage through economics shifts" by cultivating an array of sources, including suppliers in Vietnam and Thailand, she said.

Dennis Gartman, a Suffolk resident who compiles a daily report on the world's financial markets, played down China's move as largely cosmetic.

China's president, he noted, is scheduled to visit the United States in early September.

"Who is most affected? The Wal-Marts and Michaels of the world" that buy inexpensive merchandise from China, Gartman said. "Are they going to import less than before? Of course not."

The higher cost of merchandise will put pressure on retailers' profit margins, but U.S. companies, he said, will continue to buy from China because of the significant cost advantages that China has. The immediate effects of China's action with its currency will be slight, but this is likely to be only the first step, Gartman said.

"Their intention is to move to a free-floating currency regime eventually, but they know they can't do that rapidly," he said.

-----

To see more of the The Virginian-Pilot, or to subscribe to the newspaper, go to http://www.pilotonline.com.

Copyright (c) 2005, The Virginian-Pilot, Norfolk, Va.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

WMT, TGT, DLTR, MIK,

Source: The Virginian-Pilot

More News in this Category