Commerce ministry preparing support for hard-hit exporters

The commerce ministry (MofCom) wants to help struggling exporters reorient their products to the domestic market.

According to CCTV-affiliated blog Yuyuan Tantian, MofCom is working on "a series of measures" to help manufacturers find a domestic market for their products.

The blog says measures will help export-oriented manufacturers find domestic customers by:

• Holding trade fairs to matchmake them with domestic buyers
• Doubling down on efforts to help export-oriented manufacturers retool and get certified to meet domestic standards
• Supporting manufacturers with "issues of payment collection"

That last one caught our eye: We think it might involve efforts to roll out a system of trade credit insurance for domestic transactions – an initiative proposed by the macro planner (NDRC) in December.

• Domestic retailers tend to place huge orders with long payment periods, adding cashflow pressure to already struggling manufacturers.
• In theory, a domestic trade credit insurance system could protect manufacturers during those long payment periods, and improve their ability to obtain credit in the interim.

Get smart: We are skeptical about the efficacy of these measures.

• First, manufacturers rely on exports precisely because domestic consumption is sluggish – encouraging exporters to sell their goods domestically will only work if domestic consumption rebounds.
• Second, should exporters flood the domestic market with goods, it will fuel deflationary pressures.