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View from China

Why the credit crunch may soon force China to toughen its export terms.

November 1, 2008

For years the United States has blamed its huge trade deficit on China. What many haven't appreciated is that underneath China's export surplus lies a problem — for China. Chinese manufacturers have long provided financing to U.S. buyers — the bulk of China's exports to the United States are on open account, with payment periods averaging 60 days. That results in a high cost of capital, with a one-year benchmark lending rate of 7.2 percent. Read more...

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