HONG KONG, Sept. 5 – In a sign the global downturn is affecting Chinese exporters, payment default rates (non-collectable debts) due from mainland businesses rose in the first six months of 2008 to 1.6 percent of total payments due, according to Coface, the international trade risk financing group.

Surveying over 3,000 Hong Kong businesses from January to June, Coface found that Chinese businesses were experiencing the growing impact of the worldwide credit crunch, and warn that the payment performance of China buyers may worsen in the coming months.

Receivables also rose to nearly 10 percent of all payments surveyed due from China buyers, up from 8.3 percent in the second half of 2007. In response to this trend, 33 percent of those surveyed said they had tightened credit control and payment terms offered to their customers in the past six months, with a further eight percent indicating they were about to do so.

Coface was more bullish about the longer term view however, indicating that they believed the measures taken by the Chinese government concerning VAT reform, tax cuts, and SME administration costs could possibly ease the burden on Chinese buyers during 2009. Hong Kong-based academics have laid the blame mainly at the rise of the RMB against the HK dollar, which is pegged to the U.S. dollar.

“RMB appreciation has prompted mainland buyers to delay payments,” says Raymond So, associate dean of business administration at the Chinese University of Hong Kong. “They can pay less in Hong Kong dollars as the RMB strengthens.”