from ABC

by Brett Worthington

Photo: Credit issues in China are causing concern for Australian wool exporters (David Cussons)

There are growing concerns about the impact austerity measures in China will have on Australian exporters.

Finance sources have told ABC Rural that on Friday, international bank HSBC released a list to some of its clients of Chinese banks it would no longer offer credit to.

HSBC will not comment on the issue, saying discussions with its clients are confidential.

Josh Lamb, the trading manager with Techwool Trading, says he’s shocked at how quickly China’s economy is deteriorating.

"It’s definitely not a wool industry-specific problem," Mr Lamb said.

"To me, it is a credit issue in China and it covers all industries and it doesn’t look good for Australia this year.

"It doesn’t mean we are going to fall in a heap, but I think it is going to make it quite a difficult year for all commodities in Australia."

Mr Lamb says up to ten second and third tier Chinese banks, which were not state backed, were on the list of high-risk banks, though HSBC will not confirm this.

He says he doubts the credit concerns will have an immediate impact on the wool market, but says all agricultural exporters will closely watch China’s economic conditions.

"I’ve just done a trip there and I got quite a shock as to how bad the credit crisis really is there," Mr Lamb said.

"I am not an economist by any stretch, but talking to clients there it seems that the government wants the economy to slow down a little bit and they want it to be able to stand on its own two feet.

"Manufacturers having access to basically endless credit is not healthy for the long-term structure of the economy and what they are trying to do is temper that."

In a statement to ABC Rural, HSBC says it does not share these views on the future of the Chinese economy.