Taiwan, Mexico Help Fuel State Exports

By DON LEE

Feb. 21, 1998 12 AM PT

TIMES STAFF WRITER

Buoyed by a burst of shipments to Taiwan and Mexico, California’s exports accelerated in the third quarter last year, an encouraging sign as the state braces for a slowdown caused by the Asian financial crisis.

The latest trade data, to be officially released Monday by the state’s Trade and Commerce Agency, showed a 6% gain in the third quarter from a year ago, after a modest 2% increase in the first half of 1997. The pickup in activity raised hopes among officials that growing exports to Latin America and sustained strength in parts of Asia, notably Taiwan and Hong Kong, will partially offset further declines in South Korea and Southeast Asia.

“It certainly is encouraging,” said Ted Gibson, chief economist for the California Department of Finance. Based on the third-quarter numbers, Gibson estimated that California’s merchandise exports grew by about 4% for all of 1997, to about $108 billion. California’s exports, fueled by strong growth in Asia, rose by 8% in 1996 and by 19% in 1995.

But the state’s exports to South Korea, Singapore and Malaysia--three major trading partners--have declined sharply since early last year amid weakening economies there and a very strong dollar. Economists, however, expect the full effects from Asia’s economic crisis to hit California later this spring or summer, but just how hard is anybody’s guess.

The latest cargo traffic data from the ports of Los Angeles and Long Beach suggest exports began to fall in the fourth quarter of 1997, with cotton and scrap metal shipments down noticeably. Asia has accounted for a little more than half of the state’s exports.

For now, everyone seemed heartened by the third-quarter figures, especially by the hefty gains in Mexico, which pushed ahead of Canada as California’s second-largest export market behind Japan. For the first nine months of 1997, the state’s exports to Mexico surged by 33%, to $8.6 billion. The growth was driven by electronics, industrial machinery and computer equipment, said Jesus Arredondo, a spokesman for the state trade agency.

“There’s a tremendous market out there; I’m just totally amazed,” said Bill Maxwell, trade policy manager for Hewlett-Packard Co., the personal computer maker in Palo Alto. While it’s not clear if exports to Mexico will continue to grow, he said, U.S. companies continue to enjoy lower tariffs from the North American Free Trade Agreement.

California companies also boosted their exports to other Latin American countries, particularly Argentina and Chile. But major South American countries as a whole still represent just 2% of California’s total exports.

In Asia, exports to Japan fell 9% and shipments to Korea, the state’s fourth-largest trading partner, plummeted 20% for the first nine months of last year. But the state’s exports to Taiwan, the No. 5 trading partner, surged 26% from a year earlier. Exports to Hong Kong (No. 8) were up 18%. Exports to mainland China (No. 15) climbed 11%.

But Richard Courtney, Bank of America’s Asia specialist, said Taiwan is feeling more pressure from Asian competitors whose currencies have dropped significantly. China’s growth is also slowing, he said, as is Hong Kong’s.

In Southern California, cotton producers in Bakersfield and scrap metal dealers in the Southland who grind up old cars are already hurting from the Asian crisis and the strong dollar, said Al Fierstine, business development director at the Port of Los Angeles. At the port, outbound cargo traffic was down 7% in the fourth quarter of last year, and it was down nearly 1% at the bigger Port of Long Beach. “We are down in exports, there’s no doubt about it,” he said.

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Top California Export Markets

Destination: Japan

Jan.-Sept. ’97 Calif. exports in millions: $13,168

Chg. from Jan.-Sept. 1996: -8.7%

Destination: Mexico

Jan.-Sept. ’97 Calif. exports in millions: $8,636

Chg. from Jan.-Sept. 1996: 32.6%

Destination: Canada

Jan.-Sept. ’97 Calif. exports in millions: $8,353

Chg. from Jan.-Sept. 1996: 4.9%

Destination: South Korea