The cavernous halls of the Canton Fair beside the Pearl River in the southern export powerhouse of Guangdong, appeared bustling enough -- filled with what organisers said were some 280,000 foreign buyers and 57,000 exhibitors.
But the mood at Asia's largest trade event, a key barometer of China trade, was muted because of gnawing fears that the European debt crisis and a weak U.S. economy could further sap consumer demand for China-made goods.
Few have been left unscathed. A cross-sectoral Reuters poll of 101 small to medium sized exporters at the Canton Fair found that 80 percent said exports had been hit by the U.S. and European problems, 17 percent seriously.
"It's just difficult compared to other years," said Anthony Crispin, a veteran British buyer who's attended the Canton Fair for more than 20 years.
"You're buying smaller quantities ... you're not committing to anything at this present time. The market is very up and down like a yo-yo," added Crispin, sales director of Giftworks, a large British supplier of China-made home accessories.
Reflecting global economic weakness and domestic cooling, China's trade surplus narrowed for a second straight month in September to $14.5 billion, with both imports and exports lower than expected.
Growing weakness in the export sector -- still a major engine of China's economic growth -- could have deeper ramifications for the world's second-largest economy.
China is already struggling to cope with inflation, a growing pile of local government debt and a tightening credit environment that is squeezing small businesses.
Beijing authorities confirmed China's industrial firms are facing increased difficulties due to weakening global demand.
Growth of China's industrial output is likely to slow further in the coming months while inflation could remain at a "relatively" high level, the ministry of Industry and Information Technology said on Wednesday.
Cargo flows also have slowed. Hong Kong, the world's busiest air cargo hub which funnels exports from the Pearl River Delta, posted a 6.1 percent decline in September volume.
While HSBC's Purchasing Managers' Index (PMI) showed China's vast manufacturing sector expanded moderately in October to end three months of contraction, , sentiment amongst Chinese exporters remains cautious.
Factory Closures Seen
In the Reuters poll, 74 percent of exporters said there could be another wave of factory closures, mirroring the 2008-09 global financial crisis when thousands of Chinese factories shuttered as orders evaporated after Christmas. Millions of migrant factory workers were laid off.
"There is a great possibility of this," said Jack Ye, the boss of Kingdom Toys, in a stall at the fair stacked with colourful wooden puzzles and blocks.
"At the end of the year, this trend will become more apparent. Many factories that don't have orders will close, directly affecting their cash flows ... and when they aren't able to repay their loans they will be forced to close."
Eighty-one percent of firms in the Reuters poll say they've been impacted by tighter credit conditions in China. In the eastern export hub of Wenzhou, bosses of dozens of companies fled because they couldn't repay loans borrowed on exorbitant interest rates from underground lenders.
Dai Shuwen, the general manager of Jiangsu Easthigh materials which makes dolls clad in Chinese army helmets and other toys, said many exporters had some cash flow "but definitely you still require bank support, especially larger businesses," to procure raw materials and other capital inputs.
She also said firms were becoming more wary of Europeans.
"We need to be more vigilant of the credit worthiness of some foreign buyers, Dai told Reuters.
Chinese factories are struggling to cope with r
