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.

Chinese exporters are now feeling the pain of the U.S. credit crunch. Export growth to the United States slowed in the first half of this year. More important, U.S. buyers, once regarded as the most reliable clients, have started to delay payments. Some have asked to extend the payment period to 120 days, while others may not be able to pay at all.

The situation is rapidly deteriorating. According to China Export & Credit Insurance Corp. (Sinosure), the state-sponsored export-insurance provider, the export-credit-sale default rate rose 230 percent in the first half of this year compared with last year. Sinosure, which insured about $3 billion of China’s $120 billion trade with the United States in the same time period, has tripled its bad-debt provision — to 3 percent of the total amount covered this year from 1 percent last year. Meanwhile, of course, the vast majority of trade with the United States is not insured, which seems likely to trigger a significant increase in credit-sale defaults.

The consumer-electronics industry has been hit the hardest. Many export insurers have advised Chinese electronics manufacturers to reduce credit sales to certain U.S. buyers and even to demand prepayment. Chinese exporters are reluctant to tighten their terms for fear of losing clients, but as one export-insurance broker says, they may come to realize that they have significant leverage because U.S. retailers need low-cost Chinese goods more than ever.

China’s international trade has a related structural problem: China imports a substantial volume of commodities and high-tech products, which often require prepayment, but its exports are predominantly in low-cost manufacturing, a realm in which it is harder to negotiate trade terms. A certain inexperience in aspects of international trade has worsened the situation.

Of China’s $24 billion in exports to India, for example, most were on open account, with payment due in three or even six months. India’s $14 billion in exports to China, however, were mostly on terms in which payment was expected more quickly — sometimes as Indian goods were on their way to China.

As the credit crunch worsens and as the Chinese government continues its policy of credit tightening, Chinese companies will realize that they can no longer afford to do that. They may soon adopt hardball tactics in global trade negotiations.

Wu Chen is editorial director of CFO China.