Doom and Gloom of China's Economy

Armand2REP

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CEO commits suicide, Chinese solar industry at its limit

Staff Reporter 2012-08-16


Solar companies in China continue to pile on debt, which has now reached US $17.5 billion. (Photo/Xinhua)

Li Fei, the owner of Chengxing Solar Company in Jinhua, Zhejiang Province, committed suicide by jumping off a building, alarming the debt-ridden photovoltaic industry, reported First Financial Daily in Shanghai.

Li ended his life after Chengxing was unable to repay a 20 million yuan (US$3.15 million) loan taken by another photovoltaic company called Zhongxi, for which Chengxing was the guarantor.

The incident was a sign of the imminent collapse facing the Chinese photovoltaic industry, because of its lack of liquidity and mounting debts, noted First Financial Daily.

It had become common for cash-strapped companies to postpone their payments, with letters of credit often maturing 150-200 days after the delivery of goods, thereby hurting their suppliers' abilities to pay their suppliers, said First Financial Daily.

Most companies in the industry were burdened with high debts, according to the newspaper. For example, Suntech Energy reported a debt of US$2.26 billion in the first quarter of this year, the same as the last quarter of last year, while Trina Solar's debt grew 9.7% to US$1.13 billion.

The newspaper quoted US investment bank Maxim Group as warning that China's top ten photovoltaic companies had accumulated a combined debt of US$17.5 billion and the entire industry was teetering on the brink of collapse.

CEO commits suicide, Chinese photovoltaic industry at its limit|Markets|Business|WantChinaTimes.com
 

Armand2REP

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Chinese shipping industry suffers expanding losses

She Wen-yi
2012-08-19


This year fares no better for China's shipping company, some of which are reporting 25-year lows. (File photo/Xinhua)

Seven of the 12 Chinese shipping firms listed on the A-share market have publicized their advanced business and mid-year reports, the figures reflecting a mostly lackluster performance.

COSCO Shipping estimated over 50% declines in sales and Hainan Strait Shipping estimated 25% declines in revenue. China Ocean Services suffered expanded leakage of red ink. Even China Shipping Development, whose figures hovered slightly in gains amidst an adverse climate last year, did not manage to avoid losses this year.

China Merchants Energy Shipping publicized a mid-year report on August 17, showing that its net profits reached only 87.72 million yuan (US$13.8 million) in the first half, down 60% from a year earlier.

In the first half, both the BDTI (Baltic Exchange Dirty Tanker Index) and BDI (Baltic Dry Index) suffered substantial declines. The BDI plunged to 647, down 94.51% from its peak level of 11,793 in 2008.

Since the BDI peaked at 11,793 on May 20, 2008, the shipping industry has been experiencing four years of continuous decline. Amid the global financial tsunami, the BDI hit rock-bottom levels of 663 on December 5, 2008.

The BDI rebounded to 4,600 in November 2009 before declining again under the shadow of a long-term bearish market. In December last year, the BDI started to plummet and reached 647 on Feb 2, this year, the lowest since September 1986.

The plunge in shipping rates has driven down sales of shipping firms. China Ocean Service, for instance, raked in a profit of 10.83 billion yuan(US$1.70 billion) in 2008, down 43.3% from the 2007 level, with the profit-per-share reaching 1.06 yuan. In 2009, the company incurred staggering losses of 7.54 billion yuan (US$1.19 billion).

Analysts point out that massive amounts of funds flew to the shipping sector in 2007, largely expanding the shipping capacity. Subsequently, shipping rates plunged, inflicting serious losses on investors.

China Ocean Service managed to turn in growth figures in 2010 but incurred loss of 10.4 billion yuan (US$1.63 billion) in 2011 again. On July 30, the company announced that its losses jumped over 50% year-on-year in the first half this year.

China Ocean Service is the industry leader and its peers will inevitably be enduring hard times if the giant cannot keep afloat.

Chinese shipping industry suffers expanding losses|Economy|News|WantChinaTimes.com
 

Armand2REP

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Signs of food inflation become visible in China

China's Ministry of Commerce blamed the increase in vegetable prices on "strong winds and rainfall in the country's eastern regions" that "disrupted production and logistics." Nevertheless vegetable prices are up 15.4% over the past four weeks.

China Daily: – The wholesale prices of 18 types of vegetables in 36 cities rose for the fourth consecutive week, up 2.9 percent week-on-week and 15.4 percent cumulatively over the past four weeks, according to the MOC.

Signs of food inflation seen across emerging markets are now visible in China. And anecdotal evidence (see these interviews by Radio Free Asia) suggests that official inflation gauges in China may be understating true consumer price increases. Wholesale food prices have definitely risen lately.



Signs of food inflation become visible in China
 

Armand2REP

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North Korea pulls Chinese style theft on the masters

Xiyang claims that its joint venture with North Korea was terminated after North Korean workers learned the necessary skills to continue the enterprise without their Chinese counterparts.

China's fertilizer and minerals producer Xiyang Group said North Korea broke its contract deliberately and forced the company to retreat after obtaining technology from the Chinese firm by charging hefty fees and deporting its personnel.

The group's chairman Zhou Furen, the wealthiest man in Liaoning province in China's northeastern region, believes that wealth is built from an imperfect and risky market. He led his group just that, signing a 240 million yuan (US$37.7 million) contract with North Korea and becoming the country's single largest investor in 2007, forming a joint venture and building a plant to produce iron powder in North Korea.

The plant began production in April last year and Xiyang Group sent 150 technicians to work with 500 North Korean laborers on site, who learned the skills to produce iron powder over the next three months, according to an article published by the group on the internet in early August.

Then North Korea changed its attitude towards the Chinese firm completely and asked for a revision of the contract, requesting Xiyang group to pay 4% to 10% of sales and various fees such as one euro (US$1.2) of land rent per square meter and 0.14 euros in water fees for per square meter of sea water the plant used.

The change forced the joint venture to halt its operations and Xiyang's 150 workers had no choice but to return to China except ten workers who stayed to keep watch over the plant.

The remaining workers were forced to board a bus in March this year and were driven to Sinuiju city in North Pyongan province bordering China, where they were deported.

The ambition of China's Xiyang group in North Korea thwarted|Companies|Business|WantChinaTimes.com
 

Armand2REP

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New China Visa Requirements Will Hurt Tourism

Bloomberg News on August 22, 2012

China has tightened visa rules for visitors, adding requirements for a letter of invitation and proof of hotel reservations in a move that could slow its push to become the world's biggest tourism destination.

Travelers applying for tourist visas, must submit a letter from an "authorized tourism unit," company or person inviting them to China, along with a photocopy of their round-trip ticket and hotel reservation, according to rules posted on the website of China's embassy in the U.S.

The rule changes come after Chinese authorities have put foreigners' status in the country under greater scrutiny and sought to clamp down on people entering the country illegally. The World Tourism Organization had predicted that China might become the world's biggest destination for tourists by 2015, but that looks unlikely now.

"If implemented strictly, the new requirements could have an impact on the number of foreign tourists" and revenue among travel agencies, said Zhang Lu, a Shanghai-based analyst at Capital Securities Corp. (6005) China International Travel Service Corp. (601888), the country's biggest tourism company by market value, will "certainly be affected," she said.

China Adds to Visa Demands in Move That Could Slow Tourists - Businessweek

So I have to recieve an invitation to visit China now. Bye Bye tourism! :rofl:
 

asianobserve

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Armand, you never fail to lighten up my day. Nice work BTW... Keep it up. :thumb:
 

Armand2REP

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China factory sector shrinks most in 9 months

Aug 23 (Reuters) - China's factories contracted in August the most in nine months according to a survey showing falling export orders and rising inventories, signs that more policy action is probably needed to stop a slowdown in economic growth now in a seventh quarter.

The HSBC Flash China manufacturing purchasing managers index (PMI) fell to 47.8 in August, its lowest level since November, down from both the 49.5 July flash and the 49.3 final reading.

After hovering for several months just under the 50 mark that divides expansion from contraction, the index is now at levels rarely seen since the 2008-2009 global financial crisis.

"Inventory numbers are the highest on record. Orders to inventory are the lowest since December 2008. Foreign orders to inventory are the lowest since January 2009. It's very hard to put a positive spin on anything within the data," Robert Rennie, chief currency strategist at Westpac Bank, told Reuters.

The survey provides an early peek at data for August, as well as an indication that a pick-up in economic growth may not have taken root as anticipated.

A fall in the new export orders sub-index to 44.7 - the lowest level since March 2009 - provides particularly bearish reading.

UPDATE 1-China factory sector shrinks most in 9 mths-survey | Reuters
 

trackwhack

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China: gloomy factory output survey

China: gloomy factory output survey | beyondbrics

A key barometer of manufacturing activity in China declined so sharply in August that even the typically-bullish economists at investment banks have struggled to find anything positive to say.
The preliminary HSBC China Manufacturing PMI index fell to a nine-month low of 47.8 in August, down from a final reading of 49.3 in July. A reading below 50 indicates a contraction.
"This flash report is plainly awful," Yao Wei, China economist at Société Générale, wrote in a note to clients.
Yao Wei continued:
"We expect the official reading (due to release on 1 September) to drop to 49.7 – the first below 50 reading in 2012, which would pose a large downside risk to our current GDP forecast for Q3 (7.7%yoy)."


The details behind the headline number were just as bad.
Export orders dropped to 44.7 in August, it's lowest level since the Lehman crisis. Deflation intensified, with the input and output price index falling to 39.9 and 40.6, respectively.
Stocks of finished goods expanded by three percentage points to 53.6 – bad news for an economy already rife with overcapacity.
Goldman Sachs economists did their best to present a brave face about the data, although even they had to admit: "The only good news came from the delivery time data which fell by 0.6 percentage points."
And Qu Hongbin, HSBC's ultra-bullish China economist who last year said there was "no risk of a hard landing", had a slight tone of despair in his commentary. Like his peers, he called for the government to step in with another spending spree:
"To achieve the stated policy goal of stabilizing growth and the jobs market, Beijing must step up policy easing to lift infrastructure investment in the coming months."

Faith in the ability of China's private sector to produce rapid growth appears to have worn thin. And talk of "soft landings" among investment bank economists seems to have gone awfully quiet.

Yes, build some more. More debt and more empty cities and more cheap housing in which no one stays. :)
 

Daredevil

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China's unsustainable policies are coming to the fore. Some body is going to give in - the people or the party. Not a good boding for China in the short term.
 

Daredevil

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China Besieged by Glut of Unsold Goods



GUANGZHOU, China — After three decades of torrid growth, China is encountering an unfamiliar problem with its newly struggling economy: a huge buildup of unsold goods that is cluttering shop floors, clogging car dealerships and filling factory warehouses.

The glut of everything from steel and household appliances to cars and apartments is hampering China's efforts to emerge from a sharp economic slowdown. It has also produced a series of price wars and has led manufacturers to redouble efforts to export what they cannot sell at home.

The severity of China's inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government — all part of an effort to prop up confidence in the economy among business managers and investors.

But the main nongovernment survey of manufacturers in China showed on Thursday that inventories of finished goods rose much faster in August than in any month since the survey began in April, 2004. The previous record for rising inventories, according to the HSBC/Markit survey, had been set in June. May and July also showed increases.

"Across the manufacturing industries we look at, people were expecting more sales over the summer and it just didn't happen," said Anne Stevenson-Yang, the research director for J Capital Research, an economic analysis firm in Hong Kong. With inventories extremely high and factories now cutting production, she added, "Things are kind of crawling to a halt."

China is the world's second-largest economy and has been the largest engine of economic growth since the global financial crisis began in 2008. Economic weakness means that China is likely to buy fewer goods and services from abroad at a time when the sovereign debt crisis in Europe is already hurting demand, raising the prospect of a global glut of goods and falling prices and weak production around the world.

Chinese export growth, a mainstay of the economy for the last three decades, has slowed to a crawl. Imports have also practically stopped growing, particularly for raw materials like iron ore for steel making, as industrialists have lost confidence that they will be able to sell if they keep factories running. Real estate prices have slid sharply, although there have been hints that they might have bottomed out in July, and money has been leaving the country through a variety of legal and illegal channels.

Interviews with business owners and managers across a wide range of Chinese industries presented a picture of mounting stockpiles of unsold goods.

Business owners who manufacture or distribute products as varied as dehumidifiers, plastic tubing for ventilation systems, solar panels, bedsheets and steel beams for false ceilings said that sales had fallen over the last year and showed little sign of recovering, while unsold goods have accumulated.

"Sales are down 50 percent from last year, and inventory is piled high," said To Liangjian, the owner of a wholesale company distributing picture frames and cups, as he paused while playing online poker in his deserted storefront here in southeastern China.

Wu Weiqing, the manager of a faucet and sink wholesaler, said that his sales had dropped 30 percent in the last year and he has piled up extra merchandise. Yet the factory supplying him is still cranking out shiny kitchen fixtures at a fast pace.

"My supplier's inventory is huge because he cannot cut production — he doesn't want to miss out on sales when the demand comes back," he said.

Part of the problem is that the Chinese government's leaders have decided to put quality-of-life concerns ahead of maximizing economic growth when it comes to two of the country's largest industries: housing and autos.

Premier Wen Jiabao has imposed a strict ban on purchases of second and subsequent homes, in the hope that discouraging real estate speculation will improve the affordability of homes. The result has been a steep decline in residential real estate prices, a sharp fall in housing construction and widespread job losses among construction workers.

At the same time, the municipal government in Guangzhou, one of China's largest cities, has sharply reduced this summer the number of new car registrations it allows so as to reduce traffic congestion and air pollution.

Municipal officials from all over China have been flocking to Guangzhou to ask for details. Xi'an, the metropolis of northwestern China, has already announced this month that it will limit car registrations, although it has not settled on the details.

For the last decade, as the Chinese auto industry has grown 10-fold to become the world's largest, it has looked like a formidable challenger to Detroit. But now, the Chinese industry is starting to look more like Detroit in its dark days in the 1980s.

Inventories of unsold cars are soaring at dealerships across the nation. Quality problems are emerging. And buyers are becoming disenchanted as car salesmen increasingly resort to hard-sell tactics to clear clogged dealership lots.

The Chinese industry's problems show every sign of growing worse, not better. So many auto factories have opened in China in the last two years that the industry is only operating at about 65 percent of full capacity — far below the 80 percent usually needed for profitability.

Yet so many new factories are being built that, according to the Chinese government's National Development and Reform Commission, the country's auto manufacturing capacity is on track to increase again in the next three years by an amount equal to all the auto factories in Japan, or nearly all the auto factories in the United States.

"I worry that we're going down the same road the U.S. went down, and it takes quite some time to fix that," said Geoff Broderick, the general manager of Asian operations at J.D. Power and Associates, the global consulting firm.

Automakers in China have reported that the number of cars they sold at wholesale to dealers rose by nearly 600,000 units, or 9 percent, in the first half of this year compared to the same period last year.

Yet dealerships' inventories of new cars rose 900,000 units from the end of December to the end of June. While part of the increase is seasonal, auto analysts say that the data shows that retail sales are flat at best and most likely declining — a sharp reversal for an industry accustomed to double-digit annual growth.

"Inventory levels for us now are very, very high," said Huang Yi, the chairman of Zhongsheng Group, China's fifth-largest dealership chain. "If I hadn't done special offers in the first half of this year, my inventory would be even higher."

Manufacturers have largely refused to cut production, and are putting heavy pressure on dealers to accept delivery of cars under their franchise agreements even though many dealers are struggling to find places to park them or ways to finance their swelling inventories. This prompted the government-controlled China Automobile Dealers Association to issue a rare appeal to automakers earlier this month.

"We call on manufacturers to be highly concerned about dealer inventories, and to take timely and effective measures to actively digest inventory, especially taking into account the financial strain on distributors, as manufacturers have to provide the necessary financing support to help dealers ride out the storm," the association said.

As dealer lots become cluttered, many salesmen have resorted to high-pressure sales tactics. That has resulted in growing customer dissatisfaction in the past year, according to surveys by J.D. Power. As a result, auto dealers are voicing the same complaints about inventory as businesspeople in a wide range of other industries.

Officially, though, most of the inventory problems are a nonissue for the government.

The Public Security Bureau, for example, has halted the release of data about slumping car registrations. Data on the steel sector has been repeatedly revised this year after a new methodology showed a steeper downturn than the government had acknowledged. And while rows of empty apartment buildings line highways outside major cities all over China, the government has not released information about the number of empty apartments since 2008, according to a report last Friday.

Yet businesspeople in a wide range of other industries have little doubt that the Chinese economy is in trouble.

"Inventory used to flow in and out," said Mr. Wu, the faucet and sink sales manager. "Now, it just sits there, and there's more of it."
 

Armand2REP

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Factories keep pumping it out but retailers can't sell it. How can you threaten franchises to buy more of what they don't need?

Only in China! :shocked:
 

chase

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In china there is very less internal consumption but production is high,this is a very serious problem and it can even bring a sudden collapse of the economy
 

badguy2000

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In china there is very less internal consumption but production is high,this is a very serious problem and it can even bring a sudden collapse of the economy

well, guy, CHina consumes more food,steel, concrete,household appliance ,cars and other items ,which you can imagine, than any other country.....

and you still said soooo,,,,,hahahah
 

trackwhack

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NEW DELHI: India's exports declined by 14.8 per cent year-on-year to USD 22.4 billion in July this year due to the global demand slowdown.

In July 2011, the country's shipment stood at USD 26.3 billion.

Imports too contracted during the month by 7.61 per cent to USD 37.9 billion, leaving a trade deficit of USD 15.5 billion, DGFT Anup Pujari told reports here.

During the April-July period of 2012-13, exports have shrunk by 5.06 per cent to USD 80.4 billion. Imports during the period dipped by 6.47 per cent to USD 153.2 billion.

"Last month, exports have decreased more than imports. This is the highest fall this fiscal," Pujari said.
1) Wrong thread
2) Our economy is not built on export, its just one part of it, unlike...
 

Armand2REP

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Wenzhou Economy Collapsing

By Yu Ran in Shanghai and Ding Qingfen in Beijing ( China Daily)

An increasing number of companies in Wenzhou, a key manufacturing and export region, have gone out of business, amid difficulties that are even "more serious" than the 2008 financial crisis, an industry leader said.

The alert came as Premier Wen Jiabao warned over the weekend that the economy still faces downward pressure.

Wenzhou, Zhejiang province, is often referred to as a hub of small and medium-sized enterprises.

But it has witnessed a rise in bankruptcies that is even "more serious" than the 2008-09 financial crisis, Zhou Dewen, chairman of the Wenzhou SME Development Association, said.

"We have about 3,000 members and more than 10 percent have closed down and about 20 percent are struggling," Zhou said.

Many SME owners requested financial assistance and advice from the association, he said.

Larger companies are also feeling the heat.

According to a report released by the financial and economic committee of Zhejiang Provincial People's Congress, 140 out of 3,998 large enterprises in Wenzhou closed in the first half of the year while 57 percent of those large companies cut production.

Slowdown hits key export hub |Economy |chinadaily.com.cn
 

huaxia rox

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well, guy, CHina consumes more food,steel, concrete,household appliance ,cars and other items ,which you can imagine, than any other country.....

and you still said soooo,,,,,hahahah
becoz what u chinese can get is from export oriented economy which is a wrong style of economy and from govments investments which r not private owned and man made so no matter how much u consume u r a wrong economy faced with Doom and Gloom......
 

trackwhack

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Chart comparing Dow Jones, Sensex, Hang Seng and Shanghai Composite for 6 months. No CCP data in this one.

Feel sorry for the hong kongers, they must pretty much feel like their stock market right now - headless chickens.
 
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