Thursday, May 10, 2012

Data Signal Economic Trouble in China

Even NyTi gets it:

As China’s leaders have been preoccupied with a political struggle leading up to a once-in-a-decade leadership change this autumn, there are increasing signs that the Chinese economy may be running into trouble.

China announced Thursday that growth in imports had unexpectedly come to a screeching halt in April — rising just 0.3 percent from the same period a year earlier, compared with expectations for an 11 percent increase. Businesses across the country appeared to lose much of their appetite for products as varied as iron ore and computer chips..


Growth in other sectors appears to be slowing, too, particularly in real estate. Soufun Holdings, a Chinese real estate data provider, released figures Monday showing that residential land sales in the country’s 20 largest cities had fallen 92 percent last week from the week before, as declining prices for apartments have left developers short of cash and reluctant to start further projects.

In a series of interviews over the past week, bankers and senior executives from provinces all over China, in a range of light and heavy industries, cited a broad deterioration in business conditions. Two of them said that some tax agencies in smaller cities had been telling companies to inflate their sales and profits to make local economic growth look less weak than it really was, while reassuring the companies that their actual tax bills would be left unchanged.

There are early signs of a credit crunch, at least among private sector companies. Many seem to be asking their suppliers for more time to pay debts and complaining of cash flow problems. Zhang Jinmei, the sales manager at Qitele Group, a company that makes playground equipment in the coastal city of Wenzhou, said that local investment and lending pools there were starting to charge higher interest rates for loans, a sign of worries about creditworthiness.

“The business environment is getting tougher and tougher,” said Tom Zhang, the sales manager at Hebei Haihao High Pressure Flange and Pipe Fitting Group. “Competition is very intense to get more business — our domestic sales are down from last year, though our export sales are more or less stable.”...Prices in China for cold-rolled steel, used in car production, and silicon steel, used in electric motors, have been steadily declining for the past two months. Prices for other metals, like nickel and aluminum, have been eroding this spring, as have prices for widely used materials like cement and nylon.

The result is a lot of unhappy business executives. “Our industry sector is facing tough times, and some companies in our sector are struggling,” said Amanda Wang, the sales manager at Steady Shower Technology, a manufacturer of bathroom fixtures in Ningbo.

(htNick)

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