China's economic slowdown painful despite stimulus By JOE McDONALD, AP Business Writer
BEIJING (AP) — China's economic slowdown slammed into Li Fangliang, cutting sales at his Shanghai auto parts store by half.
"There are just fewer and fewer customers," said Li, who has avoided layoffs among his four employees. "I plan to start a shop online to find new markets."
From shopkeepers to shipbuilders, some sectors are feeling more pain from China's deepest slowdown since the 2008 global crisis than still-robust headline growth of about 8 percent might suggest. Higher spending by state industry and government-directed investment is pumping up the world's second-largest economy, but that is masking the fact that the private sector is cutting jobs and scrambling to prop up plunging sales.
Data due out Friday are expected to show growth in the three months ending in June fell as low as 7.3 percent, down from the previous quarter's nearly three-year low of 8.1 percent. That is in line with this year's official 7.5 percent target. But revenues for companies in construction, shipbuilding and export manufacturing are down by up to half compared with a year ago.
The slowdown is a setback for economies around the world that were looking to China to drive demand for exports and support global growth.
"Domestic demand remains weak," said JP Morgan economist Francis Fu in a report. "Corporate profits have continued to decline and incentive for business investment is low."
Other industries including cargo handling and manufacturers of shoes, clothing, optical fiber and wind turbines are suffering lower profits or losses and cutting jobs, according to Chinese news reports.
Job losses could fuel political tensions, eroding economic gains that underpin the Communist Party's claim to power. The party is trying to enforce calm ahead of a handover of power to a younger generation of leaders this year. Though China's growth even now is higher than those of developed economies, many industries depend on a much faster expansion to propel demand for new factories, cargo ships and other goods.
Construction, which supports millions of jobs, was plunged into a deep freeze by limits imposed on home purchases to cool surging prices. Demand fell further as companies facing weak sales put off building new facilities.
"A lot of building projects are half-finished and forced to stop. I think it is even worse than 2008," said a manager for Hangzhou Yuanlong Construction Co. in the eastern city of Hangzhou. She would give only her surname, An.
The company, with 20 employees and four teams of independent construction contractors, is owed 2 million yuan ($300,000) by cash-strapped customers and is having trouble collecting, An said.
It took 5 years but the Bush Economic Meltdown finally hit China!
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. John Kenneth Galbraith
Funny how our economy didn't do any better after a stimulus, then China tries the same thing and gets the same result. I wonder who tries it next.
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. John Kenneth Galbraith
china's economy is going down the crapper cause we ain't buyin' as much of their crap anymore!!! As far as the stimulus....thought china was smarter than that!
If china continues down the crapper road....they may try to collect the american debt owed to them!!
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
The stimulus was like taking a huge cash advance on your Credit card....It's nothing but borrowed money, when it runs out, the spending stops and the bill comes due...just like your graph shows. The only difference here is the government isn't forced to pay it and just borrows more. Whether you social spenders want to hear it or not, it is UNSUSTAINABLE. Tax the rich all you want, it won't balance the books. Everyone will need to have their taxes increased and spending will need to be reduced...it's called simple math, its the only way.
"Arguing with liberals is like playing chess with a pigeon; no matter how good I am at chess, the pigeon is just going to knock out the pieces, crap on the board, and strut around like it is victorious." - Author Unknown
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