China factory output drops miserably

[CorporateAffairs]

BEIJING: China's factory sector shrank the most in 32 months in November on signs of domestic economic weakness, a preliminary PMI survey showed, reviving worries that China may be slipping towards a hard landing and fuelling fears of a global recession.

The steep fall in the HSBC flash purchasing managers' index (PMI) to 48 in November from 51 in October largely reflected domestic weakness as both output and new orders shrank even as export orders continued to grow. The flash PMI, the earliest readout of China's industrial activity, was the lowest since March 2009 and suggests the factory sector contracted during the month.

A PMI reading of 50 demarcates expansion from contraction. The PMI unnerved financial markets already roiled by the euro zone debt crisis and a downward revision in US economic growth and underscored expectations that Beijing will lean more on policies to support growth than ones to fight inflation. "They are not going to want this to go too far," said Tim Condon, head of Asia research at ING in Singapore.

"I'm not sure if it (PMI) is a tipping point but I think it adds to the evidence." Beijing has already announced some selective steps, geared to small business, to support the economy. HSBC said evidence in the PMI of a sharp drop in inflationary pressures meant Beijing had room for more selective measures if need be. "There remains no need to panic," HSBC economist Qu Hongbin said.

"Easing inflation provides room for more easing measures, which will keep China on track for a soft landing." The sub-indexes for input and output prices dropped around 10 points each to below 50 to lows last seen in April 2009. HSBC said the output sub-index tumbled to a 32-month low of 46.7, a steep drop from October's final reading of 51.4 and new orders suffered the biggest drop in 1-1/2 years to sink well below 50.

Qu said the PMI data suggested industrial output growth in China will moderate in coming months to an annual rate of 11-12%, a pace not seen since 2009 when China was pulling out of the global financial crisis.

Output has averaged close to 14% this year. The final PMI reading for November may be slightly higher than the flash number, a comparison of the data shows. HSBC has reported a flash PMI, which captures up to 90% of total responses, since February. On five occasions, the final PMI reading was higher than the flash reading; twice it was lower and the other two months it was unchanged. Kevin Lai, senior economist at Daiwa in Hong Kong, said the PMI data showed China's industrial production had started to contract on a month-on-month basis.

"We see a 25% probability of a hard landing in the first quarter of next year," he said, meaning growth of less than 8%. The Australian dollar fell to a sixweek low after the data on concern that demand growth from Australia's biggest trading partner and export market will ease. Asia shares outside of Japan dropped more than 2% and US S&P stock futures lost further ground as China's PMI added to the risk of a global recession. A downward revision to US thirdquarter growth data on Tuesday had already put markets under pressure.

Vice Premier Wang Qishan is convinced the world is heading into a major downturn, saying at the weekend that a "chronic" global recession was "certain", the most dire reading from a senior Chinese policymaker to date. Similar flash PMI surveys for the euro zone released later on Wednesday reinforced recession fears by showing the bloc's private sector contracted for a third month in November.

The World Bank forecast on Tuesday that growth in the world's biggest economy after the United States would slip to 9.0% in 2011 and then to 8.4% in 2012, adding "the risks are tilted to the downside."

China's export growth hit an eight-month low in October as industrial output grew at its weakest in a year. Up to a third of Hong Kong's 50,000 or so factories in China could downsize of shut by the end of this year, the Federation of Hong Kong Industries said this month. The exuberant Chinese property market is also coming off the boil, a factor HSBC said had weighed on the PMI. Average home prices ticked lower in October for the first time this year and property sales fell.

"Worse is yet to come," Conita Hung, head of equity research of Delta Asia Financial Group, said after the data. "Companies involved in shipping, exports and even banking and finance will be affected." Most analysts argue that China will keep to a policy Beijing has dubbed "fine tuning", under which it offers support to parts of the economy.

Source:China factory output drops most in 32 months - Economic Times

 

[isro2222]

That was expected.... Although i didnt expected the red bold part.... China's dept is worse then portugal.... China spended 500 billion dollars on stimulus in past where india just spended not even 20 billion dollars.... China depended on export just much too heavily.... All the prediction on china coming true.... it took bit time because china did its best to delay it but it seems china cant delay it anymore.... They before declared that economy would be slowed down to 7percent but after watching the world reaction that india would take over as fastest growing economy china did it best to delay it but it seems china cant hold on anymore.... China says india depended on other country for weapons.... But china depended on other country for its economy growth....

 

[CorporateAffairs]

@Isro2222

China has swept years of dust under the carpet, now the carpet is torn and the dust is out for viewing. Afraid if any Chinese media would dare to show this news only to get shot by the CCP

 

[beijingwalker]

that's way too natural considering the current global economic situation,how is India's economy now?

 

[CorporateAffairs]

that's way too natural considering the current global economic situation,how is India's economy now?

Indians are brave enough to accept the facts and figures

are the chinese ready

 

[FairAndUnbiased]

that's way too natural considering the current global economic situation,how is India's economy now?

If you didn't believe me when I said, Indian education system was a failure, you believe me now right?

 

[beijingwalker]

Indians are brave enough to accept the facts and figures

are the chinese ready

where did you learn that Chinese don't accept facts and figures??actually I always refer to international third party facts and figures when I talk.

 

[CorporateAffairs]

If you didn't believe me when I said, Indian education system was a failure, you believe me now right?

now you know, what my earlier post was all about?

 

[isro2222]

@corporateaffairs i agree with you. Chinese media dont show anything that would make communist leaders hurt.... China hates any negative news. They just hide negative news under carpet but now that negative things pilled up and became an mountain.... They cant hide it anymore....
@chinese people: india depended on indians. China depended on other countries. If they buy then chinese people get to eat....

 

[CorporateAffairs]

where did you learn that Chinese don't accept facts and figures??

here in PDF

 

[Shardul.....the lion]

What is relation between GDP growth rate and economics...

If indeed relation was there, why on earth india is growing at breakneck speed for last 10-15 years.

 

[beijingwalker]

here in PDF

Then I know that you are talking nonsense,Chinese posters refer to facts and figures way more than Indian posters here.

 

[DarK-LorD]

There's large scale labour unrest in China because of this:

China hit by labour unrest as global slowdown bites

By Marianne Barriaux (AFP)

BEIJING — China's manufacturing heartland has been hit by large-scale strikes in recent weeks, as an increasingly demanding workforce faces off with employers struggling with high costs and falling exports.

Thousands of workers in factories in the southern province of Guangdong have gone on strike in recent days, protesting over low salaries, wage cuts or tough conditions, and triggering a strong police response and some clashes.

The unrest comes as China's exports and manufacturing activity weakens, hit by falling demand due to economic woes in Europe and the United States -- both crucial markets for the export-driven economy.

"When orders and profits decline and costs of business increase for manufacturers... their first instinct is to pass those costs on to the workers," said Geoffrey Crothall, editor of the China Labour Bulletin.

He said many factories in Guangdong were cutting back on lucrative overtime, bonuses and benefits for their workers, even as living costs remain high.

"That's why we are seeing workers much more willing to go out on strike and protest," he told AFP, adding that the recent bout of unrest was the most intense since a series of strikes in the summer of 2010.

Earlier this month, more than 7,000 workers went on strike at a factory in Guangdong making New Balance​, Adidas and Nike shoes, clashing with police in a protest over layoffs and wage cuts.

In Shenzhen, the manufacturing metropolis that borders Hong Kong, more than 400 female workers at a bra factory downed tools to demand higher wages.

Alistair Thornton, China analyst at IHS Global Insight​, said Guangdong's huge army of factory staff -- many of them migrant workers -- would go on feeling the effects of the global slowdown.

"There's a lot more upward pressure from the labour force as it demands higher wages, but at the same time, it increasingly looks like there's less room in the global economy for the Chinese exporter. There's a conflict there," he said.

Ji Shao, a Beijing-based labour expert at Capital University of Economics and Business, said she had just come back from Shenzhen, and painted a pessimistic picture.

She added that a huge number of small enterprises could be forced to shut their doors, pressured by high costs, difficulty accessing loans and the global downturn.

Vice Premier Wang Qishan, China's top finance official, warned just over a week ago that the global recession was here to stay and would affect the world's second largest economy.

Other countries in Asia are also bracing for a rough ride. Bank of Japan Governor Masaaki Shirakawa said Thursday that Tokyo should prepare for potential major shocks from Europe.

Manufacturing is a key driver of growth and employment in China. A fall in month-on-month exports in October -- triggered in part by the deepening eurozone debt crisis -- fuelled fears for the sector.

Mark Williams, China economist at Capital Economics, said the level of exports in the country had remained essentially flat from one month to the next since the first quarter of the year.

"The outlook is not at all positive, so a lot of employers will be extremely concerned about the position they will be in in three to six months," he added.

A survey conducted by banking giant HSBC showed that China's manufacturing activity -- which has largely been contracting in recent months -- slumped to its lowest level in 32 months in November.

Analysts say any more negative economic readings will force the government to undergo a significant policy turnaround as leaders, fearing mass unrest, seek to avoid a repeat of the huge job losses during the 2008 global crisis.

Until recently, the government had been focused on fighting soaring inflation and rolled out a series of measures to ease price rises, such as hiking interest rates or curbing the amount of money banks can lend.

These appear to have worked, as inflation slowed sharply in October, with the consumer price index rising 5.5 percent year-on-year, the slowest pace since May.

But it is still too high for the government's liking, with food prices recording double-digit growth.

"Inflation disproportionately affects the poor, and workers in low-cost exporters tend to be the poorer set of the population," said Thornton.

In his comments a week ago, Vice Premier Wang said it was better to have an "unbalanced recovery" than a "balanced recession".

"This perfectly encapsulates the shift in mentality that's gone on at the senior leadership level -- the whole of this year, they have been focused on calming the property market and controlling inflation," said Thornton.

"But now, that has been slightly put to one side. The bigger priority is now going to be maintaining growth."

But analysts say the large-scale unemployment that hit China in 2008 -- when 20 million migrant workers lost their jobs -- is unlikely to recur under current circumstances.

"It depends on how bad the global downturn is. It's clear how vulnerable the export sector is to external developments. Should the eurozone deteriorate to the extent we saw in 2008, the same thing would happen again," said Thornton.

"But at the moment, it doesn't look like it's going to be as bad as 2008-9."

Copyright © 2011 AFP. All rights reserved. More »

AFP: China hit by labour unrest as global slowdown bites

 

[DarK-LorD]

There's large scale labour unrest in China because of this:

China hit by labour unrest as global slowdown bites

By Marianne Barriaux (AFP)

BEIJING — China's manufacturing heartland has been hit by large-scale strikes in recent weeks, as an increasingly demanding workforce faces off with employers struggling with high costs and falling exports.

Thousands of workers in factories in the southern province of Guangdong have gone on strike in recent days, protesting over low salaries, wage cuts or tough conditions, and triggering a strong police response and some clashes.

The unrest comes as China's exports and manufacturing activity weakens, hit by falling demand due to economic woes in Europe and the United States -- both crucial markets for the export-driven economy.

"When orders and profits decline and costs of business increase for manufacturers... their first instinct is to pass those costs on to the workers," said Geoffrey Crothall, editor of the China Labour Bulletin.

He said many factories in Guangdong were cutting back on lucrative overtime, bonuses and benefits for their workers, even as living costs remain high.

"That's why we are seeing workers much more willing to go out on strike and protest," he told AFP, adding that the recent bout of unrest was the most intense since a series of strikes in the summer of 2010.

Earlier this month, more than 7,000 workers went on strike at a factory in Guangdong making New Balance​, Adidas and Nike shoes, clashing with police in a protest over layoffs and wage cuts.

In Shenzhen, the manufacturing metropolis that borders Hong Kong, more than 400 female workers at a bra factory downed tools to demand higher wages.

Alistair Thornton, China analyst at IHS Global Insight​, said Guangdong's huge army of factory staff -- many of them migrant workers -- would go on feeling the effects of the global slowdown.

"There's a lot more upward pressure from the labour force as it demands higher wages, but at the same time, it increasingly looks like there's less room in the global economy for the Chinese exporter. There's a conflict there," he said.

Ji Shao, a Beijing-based labour expert at Capital University of Economics and Business, said she had just come back from Shenzhen, and painted a pessimistic picture.

She added that a huge number of small enterprises could be forced to shut their doors, pressured by high costs, difficulty accessing loans and the global downturn.

Vice Premier Wang Qishan, China's top finance official, warned just over a week ago that the global recession was here to stay and would affect the world's second largest economy.

Other countries in Asia are also bracing for a rough ride. Bank of Japan Governor Masaaki Shirakawa said Thursday that Tokyo should prepare for potential major shocks from Europe.

Manufacturing is a key driver of growth and employment in China. A fall in month-on-month exports in October -- triggered in part by the deepening eurozone debt crisis -- fuelled fears for the sector.

Mark Williams, China economist at Capital Economics, said the level of exports in the country had remained essentially flat from one month to the next since the first quarter of the year.

"The outlook is not at all positive, so a lot of employers will be extremely concerned about the position they will be in in three to six months," he added.

A survey conducted by banking giant HSBC showed that China's manufacturing activity -- which has largely been contracting in recent months -- slumped to its lowest level in 32 months in November.

Analysts say any more negative economic readings will force the government to undergo a significant policy turnaround as leaders, fearing mass unrest, seek to avoid a repeat of the huge job losses during the 2008 global crisis.

Until recently, the government had been focused on fighting soaring inflation and rolled out a series of measures to ease price rises, such as hiking interest rates or curbing the amount of money banks can lend.

These appear to have worked, as inflation slowed sharply in October, with the consumer price index rising 5.5 percent year-on-year, the slowest pace since May.

But it is still too high for the government's liking, with food prices recording double-digit growth.

"Inflation disproportionately affects the poor, and workers in low-cost exporters tend to be the poorer set of the population," said Thornton.

In his comments a week ago, Vice Premier Wang said it was better to have an "unbalanced recovery" than a "balanced recession".

"This perfectly encapsulates the shift in mentality that's gone on at the senior leadership level -- the whole of this year, they have been focused on calming the property market and controlling inflation," said Thornton.

"But now, that has been slightly put to one side. The bigger priority is now going to be maintaining growth."

But analysts say the large-scale unemployment that hit China in 2008 -- when 20 million migrant workers lost their jobs -- is unlikely to recur under current circumstances.

"It depends on how bad the global downturn is. It's clear how vulnerable the export sector is to external developments. Should the eurozone deteriorate to the extent we saw in 2008, the same thing would happen again," said Thornton.

"But at the moment, it doesn't look like it's going to be as bad as 2008-9."

Copyright © 2011 AFP. All rights reserved. More »

AFP: China hit by labour unrest as global slowdown bites

 

[beijingwalker]

There's large scale labour unrest in China because of this:

there are unrest everywhere in this world,look at New York and London.but still,better than some places which always have bombs problems.

30 November 2011 Last updated at 08:16 GMT

India bomb blast targets festival in Imphal, Manipur