After a key indicator of manufacturing health fell to a 9-month low yesterday, Keith Bradsher of The New York Times details the mounting inventories of unsold goods weighing on Chinese businesses:
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.
For The Globe and Mail, Mark MacKinnon writes that output woes in China and Europe have sent the world’s central banks scrambling for answers:
This latest batch of troubling signals – combined with fresh worries about the damage wreaked by the burgeoning European debt crisis – has triggered a selloff in global equity markets. As well, central banks in China, the United States and Europe are being called on to ride to the rescue with more stimulus and bailout measures.
The trouble in the world’s workshops stems from the recession in Western Europe amid a spreading debt crisis and the stumbling recovery in the United States.
China, once viewed as the saviour that would reignite global growth, has not been able to replace falling demand from the United States and the European Union, by far its biggest customers, to keep its export-driven manufacturing machine humming.