Steel is the measure of an industrial economy. Or so thought Chairman Mao when, to achieve his utopian Great Leap Forward in 1958, he ordered the masses to quit their communal fields and instead melt woks and teakettles to forge pig iron in farmyard blast furnaces. The man-made famine that followed killed millions.
Today a sequel of sorts is unfolding”but it’s a crisis of plenty, not want. China has built so many steel foundries in recent years that it is poised to flood global markets.
…And as goes steel, so goes the rest of China’s industries. Its factories, builders and foundries arguably produce too much aluminum, cement and cotton; as well as too many T shirts, cell phones and cars. Runaway fixed-asset investment”the construction of unneeded factories, office towers and resorts”combined with sluggish consumer demand, has knocked the Middle Kingdom’s macroeconomy severely out of whack.
(Via Peking Duck.)
