China’s an Upside-Down Economy

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Neil Gough, 中国传统行业成经济增长掣肘. 纽约时报中文网, Mar 12, 2015
cn.nytimes.com/china/20150312/c12chinaecon/

, which is translated from

Neil Gough, An Upside-Down Economy; Traditional strength in China has become weakness. New York Times, Mar 12, 2015.

Excerpt in the window of print: A sharper pullback than the country and its leaders may be able to manage.

Quote:

"With scant demand at home [mainly due to 'country’s shrinking housing market, the most voracious consumer of' steel besides railways], the remaining mills have looked beyond their borders for business. China shipped a record 100 million metric tons of steel overseas in the 12 months ended in February, a 55 percent increase from the previous year.

"The country’s traditional drivers of growth — manufacturing, real estate, local government infrastructure spending — are now among the biggest threats to China’s economy. A slowdown in those areas is expected, and even baked into the country’s economic outlook.

"'If you look at what companies are suffering the most in China, it is heavy industry,' Mr [Louis] Kuijs[, the chief economist for greater China at the Royal Bank of Scotland,] said.

"'The near-term dilemma is that the slowdown in the traditional sectors is happening very quickly, in the real estate market or manufacturing sectors,' said Haibin Zhu, the chief China economist at JP Morgan in Hong Kong. [In addition, reforms could cause pain, at least temporarily]

"Around 60 percent of all rail freight traffic in China comes from transporting coal. The amount of rail freight fell about 11 percent in December and 9 percent in January compared with a year earlier — the steepest decline since the financial crisis. * * * The [economic] slowdown comes at a vulnerable time for China’s rail industry, which is facing overcapacity and heavily indebted. China Railway Corporation, the main rail operator that was spun out of the Ministry of Railways in 2013, had total debt at the end of September of 3.5 trillion renminbi, or about $567 billion — up 26 percent from the end of 2012.