Economic Barometer: China’s Glut of Goods

September 3, 2012 James Heinsman Economic Barometer

After about thirty years of unsuppressed growth, China is experiencing an unfamiliar phenomenon, unsold products. Piling up on shop floors, in car dealerships and in factory warehouses are goods which no one is buying, at least not as fast as they are being produced, or as fast as they were sold in the past.

The overabundance of goods includes items like household appliances, steel, cars and apartments, and it’s harming China’s efforts to escape from its recent economic slow-down. Despite the Chinese government’s efforts to disguise the inventory bubble by either blocking or changing the economic data, the main non-governmental survey shows that the inventories of completed products rose at a much faster rate in August than in any other month since the records have been kept, in April 2004. The previous record was reached in June, with May and July also showing rising numbers.

“Across the manufacturing industries we look at, people were expecting more sales over the summer, and it just didn’t happen,” said Anne Stevenson-Yang, the research director for J Capital Research, an economic analysis firm in Hong Kong. With inventories extremely high and factories now cutting production, she added, “Things are kind of crawling to a halt.”

Ann Stevenson-Yang, China, inventory glut, J Capital Research,

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