Perhaps the call to "annihilate" overproduction is only propaganda. The China Beige Book shows the economy slowing sharply in Q4 (see below). Steel industry insiders were expecting for a massive shut down and bankruptcy wave in early 2016 (see: Chinese Steel Industry "Sliding Into The Abyss"; Chinese New Year Could Bring Mass Bankruptcies). Surplus production is going away one way or another in 2016, so the government might as well get out in front with a big and loud policy to shut production. The government will step in to manage the fallout of what is really a market decision. Instead of failure as the economy slumps, the government will claim great success.
As for that beige book. Bloomberg: China Beige Book Shows ‘Disturbing’ Economic Deterioration
National sales revenue, volumes, output, prices, profits, hiring, borrowing, and capital expenditure were all weaker than the prior three months, according to the fourth-quarter China Beige Book, published by CBB International. The indicator is modeled on the survey compiled by the Federal Reserve on the U.S. economy, and was first published in 2012.
...While retail and real estate held up reasonably well, manufacturing and services performed poorly, with revenues, employment, capital expenditure and profits weakening.
The survey shows "pervasive weakness," Miller wrote in the report. "The popular rush to find a successful manufacturing-to-services transition will have to be put on hold for a bit. Only the part about struggling manufacturing held true."
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