Thursday, October 23, 2008

Thousands of Chinese factories close.

USA Today (10/22, Macleod, Wiseman) reports that "thousands of Chinese factories have shuttered in the past year." Among the factors are "an export-killing global slowdown" and "rising materials costs that have squeezed profit margins," as well as "a deliberate Chinese government campaign to regulate sweatshop factories out of business." Some analysts have argued "that China needs to keep annual economic growth of eight percent or nine percent to absorb the 24 million people entering the labor force every year or risk social instability." Current predictions peg China's growth at eight or nine percent in 2009. China also faces "collapsing home prices," which are expected to further hamper growth. "The good news: The forecast growth rates are still pretty impressive by any other economy's standards; Chinese exports have proved surprisingly resilient, growing nearly 22 percent in September from a year earlier; and the government in Beijing is sitting on enough go on a spending spree if needed to rescue the Chinese economy."

Report indicates that Chinese machine tool demand still growing. Plant Engineering Live (10/21) reported that "demand for machine tools in China is projected to increase 13 percent annually to 606 billion yuan in 2012, outpacing growth in most other parts of the world." According to a new study from the Freedonia Group, Inc., a Cleveland-based industry market research firm, "advances will be supported by rapid growth in durable goods production, especially for industrial machinery, transportation equipment, primary and fabricated metals, and electrical and electronics goods." The growth of China's infrastructure will also "result in increases in ceramic, glass, stone, and wood product demand, which will further contribute to machine tool market gains." Plant Engineering Live pointed out that "the report comes as the Chinese economic growth has slowed somewhat due to pressures from the global economic crisis. While Chinese manufacturing grew at a 9.9 percent rate in the first three quarters of 2008, that was still more than 2.3 percentage points slower than the same time last year."