New York Times - china's once hot economy is turning cold

Published: May 24, 2012

XI’AN, China — A nationwide real estate downturn, stalling exports and declining consumer confidence have produced what a Chinese cabinet adviser, quoted on the official government Web site on Thursday, characterized as a “sharp slowdown in the economy.”
Though the Chinese economy continues to expand, construction workers are losing jobs in droves and retail sales grew last month at the slowest pace in more than three years. Investments in fixed assets have increased more slowly this year than in any year since 2001.
The most striking feature of the slowdown is that it extends beyond the coastal provinces, which depend on exports and are closely linked to the global economy, to the country’s far more insular interior, including cities like Xi’an here in northwestern China.
China’s unexpected economic difficulties are starting to unnerve investors in world markets, especially commodity markets, as China is the world’s largest consumer of most raw materials and the second-largest consumer of oil.
A deepening slowdown would ripple across the world economy. Until now, China’s economy barreled ahead mostly unhindered as the main engine of global growth, even as Europe struggled with its government debt crisis and the United States limped along with a crippled housing market.
Government indexes show real estate prices are falling in more than half of the country’s top 70 urban markets, Xi’an among them. Standard & Poor’s Ratings Services and Moody’s each issued reports on Thursday warning that many of China’s real estate developers face a severe cash squeeze as apartment sales slow to a crawl. The developers still owe heavy interest payments on bank loans.
“Weak property developers in China are likely to face a test of their survival this year,” S.& P. said.
China’s economy was 8.1 percent larger in the first quarter of this year than a year earlier, but virtually all of that growth took place last year. The economy barely grew in the first quarter compared with the fourth quarter of 2011, and the second quarter of this year is likely to show even less growth from the preceding quarter, said Diana Choyleva, a China economist in the Hong Kong office of Lombard Street Research.
The World Bank also warned on Wednesday of a slowdown.
“Clearly the economy is much, much weaker than most people thought until recently,” Ms. Choyleva said. “They have a real mess on their hands.”
China is the world’s largest importer of a long list of commodities, like iron ore and copper. It has also been a big buyer of European factory equipment and luxury goods. The United States economy is much less exposed to a slowdown in the Chinese economy, with exports of goods to China representing less than 0.7 percent of American economic output last year.
Benefiting from heavy government spending on highways and other infrastructure and voracious demand for apartments as poor laborers arrived from the countryside, China’s inland cities had continued to expand even when the rest of the world’s economy fell into serious difficulty in late 2008 and early 2009. But now the economic troubles are evident here in Xi’an, an economic cornerstone of northwestern China that serves as one of the country’s largest transportation and distribution hubs and a manufacturing center for everything from bulldozers to aircraft components.
Sun Yufang, a wholesale dealer in Xi’an in ovens, ranges and water heaters, said that residents had nearly stopped outfitting new apartments or redecorating old ones.
“We didn’t really feel the global financial crisis, but this year, we’ve really felt it — I don’t see a solution unless people start buying,” Ms. Sun said, sitting in a spacious shop with no customers in sight.
Premier Wen Jiabao expressed concern last weekend about the economy after an inspection tour to Wuhan in east-central China. He then led a cabinet meeting on Wednesday that produced the government’s strongest statement yet.
The government should “place stabilizing growth in a more important position and carry out pre-emptive policy adjustments and fine-tuning more forcefully according to the changing situation,” the cabinet statement said.
An explanatory statement from the official Xinhua news agency drafted on Wednesday and posted on the Chinese government’s Web site on Thursday cited Zhang Liqun, a senior economist advising the cabinet, as saying that, “the sharp slowdown in the economy has aroused attention from policy makers.”
A preliminary reading of a monthly purchasing managers index showed that manufacturing had continued to weaken in May, with the index falling to 48.7 from 49.3 in April; a figure below 50 indicates a slowing sector.
The cabinet called for stimulating the economy through faster construction of railroads, schools, clinics and other infrastructure. With the Chinese economy still heavily dependent on investment spending, some economists are optimistic that China can quickly reignite growth.
“When you’ve got state banks lending to state enterprises to implement the state’s five-year plan, you don’t have a lot of downside to investment,” said Paul Gruenwald, a former International Monetary Fund official in Hong Kong who is now the chief Asia economist at ANZ, one of Australia’s biggest banks.
China has the financial resources to expand government spending sharply. China has a low ratio of debt to economic output, even when sizable local government debts are added to the national debt. Chinese banks have among the world’s lowest rates of loans to deposits, although some banking analysts have questioned whether many loans by state-owned banks to politically influential borrowers will be repaid.
But with the country having finished building much of its infrastructure, it is having a harder time finding further projects that can pass cost-benefit analyses. The Chinese interior has been the biggest beneficiary of infrastructure spending over the last decade, but now shows signs of catching up with the more developed coast.
The Xi’an airport opened a third terminal and another runway on May 3, giving it the capacity to handle as many passengers as John F. Kennedy International Airport in New York, despite considerably smaller daily traffic. Bullet trains connect Xi’an to Zhengzhou, nearly 300 miles to the east, while no fewer than three concentric beltways encircle Xi’an, although traffic jams continue to bedevil the ancient city’s core.
One more big infrastructure project remains: the city opened its first subway line late last year, plans to finish a second line later this year and has begun construction on a third. But crisscross the city these days and there are fewer streets torn up for building projects than in the past.
At the same time, residential real estate construction has slowed sharply after the government imposed a stringent ban last year on the purchase of multiple homes in an effort to discourage speculation and make housing more affordable. Wei Li, a real estate broker in downtown Xi’an, said that prices had fallen 20 percent since the start of this year for new apartments in the hundreds of towers under construction on the city’s periphery, but she said downtown real estate prices were stable. Construction material vendors here, however, say that apartment prices are also falling in downtown neighborhoods.
Developers across the country have responded to the drop in prices by abandoning the longstanding practice of floodlighting construction sites and working around the clock. They have cut back to one daytime shift, sharply reducing the demand for construction workers.
“It’s getting harder and harder to find work,” complained Li Bo, a construction worker here.
Xi’an is best known in the West as an ancient capital of China, a Silk Road entrepôt that is home to the terra-cotta warriors. But modern-day Xi’an also plays an important role in the Chinese economy as a regional economic hub with eight million residents.
Store owners and other traders from across northwestern China converge at large covered markets here to buy goods, making Xi’an one of the best places to take the pulse of China’s interior. And now, that pulse feels weak for consumer spending.
Until late March, Ma Xiechuan sold pork at his butcher shop here by hacking large chunks and handing them to lines of customers to take home and carefully slice and dice. But with sales now down by a third, he has so much extra time that he deftly wields his steel cleaver to produce thin slivers, ready for the customer’s wok.
“It’s the fastest downturn in business I’ve seen in more than 10 years here,” Mr. Ma said.
Yian Leilei, a wholesaler of tablecloths and car seat covers, said that sales nose-dived after Chinese New Year on Jan. 23 and had not recovered. Wang Heiyen, a wholesaler of insulated food and beverage containerssaid his sales were sliding steadily and customers were becoming ever pickier. Ding Lei, the co-owner of a paint and plaster store said his sales had halved since the start of this year. “People are just not buying apartments,” Mr. Ding said. “It was O.K. in 2009. I’ve never seen it as bad as it is now.”

Mayor Dong Jun of Xi’an expressed worry in a post last week on the city’s Web site.

“The economic situation in the whole city from January through April this year is not that optimistic,” he said. “Maintaining the growth rate continues to be very difficult.”


中國西安- 一輪全國性的樓市低迷、出口放緩、消費者信心下滑已經導致“經濟急劇減速” ,中國政府官方網站週四援引一位國務院參事的此番描述。
政府數據顯示,中國最核心的70個大中城市中有一半以上的房價正在下跌,西安居於其中。評級機構標準普爾(Standard & Poor's)和穆迪(Moody's)週四分別發布報告,警告說由於住宅銷量滯緩,中國眾多房地產開發商面臨著嚴重的資金周轉困境。開發商還背負著沉重的銀行借貸利息款。
同先一年同期相比,中國第一季度的經濟增長率為8.1%,但事實上所有的增長都是發生在去年。同2011年第四季度相比,第一季度的經濟幾乎持平,且今年第二季度似乎較前一季度增長更為遲緩,黛安娜•喬伊列娃(Diana Choyleva)如是說道,她是朗伯德街研究所(Lombard Street Research)駐香港的一名研究中國的經濟學家。
世界銀行(World Bank)週三也對減速發出警告。
“很明顯,中國經濟要比大部分人此前所想像的要虛弱得多,” 喬伊列娃說道。 “他們手中擺放著一個爛攤子。”
中國是世界上一系列大宗商品的最大進口國,如鐵礦石和銅。它還成為了歐洲工廠設備和奢侈品的一個大買家。美國經濟受中國經濟減緩的影響要小得多,去年美國對華商品出口只占美國經濟輸出的不到0.7 %。
“當國家銀行都將資金借貸給國企去執行政府五年計劃時,你就不會有太多用於投資的底錢,”一名身在香港的前國際貨幣基金組織(IMF)官員顧文德(Paul Gruenwald)這麼說道,他現為澳洲最大銀行之一的澳新銀行(ANZ)首席亞洲經濟學家。
西安機場第三航站樓和另一條跑道在5月3日投入運營,得以容納如紐約肯尼迪國際機場(John F. Kennedy International Airport)那樣多的乘客,儘管相比其每日客流量要少得多。連接西安與鄭州的高鐵,全程從西向東近300英里,差不多相當於西安的三條環城高速之和,不過交通擁堵仍然肆虐著這座古老城市的核心區域。
“這是我在這兒十多年來所目睹的生意上最快速的衰退,” 馬謝川說道。
顏磊磊(音譯)是一名桌布和汽車座套批發商,說銷量在1月23日的中國新年之後暴跌,至今不見復甦。王黑岩(音譯)是一名食物和飲料保溫瓶批發商,說他的銷量也在穩定下滑,且顧客甚至變得更為挑剔了。丁磊是一家塗料和石膏店舖的共同所有人,說從今年年初開始到現在,他的銷量已經減半了。 “人們都不買房了,” 丁磊說。 “2009年的時候還無所謂。我從沒有見過像現在這般糟糕的狀況。”
“今年1至4月份全市經濟運行情況不容樂觀, ”他說道。 “ 保持增長的形勢依然嚴峻。 ”



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