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发帖数: 3150 | 1 China Stimulated Its Economy Like Crazy After The Financial Crisis ... And
Now The Nightmare Is Beginning
http://www.businessinsider.com/chinas-excess-capacity-problem-2
China is seeing slower economic growth.
Concerns are building over a massive credit bubble, and some say it is no
longer an engine of global growth.
Excess capacity — in which demand for products is less than potential
supply — continues to be one of China's biggest problems.
An excellent piece by Jamil Anderlini in today's Financial Times looks at
how excess capacity and subsidies are threatening specific industries and
imperiling the Chinese economy.
A major contributor to this excess capacity problem: China's investment-led
growth-model role in the nation's excess capacity problem.
This IMF chart shows the contribution of investment to GDP growth from 2000
on.
 http://static2.businessinsider.com/image/51bf5425ecad043066000029-929-679/screen shot 2013-06-17 at 2.25.21 pm.jpg" onload="adjustimg(this)">
China's massive 4 trillion yuan stimulus, unleashed after the Lehman Crisis
to stem massive unemployment, only made the excess capacity problem worse.
PIMCO's Raja Mukherji pointed out that local governments in China launched
their own stimulus at the time with about 13 trillion yuan in investments.
"China’s 2008 economic stimulus programs may have been necessary for
stabilization, but they appear to have been too large, too intensively
focused on fixed assets and too heavily concentrated on construction,"
Mukherji wrote in a 2012 note.
"All this stimulus led to massive increases in domestic capacity for steel,
cement and aluminum – while demand from export markets fell and property
deflated amid financial tightening. As a result, these industries
experienced massive excess capacity."
What is excess capacity and why is it a problem?
Chinese policy makers have been concerned about excess capacity since 2005.
In the 2012 Central Economic Work Conference — in which officials assess
the current state of the economy and draw on this to set the tone for the
next year's macroeconomic policy — fixing overcapacity was once again made
a priority as China begins to rebalance its economy.
The IMF's Article IV assessment published in 2012 put China’s average
capacity utilization about 60% at the end of 2011, from 80% at end-2007.
Capacity utilization is a way of gauging slack in the economy.
This chart from SocGen draws on the IMF report to show the decline in
capacity utilization:
China capacity utlization
http://static4.businessinsider.com/image/51bf4fd2ecad04855f000017-996-736/screen shot 2013-06-17 at 2.07.16 pm.jpg" onload="adjustimg(this)">
The IMF said at the time that China had suffered excess capacity and
utilization rates that were constantly below 80% since the 2000s. In 2007,
strong external demand helped push the utilization rate higher, but this
took a hit again after the Lehman crisis.
While GDP growth recovered quickly after the crisis, the IMF found that
China has been growing below potential since 1997, and that the problem isn'
t just cyclical.
China can't count on external demand to close output gap, neither can it
unleash more stimulus, Societe Generale's Wei Yao wrote in a 2012 note.
Excess capacity impacts many Chinese industries including chemicals, ferrous
and non-ferrous metals, and newer industries like renewable energy. China's
solar power industry has been hit by anti-dumping and anti-subsidies
investigations.
The inventory of finished goods sub-index in China's manufacturing PMI
report, climbed to 50.2 in March. This showed that excess capacity
conditions were deteriorating. This has since fallen below 50 but not enough
to for concerns to wane.
Recently, we saw China's biggest steelmaker Hebei Iron |
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