Chinese Factories Closing by the Tens of Thousands
November 3rd, 2008This story uses the phrase, “Government statistics.” Not just any government’s statistics, but China’s government statistics! HA.
Anyway, here’s some of the follow-on effects of Joe and Jane Six Pack not being able to use their house as an ATM anymore.
Via: Los Angeles Times:
Financially troubled plants are being abandoned by the boss, leaving behind unpaid workers and debts.
First, Tao Shoulong burned his company’s financial books. He then sold his private golf club memberships and disposed of his Mercedes S-600 sedan.
And then he was gone.
And just like that, China’s biggest textile dye operation — with four factories, a campus the size of 31 football fields, 4,000 workers and debts of at least $200 million — was history.
“We’re pretty much dead now,” said Mao Youming, one of 300 suppliers stiffed last month by Tao’s company, Jianglong Group. Lighting a cigarette in a coffee shop here, the 38-year-old spoke calmly about the bleak future of his industrial gas business. Tao owed him $850,000, Mao said, about 60% of his annual revenue. “We cannot pay our workers’ salaries. We are about to be bankrupt too.”
Government statistics show that 67,000 factories of various sizes were shuttered in China in the first half of the year, said Cao Jianhai, an industrial economics researcher at the Chinese Academy of Social Sciences. By year’s end, he said, more than 100,000 plants will have closed.
As more factories in China shut down, stories of bosses running away have become familiar, multiplying the damage of China’s worst manufacturing decline in at least a decade.
Even before the global financial crisis, factory owners in China were straining under soaring labor and raw-material costs, an appreciating Chinese currency and tougher legal, tax and environmental requirements. When the credit crunch took hold — prompting Western businesses to slash orders for Chinese goods and bankers to curtail loans to factories — many operations were pushed over the edge.
More: Chinese Manufacturing Activity Slows Sharply
China’s economy has been running so fast and so hot for so long that it was pretty much bound to be devestated by the credit-crunch, considering that a period of such runaway growth has to be balanced out somehow.
The Chinese equivalent of the dot.com bust. The sound business models will survive. The others? Chinese is well acquainted with poverty and starvation. They’ve got the survival strategies down. Of course, millions of elders, infants, ill, and dim-witted will die. That’s one of the strategies of the ones who don’t die, thanks to God’s plan.
This was the essential flaw in the globalists’ Master Plan: Move all of the industries in the U.S. (and other developed countries) to China; this would have the effect of forcing Western wages to “converge” with low Chinese wages (as predicted by economist Paul Samuelson’s Factors Endowment Model of international trade theory).
The only problem is, their scheme worked too well, too fast. Americans have become poorer so quickly that they can’t even afford to keep buying the cheap Chinese-made doodads at Wal-Mart, something which this scheme depended on. Instead, we’re going to have a global deflation that sinks both China and the U.S. (along with the rest of the world), just like communist China’s favorite Westerner – Karl Marx – predicted would happen.
China, Taiwan begin historic talks on closer ties
Normally I’d dismiss the above-linked headline not worth of any more time-of-day than a headline about Middle-East peace talks…yet a sudden thought struck me: what if Taiwan is actually now believed to be more crucial to the Chinese economy in its role as a free country than would be a repossessed Empire-state? I mean, you know, the same way it’s always been worth more to the U.S. that way?
It’s a radical thought.
Still. I’d never actually bet on the present Chinese government being capable of having a “radical thought”.
Chinese is well acquainted with poverty and starvation. They’ve got the survival strategies down.
Do they ever. Read this article and pay special attention to the part about “swapping children, making food.” It’s really quite chilling.