Well once we get through the latest financial crisis (remember when they told us it was the kitchen sink quarter last fall?) - we can begin to focus on the disaster that is the economy, errr.... I mean, we can focus on the "slightly slow growth" economy with benign inflation that has not become anchored in the citizanery psyche.Unlike the talking heads, I do not focus on the highly manipulated CPI or PPI - if you've been around a while you know why. I love to use the import report which came out today [Jun 12: Import Prices Continue to Breach New Records] - and boy is this one a doozy. Click on that link in the previous sentence for some background.We've been tracking this report since the blog began, since frankly we import most of our goods into America - so by tracking those prices we can see what inflation "really is". Now keep in mind, crude oil is part of the figure but let's look at the trend we have been trackingNovember 07, the year over year import price increase was 11.4%
[Dec 12: Real Inflation Showing in Reports not Called PPI/CPI]
January 08, the year over year import price increase was 13.7%
[Feb 15: Today's Import Report Continues to Support my Stagflation Thesis]
March 08, the year over year import price increase was 15%
[Apr 11: GE Warning and Import Prices Show us Real Inflation]April 08, the year over year import price increase was 15.4% [
May 13: Import Prices Continue to be a Disaster]
May 08, the year over year import price increase was 17.8%
[Jun 12: Import Prices Continue to Breach New Records]Drumroll - June 2008 -----> 20.5%!
Boo Yah! But no inflation in America. Only the rest of the globe... or so we are told insistently each month.
Prices of goods imported into the U.S. rose more than forecast in June as record energy costs and a decline in the dollar made purchases of foreign products more expensive.
The 2.6 percent increase in the import price index last month matched the gain in May, the Labor Department said today in Washington. The index jumped 20.5 percent from a year ago, the biggest year-over-year increase on record. Prices excluding petroleum rose 0.9 percent last month.
Food prices rose 1.9 percent in June and were up 15.8 percent from a year earlier, the biggest year-over-year jump since this measure began in 1977.
The year-over-year increase for June in the main index was the biggest since it was first published in 1982
Prices for imported industrial supplies and materials increased 5.8% last month, and were up 50.1% year over year.
Excluding all fuels, import expenses rose 6.6 percent in June versus a year earlier. (whew! thank god no one uses fuel! So the "non fuel, non food" only went up 6.6% - that works wonders when workers wages are going up by half as much!)On to the other key measure we love to track, and we were very early on - the change from China as a deflationary pressure to an inflationary pressure ; if you are interested in this developing situation I have a history of stories on the subject here. Very few are talking about this in the mainstream - we used to see price decreases from China, now just the opposite.
Prices of goods from China were up 0.6 percent, those from Latin America rose 2.9 percent and imports from the European Union cost 0.6 percent more in June. (this ties last month's record)
Prices for goods from China rose to a 4.8% annual gain.(this is a new record)Folks, we are way overdue for a rally - we needed an "event" - and this "foregone conclusion" of the nationalization of our mortgage market strikes a chord as a potentially good one for this cycle. (quite interesting to see no real panic today - so apparently it's all priced in by now??) Nothing straight down. Or up. But please don't forget the reality of what is happening in the "real economy" as the market slithers upward (one of these days) and you are assured everything will be ok "by the 1st half of 2009" (told to you by the same people who said in 2007 there were no major issues, and then when issues starting spreading told you everything will be fine by first half 2008, and then second half 2008, and so on and so forth) Their Kool Aid is dangerous. Inflation is becoming a disaster, and our Federal Reserve (non political of course) sits on its hands to bail out banks with low rates, continuing to throw middle class and lower class to the wolves; in sharp contrast to the other major "1st world" countries across the globe. Enjoy.Or I could just be pulling a fast one on you and as Phil Gramm says, people such as I are the root cause of a nation of whiners. I assume he relies on government reports. Lies. Lies. And more Damn Lies.
2008年7月11日 星期五
China's Export Machine Threatened by Rising Costs
Orders Drop, Shops Idle in Sweater City; Losing Wal-Mart
By JAMES T. AREDDY See Corrections & Amplifications belowJune 30, 2008; Page A1
HONGHE, China -- As a sign over its main boulevard proclaims, Honghe is "China's Famous Town for Sweaters." But the economy of sweater town is unraveling, providing an early sign that China's manufacturing sector may be entering middle age.
WSJ's James Areddy details the decline of a sweater-making town in China that's suffering due to falling demand from a key market: the U.S. (June 30)
Over the past two decades, this city about 90 minutes' drive from Shanghai built a comfortable niche in the global economy. At the industry's height in recent years, more than half of Honghe's 100,000 residents worked in 100 factories and 8,000 shops that knitted, dyed, packaged and shipped some 200 million sweaters a year. The local government says the enterprises brought in $650 million a year in revenue.
Now many exporters and workshops here have shut their doors. Others, their work floors partly idle, are cutting costs. Some of the migrant workers who came here for jobs are returning home.
Manufacturers say their profits have dwindled as they pay out more for raw materials and energy. China's strengthening currency has made Honghe's products more expensive for important markets such as the U.S., where the price of Chinese goods surged a record 4.6% in May from the previous year, according to the U.S. Commerce Department. Foreign buyers, used to inexpensive Chinese products and nervous about economic weakness at home, are often refusing to pay more.
Beijing, too, has contributed to the squeeze: Companies say the government's tougher protection for workers and the environment has made it more expensive to do business. Foreign buyers say tighter visa policies have made it harder for them to visit Chinese factories or attend trade shows.
These pressures are felt by enterprises across China. But none have been hit harder than the companies that feed the vast global appetite for inexpensive goods such as toys, household goods, shoes and clothes. Manufacturers of low-cost products have been a key engine of China's economic miracle, helping to turn the country into the world's No. 2 exporter after Germany. For years, these companies continued to grow by expanding their volumes and trimming margins to undercut the competition. As material and labor costs rise and China's currency strengthens, these manufacturers are among the least able to absorb the costs.
The transformation is most apparent in the boomtowns that tied their fortunes to making one product cheaply, from Guangdong province in the south to Honghe's environs in the Yangtze River Delta. Many of these manufacturing centers have seen hundreds if not thousands of factories and workshops close in recent months, industry executives say. In Shengzhou, a city near Shanghai that claims to make one-third of the world's neckties, manufacturers are trying to hold a united front to boost prices. Dongguan, in Guangdong, is seeing makers of toys, shoes and brushes close shop.
Shift in Fortunes
"This is the year when things finally changed," says Peter Shay, a fashion-industry consultant in Hong Kong at Marketing Management Group Inc. "For the first time in memory, prices are going up."
The shift in fortunes has been swift for entrepreneurs such as Yao Herong, chairman of Jiaxing Yishangmei Fashion Co., one of Honghe's biggest exporters. The family-owned company was booming in 2005, when Mr. Yao landed the biggest customer of them all, Wal-Mart Stores Inc. The U.S. market soon accounted for 20% of his business, he says.
But big orders from Wal-Mart and other U.S. customers are drying up, he says. In the workshop floor below his office on a recent day, dozens of knitting machines stood idle. A Wal-Mart spokesman said in an email that the company currently doesn't source at Honghe factories but declined to offer additional comment.
"We are very worried in this business," Mr. Yao says.
While painful, such difficulties could usher in a more mature phase of China's economic development. The country's sweater industry, like many others, is arguably overbuilt: Honghe is one of at least six Chinese cities claiming to produce more than 100 million sweaters annually. In such low-cost sectors, analysts predict a coming wave of consolidation that could boost efficiency. They say companies will also be forced to innovate so they can compete on factors other than price.
Many Chinese economists and officials think the country has relied too much on cost-cutting and simple production models to boost exports. "Such a high dependence on foreign trade is not good for China," says Yu Yongding, a Beijing-based researcher at the Chinese Academy of Social Sciences, a government think tank. For the U.S. and Japan, he says, trade is equivalent to around 20% the value of gross domestic product. For China, it is about 75%.
NOT CHEAP ENOUGH?
• The Situation: China's manufacturing sector is absorbing rising costs for labor, energy and materials. Makers of low-cost goods are hit hardest, their thin margins giving them little wiggle room.
• The Impact: Workshops and factories are closing in one-industry towns like Honghe, a sweater-making center.
• What's Next: Many of the low-cost makers that drove China's growth will have to shut down, consolidate or compete on strengths other than price.
China, of course, is sure to remain an export powerhouse for many years. Export figures from China remain strong because the country also supplies industrial machinery and other higher-value products that are less vulnerable to factors such as rising wages. Plus, the country's roads and ports, and its spectrum of suppliers and businesses that support manufacturers, are a draw that few other developing countries can match.
And China's domestic market of 1.3 billion people is attractive for companies that want to both export and sell within China. In a survey late last year by the American Chamber of Commerce in Shanghai and consulting firm Booz Allen Hamilton, 83% of the responding companies said they planned to keep their production in China. But with rising costs weakening China's appeal as a manufacturing location, some 17% said they would shift at least some operations to other low-cost countries, like India and Vietnam.
For centuries, people in the Yangtze River Delta have been spinning silk into garments. In the 1970s, on the eve of China's jump from central planning to market-oriented reforms, the government opened two big sweater factories in Honghe, a section of Jiaxing City, a flat expanse of factory towns 70 miles southwest of Shanghai.
As the reforms took off in the 1980s, those operations upgraded by importing spinning equipment from Japan and Germany. They placed sales representatives in Beijing to trade with dealers from border nations like Russia and Kazakhstan.
By the late 1990s, industry veterans like Mr. Yao began leaving Honghe's state-run enterprises to set up their own companies. In 1999, Mr. Yao and two brothers started making sweaters with 20 employees. Two years later, China joined the World Trade Organization, a step that gave foreign buyers new confidence in Chinese suppliers. By 2002, Mr. Yao says he was receiving orders from Italy and elsewhere in Western Europe.
Four years ago, the Yao brothers expanded, outfitting new factories with imported machines that could make tight, intricate knits. They formed a joint venture with an Australian company and boosted annual production capacity to three million sweaters. With 400 employees of his own, Mr. Yao says he also farmed out work to more than 100 businesses specializing in everything from dyeing wool to packing sweaters into shipping containers.
Honghe's storefronts were stuffed with rolls of yarn and strips of elastic. Couriers peddled tricycles piled high with knitted cotton, acrylic and wool through narrow alleyways. Massive steam-powered machines in central Honghe cooked pigment into yarn. The town's success attracted migrants from poorer, inland provinces, who could earn better money doing piecework than farming fields back home. They rented houses in the villages near town and often brought their children.
High Point
The high point for Mr. Yao came three years ago when Bentonville, Ark.-based Wal-Mart ordered 160,000 sweaters. The U.S. buyers kept coming back, he said, pushing him to find efficiencies. "The orders are big and the price is cheap and it's hard," says Mr. Yao.
Yet just as business in Honghe was heating up, policymakers in Beijing were setting new hurdles. In July 2005, China bowed to pressure from global trading partners to ease its rigid grip on the yuan's exchange rate. The currency had been effectively pegged to the dollar for a decade, despite China's bulging trade surplus. That had created stability for exporters and their foreign buyers, but also angered Western critics who felt it gave Chinese factories an unfair advantage by keeping their prices low in dollar terms.
The yuan's appreciation was slow at first. But last year, it accelerated. The currency has now risen 20% in value against the dollar. The yuan has been losing value against the euro, on the other hand, making Chinese goods more affordable in Europe. But the advantage hasn't been enough for many manufacturers to offset other difficulties.
Like many exporters world-wide, those in Honghe executed their contracts in dollars. As the U.S. currency has fallen, exporters here say they no longer know how much they might earn -- or lose -- when it comes time to deliver sweaters three or four months after they ink a contract. "We want to be very careful with U.S. dollar orders," Mr. Yao says.
Beijing, meanwhile, began implementing policies that supported economic growth that was sustainable and modern, not merely fast. This year, the government implemented a labor law that capped factory overtime, limited temporary employment and raised the minimum working age two years, to 18. The new rules were a blow to small operations like those in Honghe that traditionally hired and fired with each production cycle. China has also tightened its environmental oversight, which means Honghe's dyeing companies must now pay to dispose of the chemicals they use, instead of dumping them into the creeks that run through town.
Mr. Yao declined to provide details about how new costs have affected his business. But a buyer for a large U.S. apparel company says that on items like wool cardigans, profit margins for Chinese manufacturers have collapsed to about 30 cents, from $2 a few years ago.
Mr. Yao, 50 years old, says he is now looking to other export markets -- often smaller and less lucrative -- and trying to shift sales to the domestic market he once ignored. On a recent day, packers in his main warehouse put "Mr. Price" brand sweaters in plastic bags destined for South Africa. They were already marked with a retail price of 49.99 rand each, or about $6.25.
Remaining Hopeful
This should have been a banner year for Honghe. The $1.68 billion, 22-mile Hangzhou Bay Bridge opened last month, halving travel time to the booming container port at Ningbo. Minutes from downtown Honghe, Wal-Mart is building a large distribution center. And in December, a complex system of textile quotas will expire, unshackling China from annual limits on exports of clothing to countries like the U.S.
The Honghe Township government, responding to questions, says it remains hopeful for the local industry. Job losses have come mainly in less technologically advanced workshops, it says. Sales at some of the town's biggest sweater companies grew about 25% in the first five months of 2008 from a year earlier, it says, though with significant erosion to profit margins.
Locals point out numerous workshops that never reopened after February's Chinese New Year holiday. Companies that remain in business are cutting costs, including dyeing companies whose skeleton staffs now work exclusively at night when electricity isn't as expensive. In a hotel that once catered to buying delegations, the manager scowls at a question about occupancy rates and returns to mopping the floor himself.
Enrollment at Honghe Town Central Primary School, once soaring with sons and daughters of migrant laborers, is off 5% from a 2006 peak, to about 2,200 students, according to Principal Zhang Guopei. A mock-up for an expansion that would have about doubled the number of classrooms now collects dust on an air conditioner in Mr. Zhang's office.
Motorized Tricycle
Migrant workers have started going back home. Cao Jiulin, a 20-year-old native of Anhui province, had in recent years persuaded her sister, brother and both parents to join her in Honghe. They rented a small farmhouse, bought five circular knitting machines and a motorized tricycle for deliveries, and hired farmers to till their land back home.
Operating one of Honghe's thousands of small workshops, the Cao family is an example of the fragmentation in many of China's export-oriented industries. Each morning, a family member rides to the town's main market and, if there is work, returns with the tricycle loaded with sweater parts. Working in a room with a bed on one side and electric knitting machines on the other, they would attach the sleeves to torsos and return them, collecting about 23 cents per finished piece. Recent jobs have paid about half as much, family members say, as orders dwindle and competition stays tight.
Ms. Cao's father and mother returned this spring to Anhui, laid off the farmers they'd hired earlier and completed their own harvest for the first time in years. "There is not much business" in Honghe, her father, Cao Mingfu, says by telephone from Anhui. "We can hardly make any money every month."
Sweater-factory boss Mr. Yao, over a lunch of steamed fish and generous sips of yellow wine, says he has gotten hypertension -- "the boss disease," he calls it -- trying to figure out how to redirect his output away from weakening markets like the U.S.
Mr. Yao says one idea is to sell more sweaters in China. But he lacks contacts among Chinese retailers. "We've always been an export company," he says.
By JAMES T. AREDDY See Corrections & Amplifications belowJune 30, 2008; Page A1
HONGHE, China -- As a sign over its main boulevard proclaims, Honghe is "China's Famous Town for Sweaters." But the economy of sweater town is unraveling, providing an early sign that China's manufacturing sector may be entering middle age.
WSJ's James Areddy details the decline of a sweater-making town in China that's suffering due to falling demand from a key market: the U.S. (June 30)
Over the past two decades, this city about 90 minutes' drive from Shanghai built a comfortable niche in the global economy. At the industry's height in recent years, more than half of Honghe's 100,000 residents worked in 100 factories and 8,000 shops that knitted, dyed, packaged and shipped some 200 million sweaters a year. The local government says the enterprises brought in $650 million a year in revenue.
Now many exporters and workshops here have shut their doors. Others, their work floors partly idle, are cutting costs. Some of the migrant workers who came here for jobs are returning home.
Manufacturers say their profits have dwindled as they pay out more for raw materials and energy. China's strengthening currency has made Honghe's products more expensive for important markets such as the U.S., where the price of Chinese goods surged a record 4.6% in May from the previous year, according to the U.S. Commerce Department. Foreign buyers, used to inexpensive Chinese products and nervous about economic weakness at home, are often refusing to pay more.
Beijing, too, has contributed to the squeeze: Companies say the government's tougher protection for workers and the environment has made it more expensive to do business. Foreign buyers say tighter visa policies have made it harder for them to visit Chinese factories or attend trade shows.
These pressures are felt by enterprises across China. But none have been hit harder than the companies that feed the vast global appetite for inexpensive goods such as toys, household goods, shoes and clothes. Manufacturers of low-cost products have been a key engine of China's economic miracle, helping to turn the country into the world's No. 2 exporter after Germany. For years, these companies continued to grow by expanding their volumes and trimming margins to undercut the competition. As material and labor costs rise and China's currency strengthens, these manufacturers are among the least able to absorb the costs.
The transformation is most apparent in the boomtowns that tied their fortunes to making one product cheaply, from Guangdong province in the south to Honghe's environs in the Yangtze River Delta. Many of these manufacturing centers have seen hundreds if not thousands of factories and workshops close in recent months, industry executives say. In Shengzhou, a city near Shanghai that claims to make one-third of the world's neckties, manufacturers are trying to hold a united front to boost prices. Dongguan, in Guangdong, is seeing makers of toys, shoes and brushes close shop.
Shift in Fortunes
"This is the year when things finally changed," says Peter Shay, a fashion-industry consultant in Hong Kong at Marketing Management Group Inc. "For the first time in memory, prices are going up."
The shift in fortunes has been swift for entrepreneurs such as Yao Herong, chairman of Jiaxing Yishangmei Fashion Co., one of Honghe's biggest exporters. The family-owned company was booming in 2005, when Mr. Yao landed the biggest customer of them all, Wal-Mart Stores Inc. The U.S. market soon accounted for 20% of his business, he says.
But big orders from Wal-Mart and other U.S. customers are drying up, he says. In the workshop floor below his office on a recent day, dozens of knitting machines stood idle. A Wal-Mart spokesman said in an email that the company currently doesn't source at Honghe factories but declined to offer additional comment.
"We are very worried in this business," Mr. Yao says.
While painful, such difficulties could usher in a more mature phase of China's economic development. The country's sweater industry, like many others, is arguably overbuilt: Honghe is one of at least six Chinese cities claiming to produce more than 100 million sweaters annually. In such low-cost sectors, analysts predict a coming wave of consolidation that could boost efficiency. They say companies will also be forced to innovate so they can compete on factors other than price.
Many Chinese economists and officials think the country has relied too much on cost-cutting and simple production models to boost exports. "Such a high dependence on foreign trade is not good for China," says Yu Yongding, a Beijing-based researcher at the Chinese Academy of Social Sciences, a government think tank. For the U.S. and Japan, he says, trade is equivalent to around 20% the value of gross domestic product. For China, it is about 75%.
NOT CHEAP ENOUGH?
• The Situation: China's manufacturing sector is absorbing rising costs for labor, energy and materials. Makers of low-cost goods are hit hardest, their thin margins giving them little wiggle room.
• The Impact: Workshops and factories are closing in one-industry towns like Honghe, a sweater-making center.
• What's Next: Many of the low-cost makers that drove China's growth will have to shut down, consolidate or compete on strengths other than price.
China, of course, is sure to remain an export powerhouse for many years. Export figures from China remain strong because the country also supplies industrial machinery and other higher-value products that are less vulnerable to factors such as rising wages. Plus, the country's roads and ports, and its spectrum of suppliers and businesses that support manufacturers, are a draw that few other developing countries can match.
And China's domestic market of 1.3 billion people is attractive for companies that want to both export and sell within China. In a survey late last year by the American Chamber of Commerce in Shanghai and consulting firm Booz Allen Hamilton, 83% of the responding companies said they planned to keep their production in China. But with rising costs weakening China's appeal as a manufacturing location, some 17% said they would shift at least some operations to other low-cost countries, like India and Vietnam.
For centuries, people in the Yangtze River Delta have been spinning silk into garments. In the 1970s, on the eve of China's jump from central planning to market-oriented reforms, the government opened two big sweater factories in Honghe, a section of Jiaxing City, a flat expanse of factory towns 70 miles southwest of Shanghai.
As the reforms took off in the 1980s, those operations upgraded by importing spinning equipment from Japan and Germany. They placed sales representatives in Beijing to trade with dealers from border nations like Russia and Kazakhstan.
By the late 1990s, industry veterans like Mr. Yao began leaving Honghe's state-run enterprises to set up their own companies. In 1999, Mr. Yao and two brothers started making sweaters with 20 employees. Two years later, China joined the World Trade Organization, a step that gave foreign buyers new confidence in Chinese suppliers. By 2002, Mr. Yao says he was receiving orders from Italy and elsewhere in Western Europe.
Four years ago, the Yao brothers expanded, outfitting new factories with imported machines that could make tight, intricate knits. They formed a joint venture with an Australian company and boosted annual production capacity to three million sweaters. With 400 employees of his own, Mr. Yao says he also farmed out work to more than 100 businesses specializing in everything from dyeing wool to packing sweaters into shipping containers.
Honghe's storefronts were stuffed with rolls of yarn and strips of elastic. Couriers peddled tricycles piled high with knitted cotton, acrylic and wool through narrow alleyways. Massive steam-powered machines in central Honghe cooked pigment into yarn. The town's success attracted migrants from poorer, inland provinces, who could earn better money doing piecework than farming fields back home. They rented houses in the villages near town and often brought their children.
High Point
The high point for Mr. Yao came three years ago when Bentonville, Ark.-based Wal-Mart ordered 160,000 sweaters. The U.S. buyers kept coming back, he said, pushing him to find efficiencies. "The orders are big and the price is cheap and it's hard," says Mr. Yao.
Yet just as business in Honghe was heating up, policymakers in Beijing were setting new hurdles. In July 2005, China bowed to pressure from global trading partners to ease its rigid grip on the yuan's exchange rate. The currency had been effectively pegged to the dollar for a decade, despite China's bulging trade surplus. That had created stability for exporters and their foreign buyers, but also angered Western critics who felt it gave Chinese factories an unfair advantage by keeping their prices low in dollar terms.
The yuan's appreciation was slow at first. But last year, it accelerated. The currency has now risen 20% in value against the dollar. The yuan has been losing value against the euro, on the other hand, making Chinese goods more affordable in Europe. But the advantage hasn't been enough for many manufacturers to offset other difficulties.
Like many exporters world-wide, those in Honghe executed their contracts in dollars. As the U.S. currency has fallen, exporters here say they no longer know how much they might earn -- or lose -- when it comes time to deliver sweaters three or four months after they ink a contract. "We want to be very careful with U.S. dollar orders," Mr. Yao says.
Beijing, meanwhile, began implementing policies that supported economic growth that was sustainable and modern, not merely fast. This year, the government implemented a labor law that capped factory overtime, limited temporary employment and raised the minimum working age two years, to 18. The new rules were a blow to small operations like those in Honghe that traditionally hired and fired with each production cycle. China has also tightened its environmental oversight, which means Honghe's dyeing companies must now pay to dispose of the chemicals they use, instead of dumping them into the creeks that run through town.
Mr. Yao declined to provide details about how new costs have affected his business. But a buyer for a large U.S. apparel company says that on items like wool cardigans, profit margins for Chinese manufacturers have collapsed to about 30 cents, from $2 a few years ago.
Mr. Yao, 50 years old, says he is now looking to other export markets -- often smaller and less lucrative -- and trying to shift sales to the domestic market he once ignored. On a recent day, packers in his main warehouse put "Mr. Price" brand sweaters in plastic bags destined for South Africa. They were already marked with a retail price of 49.99 rand each, or about $6.25.
Remaining Hopeful
This should have been a banner year for Honghe. The $1.68 billion, 22-mile Hangzhou Bay Bridge opened last month, halving travel time to the booming container port at Ningbo. Minutes from downtown Honghe, Wal-Mart is building a large distribution center. And in December, a complex system of textile quotas will expire, unshackling China from annual limits on exports of clothing to countries like the U.S.
The Honghe Township government, responding to questions, says it remains hopeful for the local industry. Job losses have come mainly in less technologically advanced workshops, it says. Sales at some of the town's biggest sweater companies grew about 25% in the first five months of 2008 from a year earlier, it says, though with significant erosion to profit margins.
Locals point out numerous workshops that never reopened after February's Chinese New Year holiday. Companies that remain in business are cutting costs, including dyeing companies whose skeleton staffs now work exclusively at night when electricity isn't as expensive. In a hotel that once catered to buying delegations, the manager scowls at a question about occupancy rates and returns to mopping the floor himself.
Enrollment at Honghe Town Central Primary School, once soaring with sons and daughters of migrant laborers, is off 5% from a 2006 peak, to about 2,200 students, according to Principal Zhang Guopei. A mock-up for an expansion that would have about doubled the number of classrooms now collects dust on an air conditioner in Mr. Zhang's office.
Motorized Tricycle
Migrant workers have started going back home. Cao Jiulin, a 20-year-old native of Anhui province, had in recent years persuaded her sister, brother and both parents to join her in Honghe. They rented a small farmhouse, bought five circular knitting machines and a motorized tricycle for deliveries, and hired farmers to till their land back home.
Operating one of Honghe's thousands of small workshops, the Cao family is an example of the fragmentation in many of China's export-oriented industries. Each morning, a family member rides to the town's main market and, if there is work, returns with the tricycle loaded with sweater parts. Working in a room with a bed on one side and electric knitting machines on the other, they would attach the sleeves to torsos and return them, collecting about 23 cents per finished piece. Recent jobs have paid about half as much, family members say, as orders dwindle and competition stays tight.
Ms. Cao's father and mother returned this spring to Anhui, laid off the farmers they'd hired earlier and completed their own harvest for the first time in years. "There is not much business" in Honghe, her father, Cao Mingfu, says by telephone from Anhui. "We can hardly make any money every month."
Sweater-factory boss Mr. Yao, over a lunch of steamed fish and generous sips of yellow wine, says he has gotten hypertension -- "the boss disease," he calls it -- trying to figure out how to redirect his output away from weakening markets like the U.S.
Mr. Yao says one idea is to sell more sweaters in China. But he lacks contacts among Chinese retailers. "We've always been an export company," he says.
China's Export Growth Softened in June
By ANDREW BATSONJuly 11, 2008
BEIJING -- A further slowdown in China's export growth last month could add to domestic political pressure on the government to loosen credit curbs and slow appreciation of the yuan.
Merchandise exports in June rose 18% from a year earlier to $121.53 billion, China's customs agency reported Thursday. That was below most forecasts and significantly slower than the 28% jump recorded in May. Total imports of goods in June, by contrast, jumped 31% from a year earlier to $100.18 billion, shrinking the nation's trade surplus for the month by more than a fifth to $21.35 billion.
Slowing export growth is being caused by both economic weakness in the U.S. and the Chinese currency's appreciation against the dollar, which makes Chinese goods relatively more expensive. China's exports to the U.S. are up just 8.9% so far this year, though shipments to Europe and Asian countries are doing better. Exporters complain that the yuan's rise against the dollar is eating into their revenue as labor and raw-material costs are also increasing.
Thursday's trade figures were issued just days after Premier Wen Jiabao and other top leaders toured different parts of China and made a show of listening to the worries of businesses. Mr. Wen, who visited the eastern coast, "was particularly concerned with the difficulties faced by textile companies," according to the official account. Vice Premier Wang Qishan, who oversees financial policy, was for his part "very concerned with the situation of exporters and the difficulties they face."
Many scholars and analysts interpreted that public show of concern as an indication that the government is shifting priorities to supporting growth, rather than controlling inflation -- which has been running at decade-high levels and which officials have called their top priority. Other analysts believe the visits were intended more to reassure the public than to signal a substantive change. A meeting Wednesday of the State Council, China's top government body, discussed the economy but didn't produce any major new policy announcements.
In either case, significant divisions are likely to remain in the government over the proper course of action as China continues to confront both high inflation and a slowing global economy. The compromise course of policy this year has been to stop raising interest rates but still try to cool economic activity somewhat by putting limits on bank lending and raising the value of the yuan. But with the currency already up 4.1% against the U.S. dollar in the first quarter and an additional 2.3% in the second quarter, many in China still think that is too much, too fast.
"If you worry about the U.S. market turning down, rising costs at home and hot money inflows, then you say, 'stop'" appreciating the yuan, says Barry Naughton, a longtime observer of the Chinese economy at the University of California, San Diego. "I disagree with this position, but it's perfectly logical."
Mr. Naughton points out that exports are still growing quickly. For the second quarter of 2008, exports were up 22% from a year earlier, in line with growth rates for the two previous quarters, though down from the 26% to 28% expansion in early 2007. The bill for imports, however, has steadily risen along with the prices of the raw materials China buys in large quantities. Imports for the quarter were up 32%, accelerating from the 28% gain in the first quarter and the 21% increase for 2007.
With growth in exports slowing while imports are accelerating, it now seems clear that China's trade surplus peaked around the beginning of this year and is set for a gradual decline. China's global trade surplus in goods came in at $57.62 billion for the second quarter, down 13% from a year earlier.
Most economists deem a fall in China's huge trade surplus to be inevitable, and largely desirable. But because exports have contributed a lot to growth in recent years, there is concern that such a decline will be accompanied by a slowdown in the overall economy.
In this debate, China's central bank is believed to favor tougher policies to fight inflation. A commentary in the central bank's newspaper Thursday said that "controlling inflation requires continuing to strengthen and improve macroeconomic control measures" -- in other words, that relaxing credit curbs and other restrictions isn't yet warranted. Inflation may have moderated to 7.7% in May from 8.5% in April, the commentator noted, "but the general trend of high inflation has not changed."
BEIJING -- A further slowdown in China's export growth last month could add to domestic political pressure on the government to loosen credit curbs and slow appreciation of the yuan.
Merchandise exports in June rose 18% from a year earlier to $121.53 billion, China's customs agency reported Thursday. That was below most forecasts and significantly slower than the 28% jump recorded in May. Total imports of goods in June, by contrast, jumped 31% from a year earlier to $100.18 billion, shrinking the nation's trade surplus for the month by more than a fifth to $21.35 billion.
Slowing export growth is being caused by both economic weakness in the U.S. and the Chinese currency's appreciation against the dollar, which makes Chinese goods relatively more expensive. China's exports to the U.S. are up just 8.9% so far this year, though shipments to Europe and Asian countries are doing better. Exporters complain that the yuan's rise against the dollar is eating into their revenue as labor and raw-material costs are also increasing.
Thursday's trade figures were issued just days after Premier Wen Jiabao and other top leaders toured different parts of China and made a show of listening to the worries of businesses. Mr. Wen, who visited the eastern coast, "was particularly concerned with the difficulties faced by textile companies," according to the official account. Vice Premier Wang Qishan, who oversees financial policy, was for his part "very concerned with the situation of exporters and the difficulties they face."
Many scholars and analysts interpreted that public show of concern as an indication that the government is shifting priorities to supporting growth, rather than controlling inflation -- which has been running at decade-high levels and which officials have called their top priority. Other analysts believe the visits were intended more to reassure the public than to signal a substantive change. A meeting Wednesday of the State Council, China's top government body, discussed the economy but didn't produce any major new policy announcements.
In either case, significant divisions are likely to remain in the government over the proper course of action as China continues to confront both high inflation and a slowing global economy. The compromise course of policy this year has been to stop raising interest rates but still try to cool economic activity somewhat by putting limits on bank lending and raising the value of the yuan. But with the currency already up 4.1% against the U.S. dollar in the first quarter and an additional 2.3% in the second quarter, many in China still think that is too much, too fast.
"If you worry about the U.S. market turning down, rising costs at home and hot money inflows, then you say, 'stop'" appreciating the yuan, says Barry Naughton, a longtime observer of the Chinese economy at the University of California, San Diego. "I disagree with this position, but it's perfectly logical."
Mr. Naughton points out that exports are still growing quickly. For the second quarter of 2008, exports were up 22% from a year earlier, in line with growth rates for the two previous quarters, though down from the 26% to 28% expansion in early 2007. The bill for imports, however, has steadily risen along with the prices of the raw materials China buys in large quantities. Imports for the quarter were up 32%, accelerating from the 28% gain in the first quarter and the 21% increase for 2007.
With growth in exports slowing while imports are accelerating, it now seems clear that China's trade surplus peaked around the beginning of this year and is set for a gradual decline. China's global trade surplus in goods came in at $57.62 billion for the second quarter, down 13% from a year earlier.
Most economists deem a fall in China's huge trade surplus to be inevitable, and largely desirable. But because exports have contributed a lot to growth in recent years, there is concern that such a decline will be accompanied by a slowdown in the overall economy.
In this debate, China's central bank is believed to favor tougher policies to fight inflation. A commentary in the central bank's newspaper Thursday said that "controlling inflation requires continuing to strengthen and improve macroeconomic control measures" -- in other words, that relaxing credit curbs and other restrictions isn't yet warranted. Inflation may have moderated to 7.7% in May from 8.5% in April, the commentator noted, "but the general trend of high inflation has not changed."
訂閱：
意見 (Atom)