Chinese industries reeling under global market crunch

December 7th, 2008 - 9:35 am ICT by IANS  

Beijing, Dec 7 (Xinhua) China’s infrastructure construction sector has received a boost after the massive capital input announced by the government in November. But a number of industries continue to suffer due to the effect of the deepening global financial crisis.Henan’s Provincial Statistical Bureau chief Liu Yongqi said “the government needs to optimize its investment to facilitate industrial dynamic so as to secure production and employment.”

Even the less export-oriented central provinces - Henan, Anhui, Shanxi, Hubei, Hunan and Jiangxi provinces - have started to feel the pinch of slowing world economy.

Private and smaller entities in sectors like textile, automobile, steel, coke and coal, iron ore and minerals have slipped into the doldrums over the past three months.

In Shanxi’s Changzhi city where coal, coking and iron making make uo 80 percent of industrial activities, many enterprises have stopped production since October or had to operate below capacity.

Changping Group, the city’s largest private iron and steel maker, has lost so far more than 400 million yuan ($58 million) because of cost escalation and shrinking demand.

The first 10 months have seen its iron and steel output decline by 80 percent over the same period last year.

Luoyang Development and Reform Bureau chief Li Shengping held that iron and steel was one of the worst affected industries.

“It does give us a clue that the global financial crisis has affected China’s tangible economy,” he said.

From the export-oriented eastern coast to the central interior, a chain reaction to the deepening credit crunch is clearly discernible.

In October, the industrial power consumption, a key indicator for industrial dynamic, fell 50 percent from September in Zhejiang, 13 percent in Anhui and 11 percent in Henan.

Jiangxi Provincial Economic and Trade Commission director Tu Qinhua said that market shrinking triggered by the financial crisis had forced many enterprises to sell off their products at lower prices, which further weakened industrial profitability and eroded investment confidence.

At a meeting last week, the Political Bureau of the Central Committee of the Communist Party of China decided that the financial crisis would inflict much bigger losses on global economy and that the impacts on the Chinese economy would become “increasingly noticeable”.

Liu Yongqi of Henan Statistics Bureau expected the government to initiate more steps to maintain corporate dynamics, including easing capital flow, that may give a bigger drive to industries.

(Cheng Yunjie is an economic analyst with Xinhua)

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