I thought I would bring up into the blog itself a comment on a previous thread by Hanyu about the state of the Chinese economy. It’s a worry, but it is not unexpected for anyone who understands the sources of economic growth.
All of the Chinese factories with which I deal on a regular basis are experiencing fewer and smaller orders than that 2.7%-rise-in-export-figures suggests. Where are the factories taking all these increased orders? Okay, some obviously are (iPhone 5 is about to hit the shelves so someone is cleaning up there, but on reduced margins), but they are surely the exceptions.
I drive around the Shenzhen, Dongguan, Guangzhou, Foshan, Zhuhai area regularly (China’s manufacturing heartland). I see more empty factories with each passing month. I visit more suppliers who are operating at 50%, 40% and even 30% operating capacity (when at this time of the year they should be squeezing out more than 100%). I was at a factory last week where over 60% of the workforce has been let go with those remaining – whilst occupied – are by no means working hard (many are being kept on just in case there is a last minute rush of orders). These are not pathetic factories that should have died years ago; some of these are among the best managed factories in the region.
I have been hearing many factories talking about how the government will step in to prop them up if things get worse. With 15 million-plus migrant workers in the Pearl Rive Delta alone, the government better have something up its sleeve, because not very many of them have any intention of going home.
Perhaps they could all come to Hong Kong and work in the booming tourist industry.