It turns out that unleashing a deadly engineered plague on the world, bellicose posturing, currency manipulation, intellectual property theft, treaty breaking, and genocidal actions against ethnic minorities isn’t a recipe for winning friends and influencing people.
Who knew?
Evidently not Xi Jingping, as under his leadership, it looks like some 90% of Chinese factories will close due to lack of business.
“My factory closed down, ended up losing over 10 million.” I’m assuming that’s Yuan.
“China continues to face a harsh winter, with reportedly 90% of factories either closing down or falling into difficulties.”
Factories that has been in business and profitable for 15 years got walloped by Flu Manchu in 2020. “After the outbreak, the factory started and stopped production intermittently, basically losing money for a year. Unexpectedly, the following three years were worse.”
“At the start of the year, there were almost no new orders. The old customers who used to order every month also significantly reduced their orders. The entire industry had fewer orders than during the 3 years of the epidemic.”
This lead to “severe competition within the industry this year to get orders. Besides low profits, customers also demanded goods to be made before payment.”
“In the second half of 2023, he was basically just chasing payments. Many customers were withholding final payments, and his factory had long run out of operational funds. During this period, he had already mortgaged his house in Shinjin for business loans. For these three years, his factory had been barely surviving on loans, and he didn’t know when it would all end. Recently he’s been exhausted, so he decided to shut” everything down.
“Bosses like us in small manufacturing factories will soon become the bottom of society. Becoming a bad debtor is only a matter of time, My factory in Guangdong is quite typical of those in the industry. Most of my customers products are for export.”
Factory workers, of course, are losing jobs and hours left and right due to the shutdowns. Plus those few factories still hiring can afford to be picky. “Those over 33 can go back! Those under 33 stay! Not accepting anyone over 33!”
“China’s products such as petrochemical raw materials, fuel and electric vehicle power batteries and non-core chips are all facing overcapacity.”
“After the pandemic, China’s economic recovery has been weak. Traditional export orders are insufficient, and products manufactured by Chinese factories exceed the domestic markets absorption capacity causing almost every industry to face overcapacity as other countries strive to curb inflation.”
“China is experiencing rare deflation.”
China’s plan to combat this is exporting high tech goods to the rest of the world. The rest of the world doesn’t seem enthused.
I’m skipping over some Q1 growth statistics for China I don’t believe.
“Due to overcapacity in China, companies are squeezing each other’s profits by lowering export prices.”
“In the first quarter, China’s manufacturing capacity utilization rate plummeted to 73.8%, the weakest level since 2015.”
“The utilization rate of the automotive manufacturing industry has now dropped to below 65%.”
And the electric car bubble bursting has hit China hard. “For years the CCP has spared no effort, using high subsidies and various preferential policies to fully support the development of new energy vehicles.”
“It is estimated that from 2010 to the present, over 200 billion yuan, about $28 billion US, has been directly subsidized to new energy vehicle companies by the CCP.”
“The CCP’s irrational economic measures not only harmed the global economy, but also damaged China’s own economy. The subsidy policy has not only led to the emergence of numerous purported new players in the automotive manufacturing sector, but has also notably spawned a significant number of counterfeit car companies that rely solely on deceiving subsidies through presentations and mockup models.” In other words, the same smoke and mirrors companies seen throughout the rest of China economy.
“The Wall Street Journal reported that in 2018 there were already more than 487 Chinese electric car manufacturers, but now there are only over 40 remaining.” (Previously.)
Is the 90% factory closure estimate way too high? Probably. But if it’s even of factories, imagine the devastating economic and social dislocation effects this will have on China’s aging economy.
Much of China’s economic miracle was built on smoke and mirrors, and by one estimate China GDP was overstated by 60%. And thanks to Xi Jinping’s gross mismanagement of just about everything, the bill for all those illusions is now coming due.
This entry was posted on Saturday, April 27th, 2024 at 1:17 PM and is filed under Communism, Economics, video. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
14 Responses to “90% Of Chinese Factories To Close?”
I’ve been telling people this, for years. Nobody listens; it’s all “China will dominate the world…”
Reality? In China, you have a bunch of delusional economic illiterates running things, the CCP. They’re more concerned with maintaining the CCP in power than anything else, which is why they’ve made all these insane choices.
China is not a natural economy; if it were, there would be things like retirement savings and the ability for small entities to invest and save money, rather than putting it into the overdevelopment of unneeded apartments and entire cities.
There are a ton of economic contradictions in terms that China has to overcome before any of this gets fixed, but so long as delusional lunatics are in charge… Well… Yeah. Good luck with that.
If anyone remembers the insane distortions that MITI built into the Japanese economy, back when? Those self-same distortions are one major reason Japan is still suffering, decades later. MITI did nutty things like try to block Honda from building cars and putting together this moonshot “supercomputing” program that was supposed to capture so much of the world’s computer market. Anyone bought a Japanese computer of any sort, lately? Let alone a supercomputer?
The hubris that leads mere humans to think that they can manage and ordain these things is what leads directly to the Nemesis which destroys them. The Japanese government, for example? Built themselves up by mandating a human-killing work environment for the people of Japan; they’ve been rewarded by one of the lowest birthrates in the world, and all because they basically immiserated their people.
China is on the same path, and will produce the same results. You can abuse people for a generation or two, but the end result had better show them some sort of improvement, or you’re going to wind up where Japan is, right now.
All work and no play? Kinda-sorta… If you’re familiar with how the average Japanese salaryman has to live, in order just to keep his damn job, you’d understand why so many women don’t want to marry them and form families. The whole culture has become effectively anti-human…
Which our bright lights and genius leaders seem hell-bent on doing here in the US and other Western nations, as well. Dumbasses.
Quick hint to the elites: If your basic proletariat-type individual ain’t doing well, and ain’t happy…? You, yourself, are not long for the world. ‘Cos, when the peons stop producing families and other things, the very base of your society is crumbling beneath your exalted feet. Pay attention to your minions, in other words… They matter more than you do, in the end.
Consider what the effects were of France’s profligate expenditure of their manpower in WWI… Cost them WWII, and God alone knows what else. You don’t undo the damage done by something like that overnight, as Putin is learning. He’s still left the hard work of recovering from WWII undone, as did the Soviets before him. Which is what will finally kill Russia, when all the bills are totted up.
Given that debt is being repriced, a 5% yield on a 10-year US Treasury bill is way more attractive than a meager 1% profit from Chinese manufacturing.
The Chinese are unable to raise their own interest rates to attract fresh capital because their real estate market is already in a state of near collapse. A brisk increase in the loan rate would bring about fresh bank failures.
Here at home, rising prices coupled to stagnant wages means less disposable income to spend on cheap Chinese crap, making China’s need to increase exports problematic.
From a geopolitical standpoint, increased unemployment frees up men for military service should China declare war on Taiwan. If the PLA loses a few hundred thousand men during an invasion, the unemployment problem ceases to exist. As Stalin famously put it, “No man, no problem.”
Troubled Chinese manufacturers have dramatically cut prices on their (mostly non durable) goods exports since the American inflation peak in May 2022 in an effort to stay in business. This provided the statistical illusion that inflation is receding, despite the continued and relentless increases in services and durable goods prices since May 2022.
This statistical illusion peaked in 2023Q4, and was reflected in a bottoming of gross CPI measures. As weaker Chinese manufacturers terminated operations, the remaining Chinese manufacturers have regained pricing power. Now durable goods, non durable goods, and services are all rising in prices on their pre May 2022 trend line.
This explains the resurgence of CPI inflation measures in 2024Q1, which are preventing the Federal Reserve from adopting a more accommodating monetary policy.
“Is the 90% factory closure estimate way too high? Probably.”
No, certainly. As noted in the text, the 90% is “either closing down or falling into difficulties.” Having your competitors go out of business is a great way to be rescued from difficulties. SO probably not anything close to 90% closed or closing. But even 25% would be devastating.
Also, @Malthus, probably need to add a zero or two to the numbers, but yeah. It not only helps solve the unemployment problem, it helps address the one-child driven woman shortage.
| Anyone bought a Japanese computer of any sort, lately?
Nintendo and Sony (and Sega two decades ago) are happy to sell a computer for playing videogames. The eXbox has been perennially in third place in that market each generation (Original, 360, Xbox One, Xbox Series, etc)
Came here from Instapundit and pretty much knew the source you were using before I got here. If you are not familiar with this site, it is a very anti-China propaganda channel. I have no idea who puts it together, but I have seen a number of debunks by expats that live in China to some of the videos, and some I have seen for myself are not true. Just a word of warning on relying on that channel in particular.
The people running everything had better figure out, and soon, that immiserating the “common man” is no way to run much of anything after you get done eating the seed corn. Unhappy people with tightly circumscribed lives don’t put resources into having kids, and once you’ve gotten the majority used to being “child-free”, the road back is going to be… Interesting.
The birth rate is due to a cluster of things nobody thinks about. Mandate expensive child safety seats and smaller cars… That plays into the choices made, when considering that third child. Make life incrementally harder for parents, and people aren’t gonna parent… If you really wanted to raise the birth rate, you’d have to go out and research just what the hell is going on and why people are not having kids. Nobody does that, however…
The problem we have in our society is that the people who’re in charge of “it all” are not actually all that smart. They think they are; they’ve been told that, all their lives. Nothing they’ve ever experienced on their cursus honorum to the upper ranks of society has told them anything different, but… The facts are before us: They’re actually rather autistic and functionally stupid.
See, here’s the thing: Most of them, the movers and shakers of society, have been taught and conditioned such that they honestly believe that their word and their intent is what makes things happen. They never think past that… “Oh, there’s this problem… Let me write a memo/pass some legislation/make a new policy…” That’s the sum total of their analysis and response to any problem. After their new law or policy doesn’t work, and actually produces entirely unanticipated second- and third-order effects…? Oh, well… Not their fault.
One of the biggest problems with the “birth dearth” is just what I’m saying here: It’s a million-and-one things going into the decisions made by millions of people out in the real world. Can’t find an affordable apartment with room for kids? No kids… Can’t afford that bigger car? Stop at one or two…
The cumulative effect is massive.
What you have to do is actually get out there into the real world, look around, and then analyze just what is going into these decisions, and then try to act by changing the environmental cues telling people not to have kids… Human behavior is very Skinnerian, to coin a term: If the environment cues you not to have kids by punishing the behaviors that lead to kids, wellllllll… You’re not going to see kids. You want to change that, you need to get out and see what cues are being provided, analyze them and how people are processing those cues, and then act to change the environment. Polemics and editorials calling for more kids aren’t actually going to do it, nor will memos or new laws.
In Japan, the birth dearth comes down to the fact that Japanese work culture and family life actively alienate people from the hard work of having and raising kids. The women are pissed off and tired; they don’t like the way the average Japanese male treats them and their kids, nor does said Japanese male get much out of life as a salaryman. So… No kids. All thanks to the top-down cultural and environmental cues they’ve been passing out. No amount of tax incentives or “encouragement” that does not address these baseline issues is going to fix anything, because they simply aren’t addressing the very real problems that cause this stuff.
“Nintendo and Sony (and Sega two decades ago) are happy to sell a computer for playing videogames. The eXbox has been perennially in third place in that market each generation (Original, 360, Xbox One, Xbox Series, etc)”
You do grasp that Nintendo, Sony, and Sega were not MITI “projects”, and that game consoles are not the “supercomputer” they were attempting to birth? As well, when has Toshiba or anyone else in Japan built a computer product that’s been a market leader like the IBM PC or the Apple products? Did they develop that market, or just exploit it for the short period when they were competitive?
It’s a sad commentary on the idea that you can top-down mandate success in a market, but there it is. The Japanese supercomputer industry that was supposed to dominating the world today…? Doesn’t exist. Which was the point of what I said, not that they weren’t selling computer-like objects such as game consoles.
Never ceases to amaze me how people can miss the plainly-put point of something, and then argue in ignorance that the original point was wrong. Nobody is buying or using Japanese supercomputers today, mostly because that market didn’t manifest, not on the world-changing scale that MITI forecast. It’s a totally different world than the one that they envisaged and spent billions trying to bring about.
Actually, Japan has intermittently held the top spot on the Supercomputer 500 list, such as in 2011-12 with Fujitsu’s K-Computer, which used SPARC64 processors. Other Japanese entries have featured x86 or ARM-based processors.
Lawrence, the point is “Where is the huge world-wide market that MITI envisaged dominating…?”
Supercomputers turned out to be a minor niche market, and one that is arguably not that big a deal. If I am remembering my details correctly, the things that MITI was seeing the market for turned out to be things that today’s average desktop workstations routinely manage. They simply got the whole direction that computing was headed in wrong. Being the major producer of supercomputers got them exactly squat, in terms of economic effect…
I’ve been telling people this, for years. Nobody listens; it’s all “China will dominate the world…”
Reality? In China, you have a bunch of delusional economic illiterates running things, the CCP. They’re more concerned with maintaining the CCP in power than anything else, which is why they’ve made all these insane choices.
China is not a natural economy; if it were, there would be things like retirement savings and the ability for small entities to invest and save money, rather than putting it into the overdevelopment of unneeded apartments and entire cities.
There are a ton of economic contradictions in terms that China has to overcome before any of this gets fixed, but so long as delusional lunatics are in charge… Well… Yeah. Good luck with that.
If anyone remembers the insane distortions that MITI built into the Japanese economy, back when? Those self-same distortions are one major reason Japan is still suffering, decades later. MITI did nutty things like try to block Honda from building cars and putting together this moonshot “supercomputing” program that was supposed to capture so much of the world’s computer market. Anyone bought a Japanese computer of any sort, lately? Let alone a supercomputer?
The hubris that leads mere humans to think that they can manage and ordain these things is what leads directly to the Nemesis which destroys them. The Japanese government, for example? Built themselves up by mandating a human-killing work environment for the people of Japan; they’ve been rewarded by one of the lowest birthrates in the world, and all because they basically immiserated their people.
China is on the same path, and will produce the same results. You can abuse people for a generation or two, but the end result had better show them some sort of improvement, or you’re going to wind up where Japan is, right now.
All work and no play? Kinda-sorta… If you’re familiar with how the average Japanese salaryman has to live, in order just to keep his damn job, you’d understand why so many women don’t want to marry them and form families. The whole culture has become effectively anti-human…
Which our bright lights and genius leaders seem hell-bent on doing here in the US and other Western nations, as well. Dumbasses.
Quick hint to the elites: If your basic proletariat-type individual ain’t doing well, and ain’t happy…? You, yourself, are not long for the world. ‘Cos, when the peons stop producing families and other things, the very base of your society is crumbling beneath your exalted feet. Pay attention to your minions, in other words… They matter more than you do, in the end.
Consider what the effects were of France’s profligate expenditure of their manpower in WWI… Cost them WWII, and God alone knows what else. You don’t undo the damage done by something like that overnight, as Putin is learning. He’s still left the hard work of recovering from WWII undone, as did the Soviets before him. Which is what will finally kill Russia, when all the bills are totted up.
Hey boss, you know what’d be a great distraction from all this? A short victorious war.
Given that debt is being repriced, a 5% yield on a 10-year US Treasury bill is way more attractive than a meager 1% profit from Chinese manufacturing.
The Chinese are unable to raise their own interest rates to attract fresh capital because their real estate market is already in a state of near collapse. A brisk increase in the loan rate would bring about fresh bank failures.
Here at home, rising prices coupled to stagnant wages means less disposable income to spend on cheap Chinese crap, making China’s need to increase exports problematic.
From a geopolitical standpoint, increased unemployment frees up men for military service should China declare war on Taiwan. If the PLA loses a few hundred thousand men during an invasion, the unemployment problem ceases to exist. As Stalin famously put it, “No man, no problem.”
Troubled Chinese manufacturers have dramatically cut prices on their (mostly non durable) goods exports since the American inflation peak in May 2022 in an effort to stay in business. This provided the statistical illusion that inflation is receding, despite the continued and relentless increases in services and durable goods prices since May 2022.
This statistical illusion peaked in 2023Q4, and was reflected in a bottoming of gross CPI measures. As weaker Chinese manufacturers terminated operations, the remaining Chinese manufacturers have regained pricing power. Now durable goods, non durable goods, and services are all rising in prices on their pre May 2022 trend line.
This explains the resurgence of CPI inflation measures in 2024Q1, which are preventing the Federal Reserve from adopting a more accommodating monetary policy.
“Is the 90% factory closure estimate way too high? Probably.”
No, certainly. As noted in the text, the 90% is “either closing down or falling into difficulties.” Having your competitors go out of business is a great way to be rescued from difficulties. SO probably not anything close to 90% closed or closing. But even 25% would be devastating.
Also, @Malthus, probably need to add a zero or two to the numbers, but yeah. It not only helps solve the unemployment problem, it helps address the one-child driven woman shortage.
@kirk … and I heard via the news segment on talk radio this morning, the latest numbers show the USA’s birth rate falling to 1.6 …
[…] 90% Of Chinese Factories To Close? “At the start of the year, there were almost no new orders. The old customers who used to order […]
| Anyone bought a Japanese computer of any sort, lately?
Nintendo and Sony (and Sega two decades ago) are happy to sell a computer for playing videogames. The eXbox has been perennially in third place in that market each generation (Original, 360, Xbox One, Xbox Series, etc)
Hi Lawrence –
Came here from Instapundit and pretty much knew the source you were using before I got here. If you are not familiar with this site, it is a very anti-China propaganda channel. I have no idea who puts it together, but I have seen a number of debunks by expats that live in China to some of the videos, and some I have seen for myself are not true. Just a word of warning on relying on that channel in particular.
@Howard,
And, it will only get worse.
The people running everything had better figure out, and soon, that immiserating the “common man” is no way to run much of anything after you get done eating the seed corn. Unhappy people with tightly circumscribed lives don’t put resources into having kids, and once you’ve gotten the majority used to being “child-free”, the road back is going to be… Interesting.
The birth rate is due to a cluster of things nobody thinks about. Mandate expensive child safety seats and smaller cars… That plays into the choices made, when considering that third child. Make life incrementally harder for parents, and people aren’t gonna parent… If you really wanted to raise the birth rate, you’d have to go out and research just what the hell is going on and why people are not having kids. Nobody does that, however…
The problem we have in our society is that the people who’re in charge of “it all” are not actually all that smart. They think they are; they’ve been told that, all their lives. Nothing they’ve ever experienced on their cursus honorum to the upper ranks of society has told them anything different, but… The facts are before us: They’re actually rather autistic and functionally stupid.
See, here’s the thing: Most of them, the movers and shakers of society, have been taught and conditioned such that they honestly believe that their word and their intent is what makes things happen. They never think past that… “Oh, there’s this problem… Let me write a memo/pass some legislation/make a new policy…” That’s the sum total of their analysis and response to any problem. After their new law or policy doesn’t work, and actually produces entirely unanticipated second- and third-order effects…? Oh, well… Not their fault.
One of the biggest problems with the “birth dearth” is just what I’m saying here: It’s a million-and-one things going into the decisions made by millions of people out in the real world. Can’t find an affordable apartment with room for kids? No kids… Can’t afford that bigger car? Stop at one or two…
The cumulative effect is massive.
What you have to do is actually get out there into the real world, look around, and then analyze just what is going into these decisions, and then try to act by changing the environmental cues telling people not to have kids… Human behavior is very Skinnerian, to coin a term: If the environment cues you not to have kids by punishing the behaviors that lead to kids, wellllllll… You’re not going to see kids. You want to change that, you need to get out and see what cues are being provided, analyze them and how people are processing those cues, and then act to change the environment. Polemics and editorials calling for more kids aren’t actually going to do it, nor will memos or new laws.
In Japan, the birth dearth comes down to the fact that Japanese work culture and family life actively alienate people from the hard work of having and raising kids. The women are pissed off and tired; they don’t like the way the average Japanese male treats them and their kids, nor does said Japanese male get much out of life as a salaryman. So… No kids. All thanks to the top-down cultural and environmental cues they’ve been passing out. No amount of tax incentives or “encouragement” that does not address these baseline issues is going to fix anything, because they simply aren’t addressing the very real problems that cause this stuff.
@Nathan, who said:
“Nintendo and Sony (and Sega two decades ago) are happy to sell a computer for playing videogames. The eXbox has been perennially in third place in that market each generation (Original, 360, Xbox One, Xbox Series, etc)”
You do grasp that Nintendo, Sony, and Sega were not MITI “projects”, and that game consoles are not the “supercomputer” they were attempting to birth? As well, when has Toshiba or anyone else in Japan built a computer product that’s been a market leader like the IBM PC or the Apple products? Did they develop that market, or just exploit it for the short period when they were competitive?
It’s a sad commentary on the idea that you can top-down mandate success in a market, but there it is. The Japanese supercomputer industry that was supposed to dominating the world today…? Doesn’t exist. Which was the point of what I said, not that they weren’t selling computer-like objects such as game consoles.
Never ceases to amaze me how people can miss the plainly-put point of something, and then argue in ignorance that the original point was wrong. Nobody is buying or using Japanese supercomputers today, mostly because that market didn’t manifest, not on the world-changing scale that MITI forecast. It’s a totally different world than the one that they envisaged and spent billions trying to bring about.
Actually, Japan has intermittently held the top spot on the Supercomputer 500 list, such as in 2011-12 with Fujitsu’s K-Computer, which used SPARC64 processors. Other Japanese entries have featured x86 or ARM-based processors.
Paul Krugman most hurt.
The tears of Red China lovers will quench our thirst for justice.
Lawrence, the point is “Where is the huge world-wide market that MITI envisaged dominating…?”
Supercomputers turned out to be a minor niche market, and one that is arguably not that big a deal. If I am remembering my details correctly, the things that MITI was seeing the market for turned out to be things that today’s average desktop workstations routinely manage. They simply got the whole direction that computing was headed in wrong. Being the major producer of supercomputers got them exactly squat, in terms of economic effect…