Chinese Industry Is Slowing Down

In November, the Chinese factory sector shrank more than in any month during the last two and a half years. This decline was caused by china’s domestic economic weakness according to a PMI Survey. The survey determines the HSBC purchasing managers index which showed a rapid decline from 51 in October to 48 in November. The PMI measures China’s industrial output which was the lowest it has been since March 2009. A score of 50 divides between the industrial sectors expansion and contraction.

Beijing has already publicized steps to help small businesses. Meanwhile, in china business is feeling the stress. Many businesses are trying to get new markets and to modernize their production processes so that they will be able to compete.

“Time is pressing. We have to invest more in technology and innovation to make our goods more competitive in the global market,” said Zhou Haichang, president of the Guoguang Electric Co Ltd. “This is the only way out, for Guoguang and most exporters.”

Zhou Jianqun, the general manager of Guoguang Electric, said, “Because of currency appreciation, nobody wants to make and accept long-term orders. I know some small industrial players have died out, as they were incapable of innovation, and many others are very anxious.”

Wang Hu, an economist at the Guotai Junan Securities in Shanghai, believes that by January there could well be decline in the Chinese bank reserve requirements, as Chin’s economy weakens.

For many Chinese companies it will be sink or swim. Companies that can improve, innovate and grow have a chance to succeed. Those that can’t will probably fall by the wayside. In the end, China will be stronger.


About James Cannon

James Cannon is an experienced hedge fund analyst. He has served on the advisory boards for various different Fortune 500 companies as well as serving as an adjunct professor of finance. James Cannon has written for a variety of Financial Magazines both on and off line. Contact James at james[at]