[Marxism] Economic tremors in the West
ffeldman at bellatlantic.net
Wed Jul 23 00:49:21 MDT 2008
July 21, 2008
Economic tremors in the West reach China
A slowdown in the flow of containers through the giant ports of southern
China is providing an amber warning light that all is not well in the vast
workshops of China's eastern seaboard.
Container traffic growth in Shenzhen and Shanghai, China's biggest ports,
slowed in June as weakening demand took its toll on trans-Pacific trade.
Traffic at Shenzhen, the world's fourth-largest port, fell in June by 0.6
per cent from the previous month and grew only 3.5 per cent against the same
month last year. Throughput in the first half of the year was up 7 per cent,
half the rate of growth last year.
The slump in traffic to the West Coast of the United States is hitting the
massive Yantian container terminal operated by Hutchison Whampoa. It is
suffering volume declines for the first time. A majority of Yantian's
traffic is from shipping lines servicing routes to North America, where
demand has been driven down by the American property slump and dwindling
consumption of household consumer goods. It is expected to report a drop in
volumes for the first half, having declined for five consecutive months.
Shanghai's container throughput is slowing, too. Growth in the first half of
the year slowed to 10.4 per cent, half last year's rate of increase, and
analysts are predicting hard times ahead. "We've seen the peak. Container
terminal shipments are now in a downtrend," Geoffrey Cheng, an analyst for
the Daiwa Institute of Research, said. "It's unusual that throughput in
June, the peak season for container shipping, would slow from May."
Shipping lines provide further evidence that the American and European
slowdown is hurting Chinese exporters. Maersk, the Danish shipping group
that acquired P&O Nedlloyd in 2005, reduced its capacity on Asian routes
last year and gave warning in its half-year report in May that volumes on
its Far East-to-North America routes were down 18 per cent. The company has
refrained from providing its usual guidance to investors on the outlook for
the year. "In general on Asia to Europe, we are seeing a slowdown. There are
real uncertainties as to how growth will develop," a Maersk spokesman said.
The Chinese economy is still growing - according to official statistics, the
People's Republic generated 10.1 per cent more value in goods and services
in the second quarter - but the rate is down from the increase of 11.9 per
cent for the whole of 2007. Inflation is surging, at 7.9 per cent in the
first half of 2008, and food prices, a bigger portion of household budgets
than in Britain, rose by 20 per cent.
Inflationary pressures, a stronger currency and soaring costs are eroding
the competitiveness of the workshops on the Pearl River Delta. Some are
calling for the return of the tax rebates that drove Chinese exports in the
1990s. In a world of expensive fuel, China's distance from the markets of
the West is becoming a challenge.
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