Dramatic economic breakdown proceeding in China

November 6, 2008 (LPAC)—The devastating consequences of a failure to adopt the New Bretton Woods proposals of Lyndon LaRouche, in the near term, are being writ large in the ongoing economic breakdown in China. The latest details reported are as follows:

• A senior official of the State Council told the China Daily on Nov. 6, that “major economic gauges indicate that we have entered into an excessive economic slowdown and need a radical stimulus package right now.” He said he was “shocked by the October growth rate, which is below zero, which means more closures, bankruptcies and job cuts.” (emphasis added)

  “In steel and iron, at least 30% of firms have already stopped production,” the official, who demanded anonymity, continued, “and this is hitting other industries.”

• A senior official from the Ministry of Industry and Information Technology, Ziu Hongren, warned on Nov. 5 that China's industry is facing a “grim situation,” and that the global financial crisis will have a deep impact on the industrial and information technology sectors.

  He said that the electricity, textile and non-ferrous metal industries have already sustained heavy losses, with 18.35% of large industrial companies losing money during the first eight months of the year. Industrial output growth fell to 11.4% in September, the lowest since April 2002. Power generation and oil production grew a mere 3.4% and 3.7% respectively, while steel output fell 9% year on year. In the first three quarters, the value of industrial exports rose 15.7%, which was 6% points down from a year earlier.

• The official news agency Xinhua reported Nov. 6 that half of the autumn harvest from China's largest cotton platnation area in Xinjiang remains unsold, due to the slowdown of the textile and other industries on China's east coast. The price of cotton has crashed from 13,722 yuan/ton in August to just 2000 yuan/ton in October. Not only regular farmers, but impoverished migrant workers will be hit hard, since the cotton plantations employ millions of them seasonally.

• China Daily reported Nov. 6 that already “several hundred” shoe factories have shut down just in the city of Dongguan, a center of the export industry, as orders have fallen by 30-40%, and production costs soar by over 20%. Last year China exported 73% of the world's shoes. Factory owners from Hong Kong and Taiwan are simply closing factories down and skipping town, leaving tens of thousands of workers without any livelihood.