China's economy could be in more trouble than we think

[LiberalArkie]

Rail freight volumes are an indicator of China’s goods-producing and goods-consuming economy, not just manufacturing, construction, agriculture, and the like, but also consumer goods. Thus they’re also an indication of consumer spending on goods. Alas, rail freight volume is collapsing: the first quarter this year puts volume for the whole year on track to revisit levels not seen since 2007.

While China’s economy was strong, rail freight volumes were soaring. For example, in 2010, when China was pump-priming its economy, rail freight volume jumped 10.8% from a year earlier. In 2011, it rose 6.9%. It had soared 44% from 2005 to 2011! But 2011 was the peak.

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The World Bank just figured that China’s economy would grow 6.7% in 2016, the IMF pegs it at 6.5%, both kowtowing to the GDP declarations issued by the Chinese government. Whose Kool-Aid have they been drinking? This would make 2016 another year when rail freight plunges by a dismal 10% or so while economic growth soars nearly 7% – which would make China one of the fastest growing economies in the world. So something in this convoluted, government-imposed math doesn’t add up here.

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After years of big wage increases in China, the supply of cheap labor is coming to an end. As the cost of labor has soared, the manufacturing base is migrating to cheap-labor countries, leaving less work in Chinese cities for migrant laborers. With few options left, they’ve started to return to their villages. This leaves China with massive challenges, just when its debt-burdened economy can least afford them. Read… China “Could Push Whole World into Fresh Economic Crisis”

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http://www.businessinsider.com/china-rail-freight-volumes-are-troubling-2016-4

[saturnsring]

1. theyve spent 6 years blowing up that bubble

[pampango]

2. US, China sign deal to end export subsidies program

The United States and China have signed an agreement that eliminates a significant subsidies program used by Beijing to bolster its exports across several sectors. U.S. Trade Representative Michael Froman said the deal will not only help U.S. workers but highlights the Obama administration’s commitment to challenging violations of the World Trade Organization's international trade rules.

Froman called the deal a win “for Americans employed in seven diverse sectors that run the gamut from agriculture to textiles to medical products, who will benefit from a more level playing field on which to compete. This agreement once again underscores that President Obama’s commitment to enforce our trade rights aggressively to secure real economic results for American workers, farmers and businesses of all sizes and in every part of the country,” Froman said.

The subsidy program affected seven sectors: textiles, apparel and footwear; advanced materials and metals (including specialty steel, titanium and aluminum products); light industry; specialty chemicals; medical products; hardware and building materials; and agriculture.

“Manufacturers welcome the U.S.-China agreement announced today that terminates a substantial Chinese export subsidy program, which has sought to advantage a wide range of Chinese manufacturing and other industries,” said Linda Dempsey, vice president of international economic affairs for the National Association of Manufacturers.

http://thehill.com/policy/finance/276312-us-china-sign-deal-to-end-export-subsidy-program