Chinese Industrial Overproduction

For John, BLUF:  Over production, swamping market, forcing down prices, hurts everyone.  Nothing to see here; just move along.

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Someone EMailed me this article from The Wall Street Journal, "Glut of Chinese Goods Pinches Global Economy".

  The subhead is:

Plants in China keep producing as growth falls, fueling deflationary pressure world-wide

My friend who forwarded the article noted:

The over capacity in China is extreme, as evidenced by this quote from the article from The Wall Street Journal for just one industry:

Last year, China exported 94 million metric tons of steel, more than the total output of the U.S., India and South Korea, the world’s third, fourth and fifth largest producers.

UBS analysts estimate the world has excess steel-production capacity of 553 million metric tons a year, much of it in China. That is enough to build more than 10,000 modern aircraft carriers a year, or the Eiffel Tower 75,000 times annually.

That is a lot of Eiffel Towers, or a lot of aircraft carriers.

It is a complex story, but one example, automobile tires, shows the impacts of over-production in China, Thailand and the US.  Short read, interesting story.

Regards  —  Cliff