China likely to be stronger after crisis

GUANGZHOU, China:

by Keith Bradsher (submitted by Rob Guerriere)

This was forwarded to me by my sourcing contacts in Beijing.  In October, my supply chain contacts notified me that retail transactions "fell off a cliff", but the drop off in labor and the closing of factories did not hit China till December.  Now, I believe we are seeing the beginnings of a springtime market rally.  See my other story: Road to Recover - Cheer on the Springtime Rally.  http://gtbp.org/...sk=view&id=50&Itemid=1 Has the real-time trading market over reacted?  Does the business supply chain need to now refill the shelves because real demand is still there?  RobG

The global economic downturn, and efforts to reverse it, will probably make China an even stronger economic competitor than it was before the crisis.

China, the world's third-largest economy behind the United States and Japan, had already become more assertive; now it is exploiting its unusual position as a country with piles of cash and a strong banking system, at a time when many countries have neither, to acquire natural resources and make new friends.

Last week, China's prime minister, Wen Jiabao, even reminded Washington that as one of the United States' biggest creditors, China expects Washington to safeguard its investment.

China's leaders are turning economic crisis to competitive advantage, said economic analysts.

Blue-collar wages, which had doubled in four years in some coastal cities, have fallen for many workers this winter, reviving China's advantage in labor costs.

Unemployment has pushed down the piece rates that factories pay for each garment sewn or toy assembled. Overtime has practically disappeared.

Today some jobs are still available. Four days after a shoe factory closed here for lack of orders, laying off several hundred workers, there were four ads on the factory's front gate from other shoe factories seeking to hire skilled workers.

Multinationals are cutting back less in China than elsewhere — and some are even expanding.

Intel is shutting down semiconductor production lines sooner than previously planned at older, smaller operations in Malaysia and the Philippines as it opens a large, new factory in Chengdu in western China.

IMI Plc., the big British manufacturer that manufactures items as diverse as power plant valves and brewery equipment, has just announced an accelerated shift of operations to China, India and the Czech Republic, after cutting its global work force by 10 percent since December.

And Hon Hai, the 600,000-employee Taiwanese company that is one of the world's largest contract manufacturers of products like the Apple iPhone and Nintendo Wii game console, has just increased employment by nearly 5 percent in China even as it cuts overall employment by 3 to 5 percent.