The ripple effects of economic crisis are spreading among countries on multiple levels and through interactive channels.
Chinese plastic processors, losing orders from overseas, are buying less resin and stocking smaller inventories. Japan, which sells 68 percent of its resin to China, has seen the export to China tank 45 percent during the first three quarters.PVC producer Tosoh Corp. has cut its resin production by 15 percent since September, for the first time in a decade. Tosoh said demand from China has dropped sharply. Korean firm SK Energy Co. also told the Wall Street Journal that the company saw a 35 percent dive of petrochemical products sold to China.There's no doubt that Western suppliers are tightening their boot straps.Note that China's export category -- processed products -- are less value-added and profitable than the equipment and materials it imports from the West. I wonder which side -- the developing countries that manufacture low-end products, or the developed countries that supply advanced equipment, materials, technology and sometimes branding -- suffers less from reduced international trade.What I'm certain about is that the global downturn is costing more jobs in China than anywhere else. Local governments used to support labor-intensive export factories running on razor-thin profits, just to maintain employment. Now even that is becoming history. What is ahead of us all?SEARCH
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Slowing China hurts the world
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COMMENTS (2)
Nina:
I guess nobody knows exactly what's ahead of us. At first, we were told that the bottom will be reached by the end of 2009. Now I'm hearing that the recession will likely to be in "L" shape instead of "V" or "U" shape. The real question is what we can do to dig ourselves out as soon as possible.
Robert Hansel:
In my opinion, the people in the "West" must realize that in order to "dig themselves out" of this recession, they need to work; i.e. have jobs other than stocking store shelves, sweeping and pouring coffee. China and India figured out that their prosperity comes from developing their middle class, i.e. putting their people to work. The Western civilizations have forgotten this. We have come to think that we will maintain our comfortable life style on the backs of China and India...we'll I guess we're starting to realize that this doesn't work. "Wall Street" is getting what it deserves now. It's focus on short term profit has decimated Western economies, and took the World's economy down with it. A country propspers when it's population has jobs that add value and produces things that can be exported. That is how a country brings money in. Canada, USA and other Western countries have forgotten this. Wall Street, top CEO's, investment firms profited by destroying Western companies; by tearing them apart, putting the employees out of work and sending the jobs to China and India. The short sightedness of Wall Street and these financiers forgot that the if the middle class doesn't have jobs, or doesn't have jobs that give the person a little extra money to buy stuff with, then there won't be anyone to buy the goods that these companies are importing. Similarly, if the people don't have good jobs, they can't afford to buy a house...duh!!! Hence the housing meltdown. Until the West realizes that Globalization means that the living standard in the East will sky rocket at the expense of the West, which will see it's standard of living erode with inflation, then we won't "dig ourselves out". There is no quick and easy fix. We're now paying for the "Wal-Martization" of the West.