China's massive subsidization is coming full circle in the form of "overproduction."
But as the Financial Times has been reporting in a new, investigative series, all of this massive subsidization may have built up a shaky tower--one that could eventually topple.
How exactly has China overamped its manufacturers?
Direct cash infusions; cheap land; cheap credit; discounted utilities; tax breaks to state-owned and private companies; $27 billion in governmental energy subsidies for steelmakers.
The problem for China is that this has led to overproduction. The Financial Times says that large industries like shipbuilding, steel, and automakers are now competing heavily against each other. The only thing "propping up" these industries are continued subsidies. One example is auto company Geely, whose subsidy income is more than 15 times greater than its next biggest source of net profits (“sales of scrap metal”).
The result is a vast expanse of Chinese manufacturers who are subsisting on continued subsidies.
Related recent Blogs
- Indiana manufacturing program expands • by TGarland • 12/05/2013
- Scott Paul: Keep skilled jobs for skilled workers in Washington • by mmcmullan • 12/05/2013
- A bad time to sideline trade talks • by mmcmullan • 12/04/2013
- Infrastructure investment means job creation • by TGarland • 12/04/2013
- China trade deficit on pace for new record, but will anyone notice? Alliance for American Manufacturing (AAM) Statement. • by scapozzola • 12/04/2013
- What to do with abandoned factories? Bring in the artists! • by LDonia • 12/03/2013
- Surprise, surprise? Americans still say job creation should be top priority • by mmcmullan • 12/03/2013
- Fmr. Transportaion Secretary Ray LaHood urges infrastructure investment • by TGarland • 12/02/2013
- The Computer Wore Heels: Check out "Top Secret Rosies" • by mmcmullan • 12/02/2013
- The Veep heads to Asia, while Michigan Democrats and automakers press the "currency issue" in TPP talks • by TGarland • 11/27/2013