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China's Heavy Industries Steel for Crash

Global downturn freezes country's industrial transformation

By Rob Quinn, Newser Staff

Posted Nov 26, 2008 1:44 AM CST

(Newser) – The global slowdown is rapidly shutting down China's heavy industries, the New York Times reports. Just months after the government warned that the red-hot economy could lead to runaway inflation, the nation's steel, cement and construction industries now find themselves with a huge excess of capacity—and workers. Growth is expected to slip to its lowest since 1990.

"It’s the speed of the deceleration that scares people," said one economist. "People got scared, and many activities just stopped. Many turned off the lights.” Beijing has announced a stimulus package worth nearly $600 billion to shore up heavy industry, but many analysts doubt even that will be enough to offset the knock-out effect of a slump in American demand for Chinese exports.

[Images (5)]

[Quotes (1)]

A Chinese migrant worker walks on a street bridge crossing railways near Beijing South Railway Station earlier this month. (AP Photo/Alexander F. Yuan)

A worker in a cement factory waits for a shipment to come in in Fushun, northwest China's Liaoning province. (AP Photo)

A Chinese worker loads iron bars in front of a construction site in Beijing earlier this year. The country's building boom is rapidly grinding to a halt. (AP Photo/Andy Wong)

Chinese work at a small-scale steel plant in Shenyang in northeast China's Liaoning province. (AP Photo)

A Chinese worker walks by steel products at a steel mill in Wuhan, central China's Hubei province early this month. (AP Photo)

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Growth is deteriorating fast. We’re not talking about China’s growth going backwards. But when supply is geared toward 10% growth, and it comes down to 5% you have excess supply. - Andrew Driscoll, a China resource analyst at investment bank CLSA

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China's Heavy Industries Steel for Crash