Slump in China’s Industrial Sector Weighs on an Already Slowing Economy

Beijinmg-China (Jan 19)  Walking around an abandoned furniture factory, Fang Minghua pointed out the workshops where several hundred employees once toiled, transforming sheets of raw wood into TV stands or wardrobes for the aspiring middle class in China and other emerging economies.

The factory is relocating to a new facility two hours away, priced out by rising costs and falling orders. Mr. Fang estimated that as many as a third of the furniture factories around town had gone out of business, while many others were struggling.

“The economic slowdown is real,” said Mr. Fang, 46, who over the past 22 years had worked his way up from $50-a-month laborer to production supervisor.

The downturn in Dongguan, a once-thriving manufacturing hub, is part of the Chinese economic puzzle that global investors are trying to solve.

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While China has been moving away from the type of low-end manufacturing that has been Dongguan’s specialty, the protracted slump in the country’s vast industrial sector is a major threat to the nation’s already slowing economy. As the government tries to manage the situation, the risk is that the Chinese economy is worse off than expected — a concern that has put markets around the world on edge.