Britannia Radio

This was well signposted in advance.  I sent out several cases of 
economic collapse and riots in China last year  notably Ambrose Evans-
Pritchard's postings

1.. "Protectionist dominoes are beginning to tumble across the 
world     The riots have begun. Civil protest is breaking out in 
cities across Russia, China, and beyond"  [My "Deflation?  What 
deflation?" 22/12/08]  and
2. [My] "The Global Slump of  2008-09 is under way" sent on 15 MAY 
08  which included   "China has hit the buffers. With inflation at 
8.5pc, it risks political turmoil. Moreover, it has repeated Japan's 
mistakes in the 1980s, building too many factories shipping too many 
goods at slender margins into a crumbling export market.
Lehman Brothers' Sun Mingchun says China will tip over in the second 
half of this year. "With so much latent overcapacity, an export-led 
slowdown could trigger a chain reaction which, in the worst case, 
could threaten the stability of [its] financial and economic system," 
he said."

China is,  indeed, the wild card in the global picture.  In the boom 
years it shipped vast quantities of goods to the USA and the 
proceedsform a vast hoard of US dollars held in China.  What they do 
with these if things turn nasty at home is the stuff nightmares are 
made of!
xxxxxxxxxx cs
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THE TIMES     3.1.09
Fire dies under China's once booming manufacturing industry

Leo Lewis, Asia Business Correspondent

China's vast manufacturing sector, the driving force behind the 
country's celebrated economic growth story, is on the brink of 
technical recession as order books run dry and once humming factories 
fall silent.

The bleak snapshot of business conditions, which may herald yet more 
shrinkage in China's growth prospects this year, arrived yesterday 
via the manufacturing purchasing managers' index (PMI), a survey 
produced by CLSA, the Hong Kong brokerage.

Widely scrutinised by markets, the monthly report is considered by 
many investors to be one of the most useful leading indicators for 
the Chinese economy. Over the past 12 weeks it has painted a far more 
rapidly worsening picture than anyone predicted and now highlights 
China's unexpectedly high vulnerability to the global financial crisis.

Eric Fishwick, CLSA's chief economist, who compiled the PMI report, 
said that China's manufacturing activity was very weak last month. 
"Output contracted at a record pace, employment fell for the fifth 
month and work in hand declined." he said. "With five back-to-back 
PMIs signalling contraction, the manufacturing sector, which accounts 
for 43 per cent of the Chinese economy, is close to technical 
recession."

Although the main PMI index rose slightly in December from its record 
low in November, the reading of 41.2 means that the CLSA index 
remains far below the levels once considered normal. A reading below 
50 means conditions are worsening: the accompanying manufacturing 
output index plunged to 38.6, marking the sharpest drop since the 
survey began. The Chinese Government's own PMI for December is due to 
be published tomorrow, and analysts believe that it is likely to show 
similar pessimism throughout the manufacturing sector.

The worsening meltdown spells yet more misery for Beijing as the 
Government battles to restore stable growth. Many believe that the 
Communist Party's political legitimacy depends heavily on its ability 
to ride out the storm with the economy still behaving like a fast-
growing emerging market. That may prove a tough act to pull off, Mr 
Fishwick said. Despite the size of the economy and the pace of its 
recent expansion, it remains fundamentally outward-looking and has 
been hit hard by the sharp drop-off in exports to both big consumers, 
such as the United States, and smaller Asian markets, which once 
provided steady demand.

In November, Beijing announced a gargantuan $586 billion (£404 
billion) economic stimulus package involving huge public works 
spending. One commentator likened it to "trying to head off a 
speedboat with a supertanker".

Particularly unsettling for Beijing, according to political and 
financial analysts, has been the greatly increased rate of job losses 
in the manufacturing heartlands. The Government's efforts to craft a 
strong policy response to the crisis and cushion growth from the 
turmoil beyond its borders have been somewhat undermined by the 
images of hundreds of workers arriving at factory gates to find only 
a handwritten sign informing them that the plant has been closed.

Senior economists have reduced sharply their Chinese growth estimates 
as business conditions have turned brutal, although some say that 
they may be forced to make more downward revisions if January brings 
more sackings and factory closures and continuing decline in exports.

The new-year alarm bells come as even the most bullish observers now 
acknowledge another grim possibility - that growth in emerging 
markets around the world could turn out to be one of 2009's bigger 
casualties. Private sector analysts are forecasting economic 
contraction for at least half a dozen Asian countries this year.
====================
EUREFERENDUM Blog   3.1.08  [Condensed]
Broken China

This blog has been pretty consistent in maintaining that the Chinese 
"economic miracle" is not all that it has seemed and that the 
country, economically and politically, has been on the brink for some 
time.

[- - - - - - - - -]

  And the signs are indeed bleak. Output has contracted at a record 
pace, employment fell for the fifth month and work in hand has 
declined. Five back-to-back PMIs are signalling contraction. The 
manufacturing sector, which accounts for 43 percent of the Chinese 
economy, is close to technical recession.

The political implications are also bleak. The Communist Party's 
political legitimacy depends heavily on its ability to maintain 
improving economic conditions and is, in a sense, hostage to its huge 
populations which, prone to rioting, could tear the government apart.

Even then, we do not have the first idea of what is happening in the 
agricultural sector, or the outlying provincial towns, but it takes 
little imagination to work out that, if the major industrial centres 
are having hard times, there must be knock-on effects right through 
the country.

The bad weather last year did not help, when heavy snow and rain - 
the worst in five decades - hit southern China in January and 
February 2008, resulting in deaths, structural collapses, blackouts, 
accidents, transport problems and livestock and crop losses in 19 
provinces.

Already bad weather had come to southern China and a repeat of the 
winter conditions experienced last year could add further stress to 
the political and economic systems.

Where this will all lead is anyone's guess. China is now part of the 
wider global economy but no one can predict how its government will 
react if its seriously threatened by internal dissent and unrest. The 
country is, in a sense, the wild card in a pack that already has too 
many jokers.
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