Shops and warehouses in the U.S. and Europe are overstocked with inventory, causing orders for new goods from China’s factories to plunge by as much as 50 percent last month, according to the Financial Times.

October is usually an especially busy month as factories turn out goods for the Western holiday shopping season.
Now, however, factories are laying off workers, selling their equipment, and padlocking their doors, the FT noted.

Beijing’s sweeping serial lockdowns to halt the spread of the COVID virus also has played into decisions to close operations, some factory owners told the FT.

Unemployment in the manufacturing sector, which was thriving just two years ago, is mounting.

Partly as a result, China’s economy expanded by only 3.9 percent in this year’s third quarter, well below the government’s 5.5-percent target for the year.

“It’s supposed to be a busy time but in the last two months it was the worst,” furniture factory owner Christian Gassner said to the FT. “Nobody dares to buy anything. Nobody [in Europe] has any money left.”

“Everybody’s crying about the same thing,” he added. “Orders are dropping 30 to 50 percent in certain industries. Many people are closing their factories.”

The electronics and green energy industries remain far less affected, he noted.

Beijing has tasked local governments to subsidize struggling local industries while also enforcing waves of lockdowns.

“What are we supposed to do?” one local official said in an FT interview. “Let the factories and local economy go dead and waste all the income from citizens on PCR tests?”

In October, China’s purchasing managers index for manufacturing slipped from 50.1 to 49.2, a decline greater than had been expected, according to the country’s National Bureau of Statistics.

Ratings below 50 indicate contraction.

Also last month, export volume shrank by 0.3 percent after analysts had predicted 4.5 percent growth, as we reported in “Value of China’s October Foreign Trade Falls Short of Expectations” (8 Nov 2022).

“We are in a scenario where Chinese domestic demand is affected by lockdowns plus, externally, we’re seeing weaker demand from Europe and the U.S., which is driven by high interest rates globally,” Nataxis economist
Gary Ng told the FT.

“That can be quite problematic [for] south China,” he added. “Those provinces are important for China’s economy.”

Also, more businesses are relocating their factories from China to lower-wage countries elsewhere in Southeast Asia, such as Vietnam.

“There is no more luck being in China,” Suki So, executive director of Everstar Merchandise, said to the FT.

The company recently moved its operations making Christmas lights from the Chinese city of Guangdong to another country nearby.

“Demand for non-essential goods has dropped as Americans get poorer,” Suki added.

TREND FORECAST: Chinese factories closing their doors and laying off workers was unthinkable just a year ago.

The fact that it is happening at all is a dire omen.

The real estate sector, which has made up as much as 30 percent of China’s GDP in the past, is still reeling from serial defaults and bankruptcies among major developers, a saga we have chronicled in “China’s Real Estate Market Teeters on Evergrande’s Debt” (21 Sep 2021) and “China’s Overborrowed Property Industry Cracking” (19 Oct 2021), among other articles.

Also, regulatory crackdowns have dented the country’s financial and tech sectors, weakening their contributions to GDP.

As a result, China has fallen back on massive public spending to keep people working and inflate its GDP numbers.

China will not be able to string together enough positive moves to maintain its past, or even current, pace of economic growth.

China will not join much of the rest of the world in falling into recession, but its prosperity and its ascendancy to the role of the world’s premiere economy has been severely damaged and will require years to recover.


In China, 11 November is the unofficial Chinese “Singles Day” holiday that celebrates people not in relationships. In 2009, Alibaba—China’s answer to Amazon—promoted the date into a national day of shopping, offering
discounts and special promotions.

The day’s sales tally has become a barometer of the strength of China’s consumer economy.

This year, Chinese consumers’ financial barometer is headed lower.

A survey in the city of Guangzhou found 24 percent of respondents were not planning to take advantage of the day’s special deals this year, double the number last year.

In 2021, Alibaba sold $84.5 billion worth of stuff on Singles Day, 8.5 percent more than in 2020 but still the lowest yearly gain to date. The company has made a point of touting dazzling sales figures after each year’s event.

This year, Alibaba declined to disclose the day’s revenues. So did competitor

This year’s national shopping spree was hobbled by growing weakness in the country’s all-important export economy, which has cost thousands of workers their jobs.

Unemployment moved up from 5.3 percent in August to 5.5 percent in September, although joblessness among workers aged 16 to 25 is a whopping 17.9 percent.

Beijing’s ongoing, widespread lockdowns to control the spread of the COVID virus also has hampered economic activity, although Beijing has now announced it will relax some anti-COVID measures.

Overall retail sales expanded at an annual rate of 2.5 percent in September, barely half of August’s 5.4-percent growth.

TRENDPOST: China’s “dual circulation” policy, announced just two years ago, of a robust economy split between manufacturing for export and a thriving domestic consumer economy is in tatters. As a result of their zero-COVID policy, strong recovery is years away.


The prices Chinese factories charge for their goods going out the door declined 1.3 percent in October, year over year, marking the first annual decline since December 2020, The Wall Street Journal reported.

The price drop “entered deflationary territory,” the Financial Times said. “Bulging inventories and cautious consumers in the West” were to blame for slumping prices, the WSJ noted.

The data follows a 7 November report from China’s National Bureau of Statistics showing an unexpected drop in China’s export volume last month of 0.3 percent, as we reported in “Value of China’s October Foreign Trade Falls Short of Expectations” (8 Nov 2022).

The figures underscore the growing weakness in the global economy as central banks raise interest rates and inflation refuses to break.

Smaller volumes of goods being shipped by sea has forced shipping rates down, which brings a measure of price relief to retailers and consumers in the West, the WSJ noted.

Slumping demand is also a result of consumers buying mass quantities of merchandise during the COVID War and now turning their attention to splurging on services and experiences, as we report in “Despite Inflation, Americans Still Eager to Travel” in this issue.


The Hang Seng stock index, Hong Kong’s chief equities lister, has given up almost a third of its value so far this year.

The company operating the index has done even worse.

The share price of Hong Kong Exchanges and Clearing Ltd. (HKEC) has sunk 43 percent since January, thanks to a slump in trading volume and a relative scarcity of new listings.

As of 9 November, new stock issues had raised $11.05 billion this year to date, 71 percent less money than a year earlier.

Also, average daily trading volume is off by 31 percent, robbing HKEC of fees it charges for handling and clearing trades.

At the same time, the company saw costs rise by 13 percent, due to hikes in salaries and professional services’ fees.

As a result, HKEC collected 18 percent less revenue than during the same period last year, data service Dealogic reported.

Things may be looking up.

In July, market regulators in Hong Kong and mainland China struck a deal that opened markets more widely to international traders.

So far this month, the Hang Seng has gained back about 11 percent in value.

HKEC has ridden the rise, with its own share price jumping 24 percent.

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