China s Excess Capacity Nightmare

(a) Production and production capacity

Excess capacity has been a priority for the State Council since 2005, when it issued industry by industry restrictions on new projects and targets for shutting down inefficient production.

With a new round of stimulus, China s excess production capacity and underused outlays (for example, built up real estate assets) could be mobilized immediately, restoring 9 annual GDP growth.

Under these circumstances, large excess capacity develops and commodity prices fall.

In 1998, excess capacity was estimated to be 275 Mt. worldwide.

As a result, China now faces the problem of short term excess capacity.

But the more immediate problem remains deflation, given high unemployment and excess capacity.

Within national income accounts, trade deficits represent the excess of a country s consumption over production.

China s excess capacity problem reveals a serious defect in its socialist market economy.

Many underlined the need to reduce excess fishing capacity and to maintain capacity at levels commensurate with the sustainability of target fish stocks.

Capacity building for the production of nautical charts

During the same period, crude steel production increased by 260 Mt., indicating that the excess has been reduced.

Excess capacity and falling growth are mutually reinforcing. Not only does excess capacity have a negative impact on growth perhaps more important, sharply declining growth also contributes to massive redundancy in some industries (especially resources and the heavy and chemical industries).

Cheap funding and land revenue have led to excess infrastructure and industrial capacity without adequate market discipline.

The legacy of excess real estate capacity and over leveraged households makes recovery all the more difficult.

In 2000, American production capacity was 5000 tons per year.

Recourse to the latter option means that, even without excess capacity, OPEC can still be in the driver s seat.

Facilities for the production of Schedule 3 chemicals are subject to declaration if they produce quantities in excess of the specified thresholds.

To correct China s excess capacity problem would require the relevant enterprises, whether SOEs or private firms, to exit the market.

First, in a situation of widespread unemployment and excess capacity, short run output is determined primarily by demand, not supply.

Thus, firms have little pricing power, owing to excess capacity, while workers bargaining power is low, owing to high unemployment.

Record low interest rates in 2001, 2002 and 2003 did not lead Americans to invest more there was already excess capacity.

State orchestration should instead be focused on fighting corruption, reducing transaction costs, promoting competition, lowering entry barriers, and removing excess capacity.

I see production 10 below capacity, and I see unemployment rates approaching 10 .

(d) Adequate organizational structure and capacity to host a national cleaner production centre

December 12 The International Authority for the Ruhr lifted part of the remaining restrictions on German industrial production and on production capacity.

Investing in futures becomes both a hedge against a weakening dollar and an investment vehicle that could yield substantial profit, particularly in a climate of vanishing excess oil production capacity, increasing demand, declining interest rates, a slumping real estate market, and crisis in the banking industry.

In 1985, the global production capacity for dioxane was between 11,000 and 14,000 tons.

With production capacity stretched to the limit, oil prices remained vulnerable to upward pressures.

Moreover, the younger countries are typically emerging markets, which have neither the scale nor the capacity to absorb the world s excess savings efficiently.

Given the high levels of excess capacity and unemployment in Europe and America, quantitative easing is unlikely to trigger a bout of inflation.

First, consumption has to give way smoothly to investment, as past excess capacity is worked off and as expansionary policies in industrial countries normalize.

These policies encourage corporations to shift output to developing countries, which gain modern production capacity.

The response capacity deals with a group of indicators referring to the main natural resources and their use with the present food production capacity.

It is also correct that if OPEC had excess capacity, it would have already used it to flush out speculators to bring oil prices down.

Such conduct was likely to make the Zambian plant less competitive by restricting its production capacity.

For example, while capitalism depends on investment and consumption, an excess of the former leads to production gluts, and too much of the latter causes economies to overheat.

OPEC can regain control in one of two ways use its claimed excess capacity to flush out speculators, or use its financial surpluses to overtake them.

Or else they can wait until the overhang of excess capacity diminishes, capital goods become obsolete, and the economy s internal restorative forces work their gradual magic.

Consider cement production, where, according to the China Cement Association, 38 of capacity consists of shaft kilns.

Industrial production has been unchanged for the past two months, and utilization of industrial capacity has declined.

Capacity building for strengthening the production and delivery of renewable energy in developing countries affected by desertification

Given the collapse of commodity prices and excess production capacities, there is no short term inflation danger, even if part of the stimulus is financed directly by central banks.

Moreover, given the magnitude of excess capacity in real estate, lower interest rates will do little to revive real estate prices, much less inflate another consumption bubble.