China Struggling

I guess it is no news that the entire globe is struggling. China, I believe, will soon, if not already, hurt more than most. They were a big supplier of a world economy that is now on the ropes. And now the signs of stress are on the rise.

Moreover, they built up for a local economy that does not and will not exist any time soon. According to this piece from the LA Times, Beijing alone built up 500 million square feet of commercial office space since 2006, which is more than exists in all of NYC, and about 100 million feet sit vacant. That is roughly a 14 year supply IF things keep going as they have over the past few years before the downturn, which ain't happening.

And certain Olympic venues are either being torn down or significantly changed. Can you imagine the Bird's Nest as a shopping mall. No - well its owner can. The construction there was rampant and now it is time to pay the piper. Sad to see.

http://www.latimes.com/business/la-fg-beijing-bust22-2009feb22,0,1213023.story?track=rss

So you think China, as a major manufacturer and supplier of the rest of the world, will truly suffer badly due to slowing world demand? They are, after all, the biggest manufacturing country in the world right? NOT!! That title, folks, in terms of value or profit squarely belongs to a country most today hardly even consider to be a manufacturing society - the U.S. of A. Yes for every $1 of value manufactured in China, the U.S. manufactures $2.50 in value. We have switched over time to the high cost, high value products. You know, like jet engines, heavy equipment, military products and the like. As the leading manufacturer, in terms of value, we are suffering the same fate as China for our manufacturers. If you have any doubt, ask GE, whose stock fell to its lowest level today since 1995. Talk about a lost decade.

http://www.ritholtz.com/blog/2009/02/us-remains-worlds-leading-manufacturer/

Disclosures: None - Fortunately I no longer have my GE stock.