31-08-2015, 09:31 AM
Over-capacity in the market, and "no option to quit", has created distortions in the market. This might be one of the key reasons, that steel is cheaper than cabbage in China, which is ridiculous...
Zombie factories stalk the sputtering Chinese economy
BEIJING — Mr Miao Leijie loses money on each tonne of cement his company produces. But stopping production is not an option.
When Lucheng Zhuoyue Cement Plant opened in 2011 to supply the real estate and infrastructure industries in the northern Chinese city of Changzhi, the company raised most of the initial money from banks. Now, Mr Miao, the factory’s general director, needs to keep churning out cement simply so the company can pay the interest on its loans.
It will be tough for the business to get out of the hole. Customers and investments are drying up, and the company is borrowing even more money to stay afloat.
“If we ceased production, the losses would be crushing,” Mr Miao said. “We are working for the bank.”
Changzhi and its environs are littered with half-dead cement factories and silent plants, an eerie backdrop to the struggling Chinese economy.
...
http://www.todayonline.com/chinaindia/ch...se-economy
Zombie factories stalk the sputtering Chinese economy
BEIJING — Mr Miao Leijie loses money on each tonne of cement his company produces. But stopping production is not an option.
When Lucheng Zhuoyue Cement Plant opened in 2011 to supply the real estate and infrastructure industries in the northern Chinese city of Changzhi, the company raised most of the initial money from banks. Now, Mr Miao, the factory’s general director, needs to keep churning out cement simply so the company can pay the interest on its loans.
It will be tough for the business to get out of the hole. Customers and investments are drying up, and the company is borrowing even more money to stay afloat.
“If we ceased production, the losses would be crushing,” Mr Miao said. “We are working for the bank.”
Changzhi and its environs are littered with half-dead cement factories and silent plants, an eerie backdrop to the struggling Chinese economy.
...
http://www.todayonline.com/chinaindia/ch...se-economy