China's New Normal: Industrial Recession

WSJ: For Many Firms, China’s ‘New Normal’ Spells Doom
One of Beijing’s biggest fears is that mass closings of factories could bring social instability. The HSBC/Markit Purchasing Managers Index shows that factories have cut jobs for 20 consecutive months. May’s culling was the fastest since the global financial crisis.

Ren Junbo, who owns a shop in Tengzhou selling drinks and instant noodles, said his business tanked after dozens of factories shut their doors.

A few blocks from his store, the Xiangyuan Apparel factory—larger than a city block and adorned with mock-Roman columns—once employed 2,000 people. It appears to have folded quickly: Half-sewn jeans sat trapped under sewing-machine needles in the building’s mostly empty hull.

For some of these factories, just continuing to churn out shirts or run-of-the mill chemicals won’t cut it anymore. Flagging demand is quickly separating the plants that can find a way to adapt from those that founder.

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