China's Industrial overcapacity, politics meets business..

Interesting arcticle from Business Week. Basically saying that state funded and financed industrial might is now over capacity, without having big enough export markets to service.

Is this where differnet political systems and business clash I wonder? Or is it any differnent from Western Countries bailing out their Finance sectors?

Excert from the article:

"It's been a rough year for Inner Mongolia Baotou Steel. Revenues for the company, based on the windswept grasslands 350 miles northwest of Beijing, are off by 21%, and the steelmaker is likely to book its first loss since going public nearly a decade ago. Slowing exports have hurt, but the biggest problem has been surging output at home. Chinese steel production is up 10.5% this year, and capacity is on track to exceed 700 million metric tons annually—about 200 million more than China consumes. "[Overcapacity] is affecting every company in the industry," says Yu Chao, Baotou's investor relations chief. "We have no choice but to accept this."

Can this be the same China that's expected to grow by more than 8% this year? While Beijing's $586 billion stimulus package has helped the mainland navigate the global financial crisis, there's a downside. Fixed asset investment—money spent on factories, highways, and other big-ticket projects—soared 40% in the first half and accounted for nearly all of the country's growth...."

Full article:
China's 'Made in China' Problem - BusinessWeek

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