Above is an interesting video overview of the Chinese economy by the Financial Times’ John Auther and James King.
Of particular importance to Australia is the discussion on China’s steel industry, which is suffering from massive overcapacity – equivalent to Japan and the United States’ combined annual steel production – and has been producing well ahead of demand, creating large stockpiles of steel in China’s factories and warehouses (see below chart).
This build-up of steel inventories does not auger well for iron ore prices, as they will weigh on future Chinese steel production and iron ore demand.
Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.
