China: Last Seen Being Buried Underneath Giant Mounds of Unsold Steel, Automobiles, and Solar Panels

The glut of everything from steel and household appliances to cars and apartments is hampering China’s efforts to emerge from a sharp economic slowdown. It has also produced a series of price wars and has led manufacturers to redouble efforts to export what they cannot sell at home.

The severity of China’s inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government — all part of an effort to prop up confidence in the economy among business managers and investors _NYT

China seems unable to switch gears from the mode of capital production which worked so well back in the 1990s and early 2000s. Despite the prolonged economic slowdowns bedeviling the US and Europe, China continues to pretend that it can produce and export its way out of any economic difficulty.

Officially, though, most of the inventory problems are a nonissue for the government.

The Public Security Bureau, for example, has halted the release of data about slumping car registrations. Data on the steel sector has been repeatedly revised this year after a new method showed a steeper downturn than the government had acknowledged. And while rows of empty apartment buildings line highways outside major cities all over China, the government has not released information about the number of empty apartments since 2008.

Yet businesspeople in a wide range of industries have little doubt that the Chinese economy is in trouble _NYT

More underlying problems in China's economy

A problem that becomes ever more difficult to conceal

China's government cannot allow employment to fall too low, or it will have massive popular unrest on its hands. And yet there is a limit to how far China can coast on its capital reserves built up during the great bubble years.

China's leaders are lost at sea, just at a time when they are planning a crucial "change of watch" in top leadership. The new generation of leaders and princelings will be even less prepared to deal with China's mounting economic and social problems.

The pressure is building within the middle kingdom. The only certain thing is that most pundits' predictions for China are likely to be wrong.