Why factories in southern China are feeling the squeeze despite pickup in orders
Manufacturers hoping for stimulus measures turn attention to coming Politburo meeting as costs eat into profits and investment
While official manufacturing data for June showed continued expansion, electronics exporters in the region – one of China’s biggest industrial areas and a bellwether for the national economy – said last week that a pickup in orders had yet to lift their bottom lines.
Rising raw material costs, tougher payment terms set by vendors, and persistent price competition were squeezing profits, they said.
Manufacturers said that despite strong export demand, particularly from the US, those pressures could stymie efforts to increase sales and fund new investments or hiring.
At the July meeting of the Politburo – a major decision-making body of the ruling Communist Party – policymakers typically assess the country’s first-half economic performance and chart the course for the remainder of the year.