China Economy Surging, But Where Will Goods Go

China’s manufacturing economy appears to have almost completely recovered. The purchasing managers’ index released by HSBC Holdings Plc rose to a seasonally adjusted 55.7 from 55.4. A second measure, The Purchasing Managers’ Index (PMI) of China’s manufacturing sector, stood at 55.2 percent in November, unchanged from the previous month, the China Federation of Logistics and Purchasing said.

China’s growth is back, but where will it ship all the inventory it has created?

Some economists have raised the prospects that the world will be awash in cheap Chinese manufactured goods in 2010 which could lead to new trade tensions between the world’s most populous nation and its trade partners. The low-priced merchandise may be good for consumers in the West and Japan, but it could help ruin the manufacturing based in their regions.

China’s manufacturing is up, but the good will either have to sit on docks or be the cause of what could become a significant trade war.

Douglas A. McIntyre

[Via http://247wallst.com]