China’s Slowing Economy Puts Pressure on American Exporters – NYTimes.com
As China’s economy cools, American exporters are increasingly feeling the chill.
Cummins, the big Indiana engine maker, lowered its revenue forecast earlier this month and said it would eliminate 1,000 to 1,500 jobs by the end of the year, citing weak demand from China as a major reason. Schnitzer Steel Industries, a Portland, Ore., company that is one of the nation’s biggest metal recyclers, is cutting 300 jobs, or 7 percent of its work force, as scrap exports to China plunge. And on Monday, Caterpillar reported lower sales in China and cut its global outlook for 2012.
Job reductions are hitting industries like mining, heavy machinery and scrap metal that prospered as China boomed, illustrating some of the risks to the broader American economy if growth continues to slow in what is now the world’s second-largest economy. Last week the Chinese government announced that gross domestic product grew at an annual rate of 7.4 percent in the third quarter, the slowest pace in more than three years.
Even as the presidential candidates try to outdo each other in promising to get tough on Chinese exports to protect American jobs, experts say the more immediate threat to American workers may actually be the slowing of sales to China, which has bid up the price of much of what the United States sent overseas in recent years.
In fact, in the presidential debate on Monday evening, President Obama noted that exports to China had doubled during his term, even as both he and Mitt Romney again vowed to crack down on Chinese trade abuses.
Over all, China’s growth is expected to decelerate to 7.7 percent this year from last year’s breakneck 9.3 percent pace, adding to fears of a global slowdown, especially with much of Europe in recession and the economic recovery in the United States stubbornly anemic.
Already, softening demand has clipped American exports.
“There’s definitely been an effect from slowing exports to China on U.S. exports,” said Dean Maki, chief United States economist at Barclays. According to his analysis, the drop in exports to China alone is responsible for shaving 0.1 to 0.2 percentage point off the growth rate for the American economy, which expanded at an annualized rate of 1.3 percent in the second quarter.