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Caterpillar’s Long-Term View of China Remains ‘Positive’

Caterpillar’s Long-Term View of China Remains ‘Positive’
A slowdown in China, which represents 3 percent of Caterpillar Inc.’s revenue, led to an increase in inventory, the company said July 25. Photographer: Carla Gottgens/Bloomberg News

Caterpillar Inc., the world’s largest maker of construction and mining machinery, says its long-term view of China remains positive as the country experiences growing pains.

China’s government has returned to more growth-oriented policies such as interest-rate cuts, Caterpillar Chief Financial Officer Ed Rapp said in an interview today with Bloomberg Television’s Carol Massar on “In the Loop”.

“We’ve been to this movie before,” Rapp said. “History has been as they go through those transition periods between growth, or trying to drive inflation down, you get through rough spots. I think 2012 has been a rough spot but the fundamentals are still the same.”

A slowdown in China, which represents 3 percent of Caterpillar’s revenue, led to an increase in inventory, the company said July 25. The company shut its main excavator factory in China for much of July and is exporting many of the products manufactured there, Mike DeWalt, director of investor relations said in a presentation yesterday.

China is trying to stimulate growth for a population increasingly moving to cities from rural areas, while managing inflation for those already living in urban centers, Rapp said today. While the Peoria, Illinois-based manufacturer more recently has made a push in the country through deals and factory expansions, it has been selling machines in China since the late 1970s.

China export growth has shrunk, with shipments increasing 1 percent from a year earlier, the customs bureau said today in Beijing, after an 11.3 percent rise in June. The slowdown intensifies risks of a seventh quarter of deceleration in the world’s second-largest economy.

“We are pacing some of the investments we are making in China,” Rapp said today. “It’s pulling it in, pacing out some of the timing and going at a slower pace. The long-term view that we have of China remains very positive.”

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