Producers in China are already under stress even ahead of implementation of U.S. tariffs, as indicated by an explosion in corporate borrowing that isn’t being captured by official government statistics, according to the China Beige Book.
“Manufacturing is under fire. The sector’s multi-year rally has given way to declining revenue and sharply declining profit growth,” CBB International said in a report. “Critically, manufacturing’s plight is occurring before any meaningful American tariffs have been imposed. Absent a fall trade deal, this situation will likely deteriorate. The pace of borrowing -- at 41 percent of firms, the highest since 2012 -- sure smells a lot like panic.”