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China's construction recovery pain

Friday, May 06, 2016 - 01:28

Heavy equipment makers like Caterpillar started the year optimistic that business would pick up in China. But as Tara Joseph reports, industry experts think there's more pain to come before a real recovery takes hold.

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For a while, it seemed like this might be the sweet hum of recovery in China. Heavy equipment maker Caterpillar started the year with an uptick in Chinese sales... Coupled with better numbers in the bellwether sectors of construction and property But beneath the surface, it's a very different picture... Massive overcapacity spelling more pain for a sector that was once front and center of China's soaring growth. Industry specialists are telling Reuters that hopeful signs of recovery in the world's second largest economy may soon burn out again. There is simply way too much unused heavy machinery dotted across China's industrial landscape. Diggers, loaders and other pieces just sitting idle. And in the second hand market, those same pieces are waiting to be sold. Even Caterpillar, one of the more optimistic suppliers, is now taking a cautious approach to China... And some of its rivals are a lot more concerned. Japanese manufacturing giant Komatsu says demand in China could fall by nearly a third this year - blaming the Chinese government for not doing enough to spur business. Optimists say things will start to pick up once inventory clears and fresh government incentives kick in, but that could take up to 18 months. And few expect to ever see a return to the days when roaring Chinese growth sent heavy equipment makers into overdrive.

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China's construction recovery pain

Friday, May 06, 2016 - 01:28