China’s Manufacturers Face Rising Bankruptcies Amid Overcapacity

- China's manufacturing sector is grappling with severe overcapacity, leading to a surge in bankruptcies, particularly in the electric vehicle (EV), solar, and semiconductor industries. - Hengchi, an EV maker owned by Evergrande, recently announced the bankruptcy of two subsidiaries, highlighting the intense competition and financial struggles within the industry. - The National Bureau of Statistics reported that 30% of industrial firms were loss-making by the end of June, with a 44% increase in the number of loss-making companies in the first half of the year. - Local governments, heavily indebted and facing fiscal constraints, are becoming less able to support struggling firms, exacerbating the financial woes of many manufacturers. - The Chinese government is encouraging industry consolidation to filter out weak producers, but this process is expected to be painful and challenging, with many companies looking to trim capacity rather than acquire more. Source: [Economist](https://www.economist.com/business/2024/08/08/chinas-manufacturers-are-going-broke)