One of the best positioned companies to gauge the health of China’s economy is FedEx, a company that has an up close and personal view of China’s export activity.
As the company cut its growth forecast for both 2012 and 2013, it said that China is vastly underestimating the impact slowing exports will have on its economy in spite of the government’s efforts to stimulate growth.
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Dow Chemical is another company that has warned about China, saying that destocking by Chinese clients was ongoing. Small and medium size Chinese companies are suffering from a lack of liquidity and many of them are facing bankruptcy.
Weakness in both the European and US economies have certainly been a factor in FedEx’s slowdown. But the company and rival United Parcel Service specifically revamped their infrastructures to manage the large export business from China.
Economic weakness across the globe and the change in trade flows will cause FedEx to shake up its express-delivery network next month.
FedEx does not see improvement coming soon for the US economy. FedEX chair Fred Smith blames policy decisions
in the US, Europe, and China for causing global trade to weaken faster than gross domestic product (GDP).
Growth in US GDP was revised downward to 1.9% from an estimate of 2.4% as recent as three months ago. Global GDP was cut recently to 2.7% from 3%.