When patriotism is a new shirt

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The Independent Online
"Let them wear shirts!" The cry has gone up in many of China's beleaguered textile factories. For the world's biggest country is suffering from what must be one of the world's biggest manufacturing gluts. Warehouses across the land are stuffed with men's shirts - 1.5 billion of them.

And that is not all. China's state-owned factories have been busy churning out other unwanted goods. Stockpiles, as 1996 draws to a close, include 20 million unsold bicycles, 10 million watches, and 250,000 motor vehicles.

Ye Zhen, the spokesman for the State Statistical Bureau, said yesterday that by the end of October the value of goods held in stock by factories was 540 billion yuan (pounds 41bn), of which a hefty one-third was "due to over- production" by enterprises which had turned a blind eye to the fact that their goods were not selling. Many of these state factories seem loath to forget the cosy old ways of the former centrally planned economy, when goods were produced to fill quotas rather than orders.

While the patriotic Chinese man's duty is now clearly to go out and buy a shirt - or three - the government can at least take cheer that it met this year's economic targets with aplomb. Those sceptical of Chinese statistics might wonder how 1996's figures can be produced before the year end, but according to Mr Ye, economic growth was 9.7 per cent while annual inflation dropped to just 6 per cent, down from 14.8 per cent in 1995. The economy is forecast to grow by 10.5 per cent in 1997.

Where, then, does that leave all those shirts? In the warehouse for the time being. The Chinese remain avid shoppers, with retail sales in 1995 showing growth of 13 per cent. But they are also becoming more discerning. Badly designed shirts, even if cheap, stay on the hanger. In this, the bicycle kingdom of the world, the fact that the number of stockpiled bicycles is equivalent to 80 per cent of last year's domestic production suggests that the manufacturers have lost touch with the consumer. Good quality brands still sell, but the thrifty Chinese cyclist sees no reason to trade in his bone-shaker until it falls to pieces.

All these state-owned factories survive, because the social cost in terms of lost jobs would make closure unthinkable. Mr Ye said 45 per cent of China's state enterprises are loss-making, and their combined losses have this year (1996) increased by nearly half. They keep afloat on a sea of unpaid bills; the so-called "triangular debt" between Chinese state enterprises - money which they owe each other - now stands at a record 900 billion yuan, even bigger than the shirt mountain.

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