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Yu Bin, a Cabinet researcher, rejected those suggestions at a briefing Thursday. He said the slowdown in richer east coast cities such as Beijing and Shanghai is being offset by stronger growth of up to 10 percent in less-developed central and western regions. Companies are investing more there as incomes and consumer spending rise. "If you go to western parts of China, the growth rate is quite high," said Yu, director of macroeconomic research for the Development Research Center. In any case, opportunities in the traditional powerhouses of China's economy appear to have dried up. "A lot of people want to go work in big cities, but there is far less demand this year," said a manager at the Tongxu County Enterprise Bureau, an employment service in the central city of Kaifeng in Henan province. He refused to give his name. "A lot of workers from big cities are starting to return home because their employers can't pay their salaries," the man said. Beijing is pinning its hopes on investment, especially by state industry, to drive a rebound. Premier Wen Jiabao said this week that sustaining investment was most important at this point
-- an acknowledgement that efforts to boost consumption and exports are failing to gain traction. State industry has been sustained and even expanded by credit from government banks. Two major steel producers have received permission to build a pair of mills costing a total of more than $20 billion, financed by state-owned lenders. Wen has promised more credit to private businesses but entrepreneurs say they get little help. Facing weak export orders, manufacturers are cutting payrolls and reducing purchases of components and raw materials. Import growth in June fell by half from the May level to 6.3 percent, reflecting low industrial and consumer demand. With trade plunging, Chinese shipyards have been battered because shippers are putting off purchases of new vessels. The industry employs hundreds of thousands of workers and is the world's biggest by total tonnage produced. Orders for new vessels fell by half in May from a year earlier, according to the China Shipbuilding Association. A spokesman who would give only his surname, Qian, said shipyards have been forced to cut prices by 20 to 40 percent. Major shipyards in Shanghai, the industry center, say they are still profitable but news reports say smaller yards in surrounding provinces have laid off employees or closed. "I'm sure some companies may face suspension of production or even closure," Qian said.
[Associated
Press;
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