China Announces $586B Economic Stimulus Plan

(AP Photo)

Job cuts, factory closures, unpaid export shipments — stalling worldwide demand for products made-in-China is driving home a new economic reality for businesses that until recently were struggling to keep up with soaring exports.

The suddenness and severity of the chill from the global slowdown prompted Chinese leaders to announce late Sunday a $586 billion economic stimulus package aimed at boosting growth in China's own markets.

"This broad-based fiscal stimulus program will emerge as the government's front line of defense against an excessive economic slowdown," Jing Ulrich, J.P. Morgan & Co.'s chairwoman for China, said in a note to clients.

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But it's unclear whether the package will be enough to salvage exporters left high and dry by overseas customers who are either canceling or abandoning orders as they face what might be one of the bleakest Christmas shopping seasons in decades.

For apparel maker Yiwu Bangjie, the first sign of trouble came with the failure of a longtime American customer to pick up and pay for its latest shipment of seamless underwear, says Tao Jianwei, the company's general manager.

"After the shipment arrived at the U.S. port, when we notified our customer to take delivery and finish paying, their reply was that they had no money to pay for the goods," said Tao, whose company is based in eastern China's Zhejiang province.

Yiwu Bangjie is one of the luckier casualties of the slowdown. Tao, who would not identify his U.S. customer, said he expects to get 90 percent of the $100,000 due back through export credit insurance.