Downturn in China spreads to key sectors By Paul J Davies, FT.com September 10, 2012 -- Updated 1020 GMT (1820 HKT) Shoppers leave a Walmart store in Beijing, China, on January 3. China's downturn is spreading to companies that were expected to withstand the slowdown A third of publicly listed Chinese companies suffered cash outflows last quarter Shows slowdown in exports, a build-up in stocks and tightening local government finances Consumer, healthcare, pharmaceuticals and electronics companies are affected (Financial Times) -- China's downturn is spreading to the sectors and companies that were expected to withstand the slowdown and drive growth in the region. Financial Times analysis shows that a third of publicly listed Chinese companies suffered cash outflows in the quarter to the end of June as the combined effect of the slowdown in exports, a build-up in stocks and tightening local government finances begins to bite. Cash balances at a tenth of 1,700 companies analysed by the FT using data from S&P Capital IQ have turned negative in the past two quarters. For a further 6 per cent of companies that normally report an outflow, the outflows were worse than last year. China growth forecasts shrink The results highlight that even the companies that are expected to help rebalance China away from an investment-driven economy -- such as consumer and retail businesses, healthcare, pharmaceuticals and electronics companies -- are being affected by the slowdown, along with construction, real estate, industrial machinery and chemicals. Increasing numbers of hedge funds and analysts are looking closely at cash flow data as sustained poor cash flows would have a big impact on companies' ability to service their debt and hence on the health of China's banking sector. There are some signs that the cash crunch has already been felt by banks during the first half of the year. China unleashes $158B infrastructure spend While non-performing loans grew by just 1 per cent across the sector, overdue loans leapt by 29 per cent, according to Mike Werner of Bernstein Research in Hong Kong. Among the 574 companies with negative cash flow from operating activities in the FT analysis, the results of 175 -- or 30 per cent -- appeared to be non-seasonal because patterns over the past two quarters were completely different from those seen in the periods a year before. Another 18 per cent showed some seasonal similarity with last year, but their results were worse over the first half of this year. Sixty-nine of the 574 had negative cash flow for both of the past two quarters. More: The Chinese threat to Sotheby's, Christie's © The Financial Times Limited 2012 August 31, 2012 -- Updated 0412 GMT (1212 HKT) Just weeks before China ushers in its next generation of leaders, one of the messiest political scandals to hit the ruling Communist Party in years continues to fester. August 27, 2012 -- Updated 1227 GMT (2027 HKT) Netizens in China are in a frenzy over rumors that a body double stood in for Gu Kailai during her murder trial. August 27, 2012 -- Updated 0450 GMT (1250 HKT) For more than a year, Chris Bayer, a Canadian student, waited tables alongside Chinese migrant workers in a restaurant in Shanghai. August 27, 2012 -- Updated 0325 GMT (1125 HKT) Dozens of Chinese criminal suspects living in Angola were sent back to Beijing on a chartered flight, state media reported. August 24, 2012 -- Updated 0127 GMT (0927 HKT) Did CCTV officials know that star hurdler Liu Xiang was injured before he fell during the heats of the 110-meter event at the London Games? August 23, 2012 -- Updated 1339 GMT (2139 HKT) The policeman tapping on our car window makes it clear we are in a no-go area before placing his hand over the lens of our camera. August 17, 2012 -- Updated 1354 GMT (2154 HKT) Later this year, the Communisty Party of China will convene its 18th Congress. We look at the next generation of leaders tipped to replace Hu and Wen. August 8, 2012 -- Updated 0532 GMT (1332 HKT) The downfall of the senior Communist Party politician has become one of the most closely-watched scandals in China. August 2, 2012 -- Updated 1302 GMT (2102 HKT) It's been called the Twitter Olympics, but in China popular micro-blogging sites are facilitating unprecedented Olympic chatter. July 26, 2012 -- Updated 0336 GMT (1136 HKT) Four days after the biggest rainstorm in six decades, Zhang Huishen is furious over what she perceives as government indifference to her family's plight.