China economic rebalancing will take at least 10 years

We must all hope that new economic policies now being implemented in China are successful.  The alternative, of a debt implosion, is too awful to contemplate.  But as China’s state-owned media continually remind us, the transition is likely to prove extremely difficult. An important interview with the deputy head of the National Economic Research Institute, Wang […]

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2 dates for the diary

Last May’s China Transformation webinar with John Richardson attracted great interest.  We are therefore arranging a free follow-up webinar on Tuesday 9 September.  As before, it will be run twice, to allow blog readers in different regions to attend. This ‘China Economic Transformation II’ webinar will cover these key areas: The likely impact on global markets of the […]

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US fracking demand creates price volatility for hydrochloric acid

Fracking has completely changed the outlook for US natural gas supplies, as the above chart from the latest Energy Information Agency 2014 annual report shows: It forecasts a 56% increase in total natural gas production from 2012 to 2040 This is largely due to growth in shale gas (green) and tight gas (brown) Shale gas output […]

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Modi highlights toilets in India’s Independence Day speech

The Indian Prime Minister’s address on Independence Day is the major event of the political year, equal to the US President’s ‘State of the Union’ speech.  It was particularly important this year as India has a new reforming prime minister in Narendra Modi. It it is thus hugely significant that top of his agenda was opening up the country […]

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The Great Unwinding of policymaker stimulus has begun

Large economies are like supertankers.  There are no brakes to use if you want to change direction in a hurry.  Instead, you have to put the engine into reverse, and hope you can slow down fast enough to avoid the rocks. That is what happened in China last month, as the new leadership began to […]

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Deflation Jul13

India’s WTO veto marks end of global trade deals

The Cycle of Deflation has taken another lurch forward.  The reason was India’s decision to veto last year’s Bali deal to streamline customs procedures.  Almost certainly, this will prove the dying effort of the World Trade Organisation, which sponsored the proposal. The blog is particularly sad at this outcome.  It has always believed that free […]

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China’s waning stimulus spells trouble for the world’s biggest car market

The blog’s latest post for the Financial Times, published on the BeyondBrics blog is below. By Paul Hodges of International eChem China’s July lending level of just Rmb 385bn ($62.6bn) has surprised financial markets, which were expecting an increase in stimulus. But bigger surprises may lie ahead. The strong link between lending and passenger car sales […]

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European chloralkali output hit as growth slows, Ukraine volumes drop

Chlorine and caustic soda are the bedrock of modern industry.  They are used in everything from laundry products to pharmaceuticals.  So changes in their business performance are a most valuable guide to what is happening in the real world in which we all live. The chart shows the detail of developments in the European industry, […]

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China PE Aug14

Eliminating the impossible in China’s polyethylene market

Very large amounts of copper, iron and other commodities are in long-term storage in China as part of the ‘collateral trade’.  More recently, it seems large amounts of polyethylene (PE), ethylene glycol (MEG) and probably other chemicals have also started to be used for the trade. None of this used to matter when the Chinese economy was booming.  Why […]

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China’s housing market enters New Normal as prices slide

Markets appear to be continuing to move, slowly but surely, into their expected ‘scary phase’.  The reason is the massive distortions that have been created in financial markets, and in China’s housing market, by the $35tn+ of stimulus from governments and central banks since 2009. Unwinding these distortions will not be simple.  The stimulus has not returned us […]

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