Making sense of China’s boom time

Many across the global chemical industry are pinning their hopes on China as a driver for recovery in demand for chemicals. Indeed, in recent months, we have been encouraged by some startlingly good import and export figures from the country.

High-density polyethylene (HDPE) imports nearly doubled in the first half of the year, while low and linear low density polyethylene (LDPE and LLDPE) jumped by around a half. Domestic chemical demand also appears to have rocketed.

This week, we analyze the causes of this apparent recovery and ask if it signifies a real turnaround.

Realizing that export markets were collapsing, the Chinese government has put in place enormous stimulus plans. The automotive programs, for example, resulted in sales of locally made cars rocketing 36% year on year in June. Huge amounts of cheap credit have also fueled growth. The question remains, though – how strong is real, underlying domestic demand?

China is pushing hard into specialties as it tries to diversify its economy. This will provide raw materials for products to satisfy the nation’s burgeoning middle class. The figures are startling: between 2005 and 2020, China will add around 500m consumers who have an annual income of at least $10,000 (€6,800). That market is an opportunity not to be missed.

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