Is the elephant about to fall off the bike?

Aromatics, Business, China, Economics, Olefins, Polyolefins, Projects, Styrenics

As Paul Hodges notes in his Chemicals and the Economy blog, China’s Finance Minister quit this morning – either over his role in a sex scandal or because inflation and the stock markets are out of control.
Petrochemical demand growth has been booming in China because, as a bureaucrat put it shortly after WTO entry, “China is like an elephant riding a bicycle”.
By that comment he meant that China had to achieve growth of at least 10 per cent year (peddle hard) to avoid a heavyweight crash. High growth has been viewed as essential to maintain social stability through creating sufficient new jobs to replace those lost by WTO accession and the constant drift of migrant workers from the impoverished countryside to the towns and cities.
But perhaps now, with inflation rising alarmingly and the stock market in the midst of an enormous bubble, the government really does want to cool the economy down instead of just paying lip service to this objective – it’s current approach. Perhaps the calculation is that high inflation and the potential for a stock market collapse represent a bigger risk to social stability than a moderation of growth.
But if policies are introduced that cut growth by too much, every industry from petrochemicals to the overseas retail and auto giants that have staked so much on China will find their profits trimmed. Make sure you steer well clear of any passing bikes with elephants on board, therefore, the next time you are driving through Beijing.
All should become clearer in six weeks when the Communist Party Congress, which only takes place every five years, is held.


Comments off until Tuesday 28 August


We will be undergoing routine maintenance this week end and you will be unable t...

Learn more

Could new laws threaten your supply chain?


I am at logistics conference at the moment where the major theme is a chronicall...

Learn more
More posts
China 2020 polyethylene demand 4.1m tonnes lower on single-use plastics ban and coronavirus

By John Richardson CHINA was supposed to be the one polyethylene (PE) market we could all depend on ...

China single-use plastic bans: Polyethylene imports 68m tonnes lower in 2020-2030

By John Richardson THE good news from a “business as usual” perspective is that China’...

China’s bans on single-use plastics: The impact on polyethylene demand

    By John Richardson DON’T SAY I didn’t tell you. It has always been just a question...

Why the trade deal is much ado about almost nothing

These are, as always, my personal views and do not express the views of ICIS. Thanks By John Richard...

The polymers industry, climate change and a call to action

By John Richardson MUCH OF the debate about plastics and the environment is, I fear, missing the big...

Why President Trump, unlike with Iran, will find it harder to shift course on China

As always, these are my personal views only and do not represent the views of ICIS. Thank you  ...

US and Iran conflict in a world of declining growth and fragile supply chains

By John Richardson THINK of the Fukushima disaster in 2011 and multiply its impact on global supply ...

Iran and the US: Assessing the risks for petrochemicals and the global economy

As always, these are my personal views only and don’t reflect the views of ICIS By John Richar...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more