China GDP Growth 4-5% in 2013-2020

Business, China, Company Strategy, Economics, Europe, US

16184236783.jpg

Canton Trade Fair. Source of picture: http://www.vatti-china.com/News/83.htm

 

By John Richardson

IT would be nice to believe that the improved mood at this week’s Canton Trade Fair represents a long-term turnaround in China’s economic direction.

This reflects a 9.9% increase in overall exports in September, much higher than the 5.5% median estimate in a Bloomberg Survey.

But as Bloomberg writes: “In the first nine months, the (China-US trade) surplus widened about 38%t from a year earlier to $148.3 billion, customs data show. That may provide ammunition to Republican presidential candidate Mitt Romney, who pledges to designate the nation a currency manipulator if elected, a step the US government hasn’t taken since 1994.”

Ideal election fodder, obviously, but Romney or Obama will face a far bigger problem once in office: The US fiscal cliff. This is likely to end the recovery in China’s exports to the States.

Further, exports to the European Union fell by 10.7% in September. The Eurozone crisis is going to take a long time to resolve.

Attendees at the trade fair also commented on how domestic demand remains weak.

This reflects deep structural changes in China’s economy, and the hangover from the investment-led growth model, that will lead to several years of much-lower GDP (gross domestic product) growth.

An excellent September report from the UK-based consultancy, Simon Hunt Strategic Services, concurs with our view, and says on the GDP outlook:

“Officially reported GDP will probably come in at 7.8-8.0% this year. However, we focus on nominal growth and discount that number by an estimated GDP deflator.

“We are confident in our historical data for the deflator but have to estimate the quarter on quarter numbers for this year. Last year, the GDP deflator was 7.6%. We guess that it is now running at between 5.0- 5.5% but likely to increase in the fourth quarter.

“Our forecast for real GDP growth this year is between 5.2-5.7%.”

Real GDP growth will range between 4-5% in 2013-2020, adds the consultancy.

“This is a humongous change for the new leadership to manage and will lead to intense debates and internal fights with vested interests and with local governments,” continues the report.

“Global business models of multinationals are going to have to be changed and changed sharply. Some are already doing this looking to relocate capacity out of China and back into the US.”

PREVIOUS POST

Saudi Aramco, Dow, Shell, IEA To Speak At Berlin Conference

16/10/2012

Canton Trade Fair. Source of picture: http://www.vatti-china.com/News/83.htm &nb...

Learn more
NEXT POST

China PE Imports Rise On Recovery Theory

18/10/2012

Canton Trade Fair. Source of picture: http://www.vatti-china.com/News/83.htm &nb...

Learn more
More posts
China MEG spreads turn negative on 171% rise in US retail prices for Chinese clothing
24/05/2019

By John Richardson THERE are a lot of theories out there about why the spreads between Chinese mono-...

Read
China’s paraxylene imports in 2019-2025 face major downside risks
21/05/2019

By John Richardson NEVER underestimate China’s ability to execute vast and highly complex manufact...

Read
China benzene spreads at ten-year low on misplaced trade deal hopes
19/05/2019

By John Richardson THE ABOVE chart shows that in April the average spread between CFR Japan naphtha ...

Read
Longer trade war: Impact in numbers on China polymers demand
15/05/2019

By John Richardson WE MUST now start to quantify the impact on the petrochemicals industry of no end...

Read
Plastics pollution crisis: Impact on polyethylene margins in 2022-2027
13/05/2019

By John Richardson ALMOST all countries late last week signed a UN deal to monitor the flow of hard-...

Read
China PE demand boom will not stop further margin declines
10/05/2019

By John Richardson CHINA’S polyethylene (PE) market is being temporarily weighed down by overstock...

Read
China holds all the petchems demand aces as it digs in for longer trade war
08/05/2019

By John Richardson THE STRENGTH of China’s position in the intensifying trade war is further under...

Read
President Trump’s Tweets increase risk of no trade deal until 2021
06/05/2019

By John Richardson THE PROSPECTS of a trade deal seem to have have faded into the distance as a resu...

Read

Market Intelligence

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

Learn more

Analytics

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