China And Tearing Up The Rule Book: A Ten-Point Guide

Business, China, Company Strategy

By John Richardson

WE thought it would be helpful for chemicals to summarise our thoughts on China as chemicals and other companies prepare their strategies for 2015.

LongroadaheadSee our ten-point guide below, with relevant links to our previous coverage and coverage elsewhere:

  1. The Deng Xiaoping growth model went on far for too long, especially post 2009, and has inflicted serious damage on the Chinese economy – bad debts, overcapacity, the environment and income inequality etc.
  2. The new leadership have made it crystal clear, ever since they took power, that this model would have to be dismantled.
  3. It was clear from late last year, and perhaps earlier, that this was very likely to happen in 2014.
  4. No chemicals company should be surprised, therefore, if the “official”, but actually fictitious growth number is missed.
  5. Instead they should focus on strategies to deal with how bad it will get before it gets better (and it will get a lot better, we think. Future growth prospects are nothing short of tremendous).
  6. How long will this take? At least five years, during which we should prepare for all sorts of disruptions to the old way that the economy – and so chemicals markets – behave.
  7. Good guides to the extent of economic strength will continue to be loan growth, electricity consumption, rail freight movements – and also chemical industry operating rates.
  8. The more that loan growth, and the rest of these measures, revert back to previous levels before rebalancing has been completed, the more this is bad news in the longer term; it means the government has listened to all the clamour out there.
  9. They won’t listen because they know they would make the eventual rebalancing much harder by adding to bad debt and overcapacity problems etc.
  10. Crucially, they don’t have to listen, from a popularity and so political survival standpoint because a.) blue collar labour markets are incredibly tight, with graduate unemployment now the issue. And you won’t create enough jobs for graduates by pursuing the old growth model, and b.) the public want these changes – e.g.  discontent over income inequality and the environment.

Why China's Anti-Corruption Campaign Has To Continue


By John Richardson CHINA’s anti-corruption campaign is now more than two years...

Learn more

Diesel Demand In China To Fall As Banks Hoard Cash....



Learn more
More posts
Focus of petchems business must be on meeting medical and food needs

By John Richardson SEVERAL contacts have said to me over the last two weeks that increased medical a...

Be very, very cautious about buying into the idea of a Q2 crude price rally

By John Richardson IT IS the unprecedented nature of the demand shock that’s the thing, regardless...

No business as usual despite re-ordering of global polyethylene competitiveness

By John Richardson THERE ARE sadly no business as usual scenarios, in my view. Under normal circumst...

China: temper your expectations of a H2 recovery for supply as well as demand reasons

By John Richardson CHINA IS gradually getting back to work, but only gradually because the governmen...

Petrochemical feedstock purchasing managers: What to think about and what do next

By John Richardson ALL THE old assumptions about how oil, feedstock and petrochemicals markets work ...

Vital work to maintain petrochemicals supply for essential services must continue

By John Richardson INDUSTRY associations around the world are lobbying governments about the importa...

Polyethylene: How to plan sensibly as we face threat of new Global Depression

By John Richardson I SINCERELY want to help you guys. That’s what I am here for. To this end, here...

Coronavirus may take as much as two years to be brought under control

By John Richardson The only honest answer is that none of us know how events will turn out because o...


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