Moving Beyond A World Of Myths: Steps One And Two

Business, China, Company Strategy, Economics, Oil & Gas

Guardian3

By John Richardson

We are living in a world of myths that are at long last being exposed as such, although I worry that this could be too late for some chemicals companies.

One myth I discussed yesterday is the idea that because Chinese consumption of petrochemicals is so much bigger than a decade ago, the slowdown in its economic growth doesn’t really matter.

The above chart, from this excellent series of graphics in The Guardian newspaper, exposes another myth: That the rest of Asia will be fine if China’s GDP growth collapses.

Any sensible look at the data would have told you a long time ago that this was just a plain silly notion.

But looking sensibly at any set of data has been out of fashion for many years now. The reason is that too many of us have been sucked into all the hype surrounding emerging markets in general, with the hype driven by vacuous slogans such as “the rise of the Asian middle classes”.

We should have asked questions such as these: Who is telling us that everyone will become middle class by Western standards in developing countries in Asia virtually overnight, and why are they telling us this?

It was of course the financial world that pushed the Asian middle class myth because they were busy talking up equities and oil prices.

Now, though, equities and oil prices are in trouble as the full extent of China’s economic problems becomes more broadly understood.

What chemicals now need to do is to go back to real supply and demand analysis. Sadly, this will lead them to conclude that we are in a low growth deflationary world.  This is Step One

Step Two involves completely reassembling your strategies in order to take advantage of the new growth drivers.

PREVIOUS POST

Why The China "Higher Base" Argument Doesn't Stand Up

27/08/2015

By John Richardson WHAT an amazing success story. The above chart shows that: Ch...

Learn more
NEXT POST

China Myth No 3: China's Politicians Are Always Right

31/08/2015

By John Richardson A THIRD myth about China is that its political leaders are su...

Learn more
More posts
Why a hard look at the data show China has not seen a V-shaped recovery
06/08/2020

          Note: All the data comparisons below are year-on-year By John Ric...

Read
China moves closer to Iran as tensions with the US build: Implications for petrochemicals
02/08/2020

By John Richardson Opinions and emotions and can shape how we interpret data, but, as we all know, o...

Read
China polyolefins market H1 review: so far so good, but beware of the risks ahead
30/07/2020

By John Richardson ALL looks fine in the polyolefins world. The Old Normal appears to have reasserte...

Read
Polyethylene market recovery could be threatened by slower China crude buying, weaker economic growth
28/07/2020

By John Richardson EVEN by China’s standards, where just about every number is eye-wateringly larg...

Read
Why the polypropylene industry must switch from volumes to value
26/07/2020

By John Richardson EVERYONE knows about the oversupply in the polyethylene (PE) market as it has bee...

Read
China consulate closure underlines long-term split with US, potential big shift in petchems trade flows
23/07/2020

The views in this blog post are, as always, my personal views and do not reflect the views of ICIS. ...

Read
China’s real GDP could have been negative in Q2: What this may mean for PP
22/07/2020

By John Richardson CHINA’S official GDP growth of 3.2% for Q2, which was announced last week, may ...

Read
Iran and China new deal could hasten Belt & Road Initiative petrochemicals self-sufficiency
19/07/2020

By John Richardson ONCE AGAIN, please don’t say I didn’t tell you. A proposed new investment and...

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