By John Richardson There are three things you need to bear in mind about credit creation in China, which according to the government’s own data, are as follows: In 2007, $1 of additional credit added 83 cents to GDP. By 2013, $1 was only adding 17 cents. This year, each additional dollar of lending will only […]
Asian Chemical Connections
China Adjusts To “Zero Inflation” In Textiles
By John Richardson CHINA’S polyester chain business is undergoing a painful adjustment period, as the slide above indicates, as a result of: Expectations that cotton prices will drop to a five-year low in 2014-2015. This is largely the result of China’s decision to directly support farm incomes, rather than buying-up ever more cotton stocks. Cotton […]
China’s Polypropylene Imports: The Balance Of Probabilities
CHINA’S polypropylene (PP) imports increased by 11.3% in January-April of this year compared with the same period in 2013, according to the latest available China customs data. There could be lots of reasons for this. One reason might be that the fairly subdued tone of just about everybody you speak to in markets is wrong […]
China’s “Whack-A-Mole” Game Continues
By John Richardson THE blog loves playing the the “whack-a-mole game” in our local arcade. How it works is that every time a plastic mole pops up, you have to try and whack it back down with a hammer in order to win points. Moles just keep popping up, no matter how frantically you deploy […]
Why China’s Polyethylene Imports Have Surged
By John Richardson CHINA’S polyethylene (PE) imports jumped by 26% in the first quarter of this year over the same period in 2013, according to data from Global Trade Information Services (see the above chart). This isn’t the result of a dip in domestic production that had to be made up by imports, as […]
China Housing The Biggest Risk
By John Richardson WHEN the blog made the point during a recent presentation that China is still predominantly a poor country, a chemicals industry executive pointed out that it doesn’t feel that way if you visit the Apple store in Hong Kong. If you do, you will see lots of rich mainlanders buying every I-Phone […]
China’s SMEs, Good And Bad, Under Threat
By John Richardson THE cosy relationship between the state-run banks and state-owned enterprises (SOEs) has long held back economic rebalancing, but wasn’t a critical problem for small-and-medium-sized enterprises (SMEs) when official lending tripled in 2009 (have a look at the chart on polypropylene in this post, which illustrates the impact). There was, of course, plenty of […]
China And Re-examining Your Customers
In the first part of a two-part series on how chemicals companies need to respond to China’s economic reforms, we look at the “account receivables” challenge. Tomorrow we will look at new growth opportunities. By John Richardson AS China’s credit wind down continues, and its overall economic reforms accelerate, chemicals companies need to look […]
Take Away The China “Froth” And What’s Left?
By John Richardson THE denial that we discussed last week is still very much in evidence. For example, we heard the argument over the last few days that China’s economic slowdown would involve only “a couple of bad quarters” and then China, and Asia-Pacific markets in general, would be back to normal. The following two […]
China MEG Market Points To Risks Ahead
By John Richardson SOMETHING very disturbing is going on in China’s mono-ethylene glycol markets (MEG), which, we, think, reflects the following: Failure to read the economic tea leaves. A sharp contraction in credit growth threatens to leave 2014 GDP growth a lot lower than many chemicals companies have forecast. The possible use of MEG as […]