By John Richardson THE IMF produced a very interesting study earlier this month, in which it estimated that if it had not been for China’s giant economic stimulus programme the country’s real GDP growth would have averaged only 5.3% per annum during the five years to 2016. Instead, however, the IMF estimates that China’s economy […]
Asian Chemical Connections
China’s “Minsky Moment” And The Global Economy
By John Richardson HYMAN MINSKY was an American economist who focused his career on studying the causes of financial crises. He developed what he called a ‘financial instability hypothesis” which was based on the notion that long periods of stability sow the seeds of future crises. His ground breaking work, which is used to explain […]
Failed Pursuit Of Inflation Creates Major Economic Risks
By John Richardson BUILDING UP lots of debt isn’t a problem if it leads to inflation that then inflates-away the value of some of that lending. And debt-induced healthy increases in inflation also show that all of that lending has worked, as these levels of inflation point to snug employment markets and strong wage growth. […]
China PP Market Underlines Return To Global Deflation
By John Richardson CHINA’S polypropylene (PP) net trade, which is imports minus exports, fell by 31% on a month-on-month basis in April to around 316,000 tonnes. That was to be expected given the 42% surge in net trade in Q1 2017 over the first quarter of last year. But if you look at the period from January […]
China’s Polyethylene Market Faces Long Destocking Process
China’s polyethylene (PE) imports surged and domestic production saw strong growth in Q1. This occurred as the economy slowed down on reduced availability of credit and the pollution clean-up. Even if global producers saw this coming, they had no other choice but to raise exports to China late last year for arrival in Q1. This once again […]
Credit, Commodities And China: History May Soon Repeat Itself
By John Richardson YOU should be getting that strong feeling that history might be about to repeat itself when you look at the January-February data on China’s petrochemicals markets. In polypropylene (PP), polyethylene, styrene, mono-ethylene glycol, phenol and acetone, the ICIS reading of China Customs data indicates big year-on-year increases in imports – way ahead of what the […]
Dip In China Credit Growth A Global Warning Sign
By John Richardson CHINA might choose to once again kick the can down the road by further delaying essential economic reforms, but this is not my base case for the rest of this year and into 2017. Xi Jinping and his supporters are now in the position to accelerate reforms, and so they may well choose this […]
The Two Different Chinas: Outcome Remains Uncertain
By John Richardson THIS year’s “sugar high” was always going to be that exactly that – if you look at the right data. The staggering increase in China’s total credit in Q1 2016 over the first quarter of last year –by as much as 58% – was only ever going to deliver a mild, and unsustainable, […]
China Reforms Stay On Track With 8% Credit Fall
By John Richardson THE above chart shows the moving average growth of total social financing (TSF) in China since 2009 in US dollars. You can see the surge in the growth of TSF from 2009 until 2013 and its subsequent decline. This decline has followed the crucial 3rd Plenum Meeting in November 2013, when China […]
2014: The Rear View Mirror
By John Richardson MOST of my forecasts for 2014, which I made in this post on 30 December last year, look good in the rear view mirror. I was right about credit availability being the single biggest issue for the polyethylene (PE) industry in China – and, of course, all other manufacturing sectors. As the […]
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