By John Richardson WE are in entirely uncharted territory because the West looks as if it is about to abandon the economic and geopolitical policy consensus that has been in place since the Second World War. There is, for example, the collateral damage that might well result from the president-elect’s domestic stimulus policies – a […]
Asian Chemical Connections
How Free Floating The Yuan Could Accelerate A Global Trade War
By John Richardson THERE is a 50% chance that the Yuan will become a freely trade currency in 2017 in response to the US signalling its willingness to start a global trade war, says Societe Generale. If Donald Trump pedals back on his rhetoric and/or Congress gets in the way of his plans and we avoid a trade […]
G20 Reassurances Not Enough To Stop A Currency War
By John Richardson PRESIDENTS XI Jinping and Barack Obama have made a commitment to avoid competitive currency devaluations at the G20 summit in Hangzhou. The fact sheet released by the two presidents also contained this statement: [China will] “continue an orderly transition to a market-determined exchange rate, enhancing two-way flexibility. “China stresses that there is […]
China’s Yuan: Making Sense Of All The Noise
By John Richardson LAST year nearly $1trn was moved out of China as rich people lost confidence in the direction of the economy. Much of this was moved if not illegally, then through stretching the rules to the very edge of snapping point. Take the practice of Smurfing as an example. The New York Times […]
Yuan Devaluation: Next Phase Of The Great Unwinding….
…..China’s purified terephthalic exports could easily rise to 1m tonnes this year. By John Richardson THE next phase of the Great Unwinding, which we have been warning about since 2011, is now well underway. If you have taken note of what the blog has been consistently saying, and as a result changed your approach, you […]
China’s Currency Appreciates By 26% In Four Years
By John Richardson THE above chart further illustrates the dilemma confronting China, which, despite the often-discussed and wrongly interpreted growth in its domestic consumption, still depends on exports for about a quarter of its GDP. Based on Bank of International Settlements (BIS) data, and compiled by the Federal Reserve Bank of St Louis, the chart […]
China After The Lunar New Year: Your Five-Point Guide
By John Richardson HERE is a five-point guide to what will happen in China after the Lunar New Year is over (most of China will be only holiday from 18-24 February): The People’s Bank of China (PBOC) now seems almost certain to further reduce interest rates and the bank reserve requirement (RRR). If you recall […]
China Exports: Whatever It Takes To Boost Volumes
By John Richardson HERE is a reminder of some key facts about the Chinese economy: Investment, in the form of local real estate, infrastructure and industrial capacity accounts for around 50% of the country’s GDP. China’s total investment levels are 10-15% of GDP higher than comparable countries, such as Japan and South Korea, when they […]
China To Follow In America’s Oil And Gas Footsteps
By John Richardson DURING the economic Supercycle it all worked beautifully, as the above picture indicates. China sold stuff to the West and then bought lots of US Treasuries from their earnings in order to keep US interest rates low. This enabled US consumers to buy even more shirts, washing machines, refrigerators, TVs etc from […]
China Credit Squeeze Further Weakens “Real Demand”
By John Richardson DESPITE the 26% increase in China’s polyethylene (PE) imports in Q1 of this year over the same period in 2013, “real demand” continues to weaken – i.e. the resin bought by end-users to actually make things. The main reason is that China’s determined credit crackdown is having a bigger and bigger effect on […]
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