Hopes of China recovery “premature” – World Bank

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The high level of speculation accompanying China’s apparent economic revival worries the World Bank. “Until we see a recovery in private investment, it’s hard to get too excited about the future,” according to David Dollar, the Bank’s country director for China, at a Beijing seminar today.

Dollar added that “private investment, the main driver of growth, was ‘way down’ in Q1”. And this view seems to be confirmed by a report from China’s own National Audit Office into the impact of the government’s stimulus programme. This says that “some bank funding is getting stuck in the pipeline, instead of flowing to the real economy”, and may have been used to “buy stocks or speculate in other assets”.

My fellow-blogger, John Richardson noted recently that net lending fell 70% in April versus March, due to such government concerns. In turn, this could cause problems for those Western polymer producers who have benefited from China’s recent surge in import demand. LLDPE volumes on the Dalian futures exchange are certainly slowing, with “only” 42 million tonnes traded so far this month, versus 71 million tes in April.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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