China’s demand growth remains weak

Economic growth


China auto May12.pngChina’s demand growth continues to be weak down the main value chains.

Auto sales are the most obvious example. As the chart shows, they have recovered from the very slow period over the Lunar New Year holiday, but are still only up 2% (red diamond) versus 2011 levels (green line).

Even this growth has only been due to price cuts. Whilst the head of the dealers association warned “unsold cars are crowding dealer lots in cities from Guangzhou in the south to Xi’an to the west.”

This pattern is confirmed by other key markets. Investment in real estate has been 13% of GDP in recent years, a clear sign of China’s unbalanced economy. It was growing 20%/year in the 2009-11 boom period. A key area is construction of new residential floor space:

• This grew 16.2% in January-April last year versus 2010
• This year, it fell 4.2% in the same period
• The slowdown is even worse when one remembers that growth had still been 5.1% in the first two months of this year

This, unfortunately, is what happens when credit bubbles start to implode.

Air is starting to rush out of the balloon, even faster than it was pumped in during the government’s 2009-10 lending boom. Home prices have now been falling for 8 months in China’s top 100 cities.


The Eurozone train crash heads for the buffers


China’s demand growth continues to be weak down the main value chains. Aut...

Learn more

Why plastics signal problems ahead for the US shale gas bonanza


China’s demand growth continues to be weak down the main value chains. Aut...

Learn more
More posts
BASF’s second profit warning highlights scale of the downturn now underway

The chemical industry is easily the best leading indicator for the global economy.  And thanks to K...

Chemistry & the Economy: 2019 Outlook

There will be no shortage of important topics to discuss on Thursday, at my regular Chemistry and th...

Brexit moves from ‘Snakes and Ladders’ to cricket

The Brexit debate had appeared to be a simple game of Snakes & Ladders till now.  The Leave cam...

Asian downturn worsens, bringing global recession nearer

The chemical industry is the best leading indicator for the global economy.  And my visit to Singap...

Your ‘A-Z Guide’ to the Brexit Negotiations

“The UK is now facing a national crisis”, according to Margaret Thatcher’s former ...

Chemical output signals trouble for global economy

A petrochemical plant on the outskirts of Shanghai. Chinese chemical industry production has been ne...

Budgeting for the end of “Business as Usual”

Companies and investors are starting to finalise their plans for the coming year.  Many are assumin...

“What could possibly go wrong?”

I well remember the questions a year ago, after I published my annual Budget Outlook, ‘Budgeti...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


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