One of the great myths of modern times is that China is now full of middle class people with Western levels of consumption. Nothing could be further from the truth. Annual per capita incomes have certainly soared over the past two decades. But the main impact has been to lift people out of absolute poverty, […]
Chemicals and the Economy
BBC reports ‘How China Fooled the World’
Last night, the BBC ran a 1 hour documentary by its senior editor Robert Peston, who won countless awards for his work during the subprime crisis. It completely confirmed the arguments put forward by the blog in recent months about the scale of the economic crisis now facing China. The BBC introduced the documentary as follows: […]
China’s lending bubble could now lead to zero GDP growth
China has been primarily responsible for driving global growth since the Crisis began in 2008. Auto sales, for example, would have seen negative growth world-wide without China. And auto manufacturing is the world’s largest manufacturing industry. The chemical industry has been in a similar position. Whilst China is also now responsible for nearly 50% of global […]
“The dog ate my homework”: excuses for economic slowdown
There were never any excuses from policymakers during the BabyBoomer-led SuperCycle from 1983 – 2007. The Chairman of the US Federal Reserve, Alan Greenspan, came to be styled ‘The Maestro’. Whilst the Governor of the Bank of England argued that his efforts had created the NICE decade of Non-Inflationary Constant Expansion. Central bankers came to be seen as wise […]
JP Morgan says ‘Buy China’, as coal stocks show economy slowing
China seems to be trying to tell the outside world something quite important about the impact of its economic policy changes. But to judge by most expert commentary, the outside world is convinced they are bluffing. Thus JP Morgan issued a Buy recommendation yesterday on the Shanghai market: “Chinese stocks will probably rally as much […]
“Bad news barrage sinks New Year consensus”
Markets stopped operating in their true role of providing price discovery sometime ago. Instead, they became dominated by the central banks, determined to prove their theory that increased asset values can stimulate sustained economic recovery. They, of course, have the firepower to bend markets to their will. Nobody else could have spent $16tn in this manner […]
Seven global implications of China’s new policies
Everyone remembers the old joke, “Why did the elephant wear dark glasses?”, and the answer, “So that she wouldn’t be recognised”. A new version popped into the blog’s mind this week, when finishing its new Research Note on the impact of China’s new policies on the global economy: “Why did nobody notice that China was the ‘elephant […]
And now the stumble?
Last week the US Federal Reserve announced the second move in its so-called tapering process, and reduced its bond buying by another $10bn/month. But there was only a temporary repeat in stock markets of the enthusiastic response to its first reduction in December. We are thus about to test whether the blog’s theory of ‘two steps and a […]
Global auto industry sales growth depends on China
Autos remain the world’s largest manufacturing industry, and the single biggest source of demand for chemicals and plastics. According to detailed analysis by the American Chemistry Council, each new US auto is worth $3,539 in terms of sales – and involves a wide range of products including antifreeze, plastic dashboards, bumpers and windows, as well as upholstery […]
The Deng, Jiang model for China’s economic growth under Xi
Major change is already underway in China, with potentially enormous implications for all of us. Corruption is being stamped out via a policy of ‘shock and awe’ Similarly, wasteful lending is under attack in both the official and the so-called ‘shadow banking’ sectors Thirdly, pollution is being tackled by literally ‘sending in the bulldozers‘ to […]
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