10 septiembre 2015

China importa, manufactura y exporta

Si no le compran fuera, importa menos… Pero no es el sector exterior lo que mueve el país…

China's PP production rises 25% as it moves into higher-value export markets

Everyone is now beginning to notice the change in economic policy in China.  And concern is rising about the outlook for all those new petchem investments about to come online, whose rationale has been the need to supply ever-increasing growth in Chinese demand.  The chart above highlights the reality behind this wishful thinking:
Everyone "knew" that China would never go ahead with its PDH and coal-to-chemicals expansions
But in fact, production data from Chemease shows output is now up 25% in 2015 (red column) versus 2013 (blue)
As a result, China's PP imports are up just 1% over the period, and are down 8% versus last year (green)
Similarly, its exports are on the rise, up 9% versus 2013 and up 42% versus last year
As a result, imports from NE Asia are down 12% versus 2013 and even Middle East imports are up just 4%
The problem was that commentators chose to ignore the potential impact of China's New Normal policies.  They failed to recognise that China simply couldn't go on with its failed stimulus programmes, which had created major problems across the country with pollution and corruption.
This threatened the whole basis of Communist Party rule, which has since Deng Xiaoping's time been focused on increasing living standards to maintain social order.  And in addition, there is the sheer waste of resources involved –$6.8tn over the past 4 years, according to the government's own National Development and Reform Commission. There was just no way that the previous policy could continue.
Equally important, however, in the quest for social stability, is China's need for jobs.  This was made clear at the critical 3rd Plenum in November 2013, which adopted what has now become known as the New Normal economic programme.  Jobs are rapidly disappearing in traditional, high-polluting industries such as steel, as an excellent analysis by the Wall Street Journal confirms.  But something has to take their place.
Petrochemicals and polymers are an obvious choice, as they support jobs down the value chain in compounding, as well as in end-user industries such as autos, food packaging.  Unlike steel, these jobs are not heavily polluting – and they are also relatively high margin.  This is important, as it will allow domestic incomes to increase – and so help to support social stability.  The growth of coal-to-chemicals production also provides a replacement outlet for coal no longer needed for steel production – thus helping to preserve jobs in the mining industry.
Polypropylene thus highlights the level of change taking place in China.  Its pace is now increasing, as President Xi must take most of the pain over the next 18 months, before all eyes turn to the next National Congress in November 2017, when he is due for reappointment.   It would make no sense at all for him to turn up for this with a job half-done.
When the Congress meets, he instead needs to be able to look forward, and point to the opportunities ahead from the Belt & Road initiative and the Asian Infrastructure Investment Bank.  The next 18 months will be a tough wake-up call for those companies and investors who still want to believe that stimulus is just around the corner.
PD1: Esto es lo que contribuye al crecimiento de China. El sector exterior no aporta NADA… Que no se te olvide, que no es como Alemania cuyas exportaciones son vitales para su crecimiento… China depende en exclusiva para crecer tanto del consumo, privado y público, y de la inversión…
PD2: Santa Catalina de Siena dijo: "A Dios el juicio a nosotros la compasión, solo Dios puede y debe juzgar, porque es quien tiene en sus manos todos los elementos de juicio. A nosotros sólo nos pertenece la compasión. Para adquirir la pureza de Espíritu es absolutamente indispensable abstenerse de todo juicio acerca del prójimo, así como de comentarios inútiles de sus actos. No debemos por ningún pretexto juzgar las acciones de las criaturas y sus motivos, aunque viéramos actos que sabemos son pecado en realidad, debemos abstenernos de juzgarlos; antes bien, debemos experimentar una sincera y santa compasión, que ofreceremos a Dios mediante una oración piadosa y humilde"… Y mientras nosotros venga a pensar mal del prójimo, venga a hablar mal, criticando a todo quisqui… ¡Qué memos somos!