Onshore Energy Conference — London Onshore Energy Conference — London | Page 43
THE P H REPORT
CHINA PRODUCER PRICE INDEX
2008 –
15
END OF THE EXPORT
SUPERCYCLE
to the stimulus policies developed under
previous Populists such as President Hu
and Premier Wen. China’s lending has thus
been on the rise for most of 2016, having
reached 249% of GDP by May 2016 on the
back of a reviving property market bubble.
As the Wall Street Journal noted recently:
IMPACT OF LENDING
TSUNAMI
10
5
%
OVER -CAPACITY AND
DEFLATION
LI’s
STIMULUS
0
• More than one-third of all loans
went to the sector in H1 2016
SEP
MAY
SEP
2016
MAY
SEP
2015
MAY
SEP
2014
MAY
SEP
2013
MAY
SEP
2012
MAY
SEP
2011
MAY
SEP
2010
MAY
SEP
2009
2008
-10
MAY
-5
• This was double the average
percentage between 2010 – 2015
SOURCE: pH REPORT, NATIONAL BUREAU OF STATISTICS
Stimulus has reignited
Chart 4: Inflation
data confirms
new stimulus is
underway
China’s property bubble
• Total home loans will be around 30% of
GDP this year, versus 20% in 2014
Unsurprisingly, producer price inflation has
also been on the rise, as chart 4 confirms,
reaching a positive figure in September
for the first time in 4 years. And whilst Xi
has recently instructed the government
Fundamental economic
reform depends on
the President to
Chart 5: China’s
auto sales have
surged again
this year due to
stimulus
make it happen
PASSENGER CAR SALES IN THE BRICs
JANUARY – SEPTEMBER, 2006 – 2016
18
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
16
14
12
Millions
November 2017. This is when appointments
to the Politburo Standing Committee
(PSC) – effectively the supreme governing
body – will be finalised for the next 5 years.
The situation is certainly calmer than in the
run up to the 18th Congress in 2012. Then, the
Bo Xilai affair was followed by the scandal
of the death of the son of Populist President
Hu’s chief of staff, Ling Jihua, in the infamous
Ferrari crash. In October, the New York Times
then alleged that Populist Premier Wen’s
family had amassed a $2.7bn fortune after
Wen’s 1998 move into China’s ruling elite.
Unsurprisingly, the Ling and Wen affairs
discredited the Populist faction within the
Party. They not only ensured Xi Jinping’s
appointment as President, but meant that he
gained an unprecedented 6 – 1 majority for his
Princeling faction in the PSC (The pH Report.
‘Two steps forward, one step back’, July 2015),
with only Premier Li left to represent the
Populists. Xi also set out to circumvent the
premier’s traditional control of the economy by
establishing a system of Leading Small Groups
under his own chairmanship, with the aim of
implementing major reforms in key areas.
More recently, of course, (The pH Report,
‘Desert and Middle Kingdom aim for economic
transformation’, May 2016), Populist fortunes
have begun to revive, enabling Li to return
• 10 cities saw annual house price gains
of more than 20% in August
10
8
6
4
2
0
CHINA
RUSSIA
BRAZIL
INDIA
SOURCE: pH REPORT, NATIONAL AUTO MANUFACTURER ORGANISATION
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