China focuses on domestic growth

In September, the blog wondered whether “China’s interest in remaining the manufacturing capital of the world may be starting to wane”. Yesterday, Lou Jiwei, the chairman of China’s sovereign wealth fund (China Investment Corporation) confirmed the new focus on domestic growth. He suggested that “if China can do a good job domestically, that is the best thing it can do for the world”.
Lou’s statement echoed last week’s comments from President Hu Jintao that “difficulties in the global economy threaten to undermine growth in China”. Lou also added that major losses in their western financial investments (for example, Blackstone down 82% since they bought at $29.60/share), meant they “do not have the courage to invest in financial institutions because we do not know what problems they may have”.
Asian chemical demand is tied to GDP/capita growth in the West, not to domestic needs. So China’s new focus means much slower growth in local chemical demand. As the blog warned a year ago ,”decoupling (of the Asia economy from the West) is a good story, but its not going to work going forward”.

Leave a Comment