The blog in 2015
on December 30, 2015

Blog Dec15

2015 was the year when companies and markets began to feel the impact of the Great Unwinding of stimulus policies.

The blog’s readership has increased significantly as a result, as people began to abandon the consensus wisdom which had so clearly failed – once again – to provide a reliable guide to the outlook.

The key has been China’s change of economic direction.  And this is likely to intensify in 2016, as President Xi looks to complete the process of “taking the pain of restructuring the economy” before he comes up for reappointment in 2017.   China’s recent Central Economic Work Conference was clear about the priorities:

In the 1980s, former US president Ronald Reagan and then UK prime minister Margaret Thatcher implemented the policies of supply-side economics and monetarism. Monetarism advocates maintaining money supply according to the GDP growth rate and leaving other problems to the market. According to supply-side economics, the government should reduce taxes to encourage enterprises to foster innovation and boost public consumption…and it added

“China’s economy is in dire need of a makeover. Instead of working on the demand side, attention has turned to stimulating business through tax cuts, entrepreneurship and innovation while phasing out excess capacity resulting from the previous stimulus. Such measures are intended to increase the supply of goods and services, consequently lowering prices and boosting consumption.

“Cutting housing inventories, tackling debt overhang, eliminating superfluous industrial capacity, cutting business costs, streamlining bureaucracy, urbanization and abandoning the one-child policy are all examples of supply-side reforms. Viewed as a whole, these measures can also be considered “structural” reform. By cutting capacity, nurturing new industries and improving the mobility of the populace, vitality and productivity should increase.”

Understanding these developments, and their impact on the global economy, will be a key theme in 2016 for my new pH Report subscription service, which has had an encouraging first year.  I hope you might consider subscribing.

Thank you also for your continued support for the blog.  Its audience continues to grow, as shown in the chart above, with its visits now totalling 380k.  Its readership includes 186 countries and over 10k cities.  Readers also remain very loyal, with one in two reading it every week, and one in four reading it every day.

 

 

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