China’s economy ended 2010 on yet another high.
As the chart shows, bank lending (red column) and electricity consumption (blue line), remained very strong:
• Electricity usage was up 15% in 2010 versus 2009
• Bank lending was RMB 7.9trn ($1.2trn), above the RMB 7.5trn target
The change since the start of the Crisis is even more significant. Electricity consumption is up 22% versus 2008, and lending up a massive 62%.
Unsurprisingly, property is at the centre of the boom, with total sale volumes up 12%, and total value up 22%, versus 2009. Similarly auto sales, also central to chemical and polymer demand, were up 34% versus 2009 and have doubled since 2008.
Without China, global chemical demand would have been miserably low over the past 2 years. Therefore, we can only be grateful that it has taken off so extraordinarily. But can this pace be sustained?
If it was a Western economy, economists would now be pointing at rising inflation, and the housing bubble, and calling for policymakers to slam on the brakes. So far, this hasn’t happened. But Li Keqiang (expected to be the next premier) is clearly increasingly concerned.
This major question mark over the sustainability of China’s current Boom is one major reason why the title of the blog’s new White Paper is ‘Budgeting for Uncertainty’.