A Bright Outlook for China's Growth Prospects and Commodities Demand
A Bright Outlook for China's Growth Prospects and Commodities Demand. Pessimism is de rigueur among commentators regarding the prospects for China's economy. But the RBA has weighed into the debate with a timely reminder that the long term outlook for Chinese demand for iron ore and steel is bright, underpinned by growing steel intensity in household consumption and residential construction, while China's per capita energy consumption remains low by the standards of advanced economies. In the short-term, concerns about credit bubbles, the opacity of the financial system, and renewed weakness in property markets will provide plenty of fuel for the pessimists. But there are reasons to be the optimistic. At comparable levels of development to China relative to the USA - Korea, Taiwan and Japan continued to experience rapid growth for decades. The pessimists might be winning the battle at present, but there are good reasons to be optimistic about China's longer run growth prospects and demand for commodities, even as the economy re-balances towards more household consumption. (VIEW LINK)