China’s president Xi Jinping is not a happy man. Not happy at all. Yesterday’s People’s Daily newspaper carried a thinly veiled rebuke of government economic policy by an ‘unidentified authority’ close to the president’s office. But it remains unclear whether this heralds a change in policy, or is intended only to shield the president from the next unpopular market crash.
The phrase “as much use as a chocolate teapot”, describes something that epically fails to perform its intended function. And there are few instances to which the phrase is better suited than the use of the word “teapot” to describe refineries that account for as much as a third of China’s installed refining capacity.
Gasoline refining margins have taken a knock in the past week. But what do falling prices on the Chinese spot market in oil products signal? Not necessarily a great deal about consumption, it turns out. Chinese consumers are driving and spending more than ever before.
The shock arrest of Chinese state-controlled Sinopec’s second-in-command, Wang Tianpu, yesterday, did little to dampen the rally in Chinese stocks or, indeed, shares in Sinopec itself. China’s feared Central Commission for Discipline Inspection (CCDI), the body that enforces communist party discipline, yesterday placed Wang under investigation for “alleged serious violations of law”.
How hard will China’s landing be? Premier Li Keqiang last week set the country its lowest GDP growth target since 1990, of 7pc. Sky News economics editor Ed Conway warns that “some China-watchers are talking about the beginning of the end of the Communist regime”, which will not be able to cope with the social cost of slowing growth. This looks like wishful thinking rather than sound analysis. Many economic data do paint a picture almost as gloomy as China’s urban air haze — but there are shafts of light, too.