According to Standard Bank, while it is not going to be a linear progression, the nature of Chinese growth is likely to moderate over the next five years.
GRONINGEN (MINEWEB) – Like any good relationship, it is hard to imagine one’s life without the other person while things are going well. Which is why, any mention of slowing growth in China was met by many in the commodities market with loud cries of “I can’t hear you” and hands clasped firmly over ears.
A case in point, it could be argued, is the massive expansion in iron ore production by the likes of Rio Tinto and BHP Billiton in the face of slowing demand from China, which is expected to result in at least four years of expanding gluts, according to data compiled by Bloomberg.
That’s also not to say, and this is an important distinction, that growth in China has stopped, rather it is moderating. Overall growth is expected to slow over the course of the next few years but it is still going to be at a healthy rate. Indeed, it should also be noted that the base on which this, albeit slower, growth is now placed, and thus the quantum of commodities required in any given year, is vastly higher than it once was.