Home' Trinidad and Tobago Guardian : July 13th 2017 Contents BG14 | INTERNATIONAL
BUSINESS GUARDIAN guardian.co.tt JULY 13 • 2017
China's faltering inflation
rebound is a problem
China's inflation rebound is turning into a false
dawn. For the world economy, that's sobering news.
Rising factory prices in the world's second-biggest
economy had been touted as a possible circuit breaker
for anaemic global inflation, which continues to defy
accelerating economic growth.
The thinking was that higher costs in China would
drive up the price of everything from footwear to elec-
tronics which in turn would help lift profits and wages.
Yet those hopes appear to be fading. While Chi-
na's producer price index held up in June, much of
the support came from higher commodity prices as
companies restocked their inventories. That sup-
port is already fading as activity in the property and
construction sectors remains soft and oil and raw
materials prices decline, keeping factory prices lower.
At the same time a move by China's regulators to
curb risk in the financial system by targeting leverage
will also act as a brake on the economy. So instead of
spurring price gains China could become a source of
global disinflation, according to Michael Every, head
of financial markets research at Rabobank Group in
Inflation has been a key ingredient missing from an
otherwise robust recovery. The International Mon-
etary Fund in April raised its world growth forecast
for to 3.5 per cent this year, up 0.1 percentage point
US inflation hasn't been responding to the long-
term decline in unemployment, and analysts worry
there are few signs of it doing so. Euro-area inflation
slowed in June to its weakest pace this year and Japan
continues to be dogged by years of tepid price gains.
Shell to spend US$1b per year on clean energy
Royal Dutch Shell plans to spend as much
as US$1 billion a year on its New Energies
division as the transition toward renewable
power and electric cars accelerates.
"In some parts of the world we are be-
ginning to see battery electric cars starting
to gain consumer acceptance" while wind
and solar costs are falling fast, Shell CEO
Ben Van Beurden said in a speech in Istanbul
"All of this is good news for the world and
must accelerate," while still offering oppor-
tunities for producers of fossil fuels.
Shell sees opportunities in hydrogen fu-
el-cells, liquefied natural gas, and next-gen-
eration biofuels for air travel, shipping and
heavy freight --- areas of transport for which
batteries aren't adequate. The intermittent
nature of wind and solar energy means power
plants fired by natural gas will have a long-
term role, Van Beurden said.
Van Beurden was addressing the World
Petroleum Congress, a gathering of ministers
and chief executives from some of the largest
oil producers, at a time when the accelerat-
ing shift to clean energy is raising questions
about their long-term business models.
While Russian Energy Minister Alexander
Novak and Saudi Arabian Oil Co boss Amin
Nasser said oil and gas will be dominant for
decades to come, Van Beurden highlighted
the potential for some of the fastest-grow-
ing nations to leapfrog straight to a cleaner
"When you consider the areas of the world
where energy demand is still to expand, like
Asia and sub-Saharan Africa, there is a huge
opportunity," Van Beurden said.
"These are areas that are not, on the whole,
locked in to a coal-driven system. There is
the potential for them to shift more direct-
ly onto a less energy-intensive pathway to
There is often too much focus on ener-
gy-transition policies in Europe and North
America instead of the fast-growing devel-
oping world, Van Beurden said.
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