Affected by the epidemic, the global economy turned negative from positive growth in 2020, especially the recession in major economies; affected by the successful development of the vaccine and full promotion of injection, countries are confident that the economy will rebound significantly next year, for example, the Federal Reserve believes that the U.S. GDP -2.4% in 2020, and the median GDP growth rate is expected to be 4.2% at the end of 2021; international financial institutions generally believe that China this year can reach about 2% growth and about 8% next year; the IMF expects the global economy to shrink by 4.4% this year and grow by 5.2% in 2021.
The Federal Reserve in March directly linked to the exchange rate significantly lowered more than one hundred basis points into zero interest rates, and currently, most developed economies interest rates remain at zero and negative rates. The Fed’s latest interest rate meeting said no interest rate hikes for three years, and it is believed that all major economies will remain without interest rate hikes for about three years.
International financial institutions ignore inflationary factors in their forecasts of economic growth next year. The International Food and Agriculture Organization expects a worldwide food shortage, with food remaining predictably high; international oil prices above $40 per barrel; and record high prices for steel, copper and aluminum, with prices of industrial products continuing to rise. Inflation is foreseeable for the next three years; not only will general commodity prices rise, but as the economy recovers, low interest rates will also affect asset prices upwards, and rising house prices are possible in most developed economies around the world.
Australia’s finances are better than China’s
China’s economy could have grown more robustly, but there are five problems that will affect it in 2021 due to its assertiveness to the West. The first is power cuts affecting the economy; second, rising base metal prices will infect the entire industry; third, chip high technology being restricted by the West; fourth, outward migration of the industrial chain; and fifth, disruption of the industrial chain.
Earlier this month, FAW-Volkswagen and Shanghai Volkswagen stopped production, which was reportedly triggered by chip disconnection; I guess it is also related to the rising steel prices. Soaring steel prices will lead to a significant increase in the cost of building cars, compressing corporate profits and even losses, because it is simply impossible to sell cars at a higher price, so it is better to stop production. Rising steel prices will also directly raise the cost of the house, to real estate developers to form a huge cost pressure.
Into December, Hunan, Jiangxi, Zhejiang, a large area of power outages, and then rumors of power outages in Beijing, Shanghai, Guangdong, etc. The main reason for power outages is the environmental requirements, due to domestic coal emissions of sulfur and other substances is difficult to meet the standard, after the exchange of bad relations between Australia and China, Australia’s high-quality coal can not be delivered to power plants, power plants can only shut down the furnace. On the other hand, this year is the last year of the 13th Five-Year Plan, in order to achieve the task of energy saving and emission reduction can only pull the plug on electricity. This problem is perhaps the easiest to solve, and will be solved by mid to late January next year.
The U.S.-China trade war began, the relationship between the two countries to a comprehensive irreversible deterioration, the U.S. sanctions list expansion will interrupt the Chinese industrial chain; on the other hand, Japan and other countries to subsidize the industrial chain to move out of China, taxes, fees, costs and other factors affect the Chinese companies to move to Southeast Asia, India and other places.
Since April, China-Australia relations have exchanged bad blood and China boycotted Australian coal, wine, etc. Iron ore has moved all the way up, with China’s Dalian iron ore futures rising from a low of 511 yuan a tonne in May to above 1,100 yuan now, and the Platts 62 iron ore index, on which international pricing is based, has soared by more than 60% and now stands firmly above $160 a tonne. China’s steel production accounts for about half of the world’s output, is the largest importer of iron ore, the world’s iron ore by Brazil’s Vale, Australia’s BHP Billiton, Britain (Australia) Rio Tinto three companies monopoly, Brazil’s Vale due to an accident shutdown a year, can only be imported from Australia, iron ore mining costs $ 20 per ton, China at least 700 million tons of imports from Australia every year, the two top companies from China’s daily net income of $ 269 million. I roughly calculated, just two to the Australian government to pay a year of corporate income tax can reach about 30 billion U.S. dollars, China and Australia vicious Australian government to make a fortune. The global economic recovery, Australia will take the lead, the fiscal will be the best.
Will iron ore prices fall? Depends on China-Australia relations. Will it improve? No. For example, I have to buy grain at your house, I keep pissing you off, and you double the price of selling me grain. Do you think you will improve your relationship with me the worse our relationship is and the more you make?
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