Cleaning Up Supply-Side Controls

While industrial demand conditions in China’s economy enter a critical testing period in the next few weeks, the expanded array and scope of measures to cut excess capacity in 2017 set the stage for a year of sporadic production cuts and potential price volatility. Production cuts under the banner of environmental protection and energy efficiency are more likely to impact supply conditions than those under other channels. Because policymakers prefer stability in supply and price conditions, a 2016-style commodities rally powered by supply-side adjustments is not likely to be repeated this year.

Posted August 1, 2017
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