China Economy: News & Discussion

Discussion in 'China' started by Rage, Jun 1, 2009.

  1. Daredevil

    Daredevil On Vacation! Administrator

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    China has now become the biggest risk to the world economy

    Far from taking over as the engine of growth from an exhausted West, China is making matters worse. Its "beggar-thy-neighbour" policies continue to play havoc with global trade and risk tipping the world into a second leg of the Great Recession.

    By Ambrose Evans-Pritchard
    Published: 6:21PM GMT 15 Nov 2009

    President Obama said before going to China this week that Asia can no longer live by shipping goods to Americans already in debt to their ears Photo: AP
    "The inherent problems of the international economic system have not been fully addressed," said China's president Hu Jintao. Indeed not. China is still exporting overcapacity to the rest of us on a grand scale, with deflationary consequences.

    While some fret about liquidity-driven inflation, Justin Lin, World Bank chief economist, said the greater danger is that record levels of idle plant almost everywhere will feed a downward spiral of job cuts and corporate busts. "I'm more worried about deflation," he said.

    By holding the yuan to 6.83 to the dollar to boost exports, Beijing is dumping its unemployment abroad – "stealing American jobs", says Nobel laureate Paul Krugman. As long as China does it, other tigers must do it too.

    Western capitalists are complicit, of course. They rent cheap workers and cheap plant in Guangdong, then lobby Capitol Hill to prevent Congress doing anything about it. This is labour arbitrage.

    At some point, American workers will rebel. US unemployment is already 17.5pc under the broad "U6" gauge followed by Barack Obama. Realty Track said that 332,000 properties were foreclosed in October alone. More Americans have lost their homes this year than during the entire decade of the Great Depression. A backlog of 7m homes is awaiting likely seizure by lenders. If you are not paying attention to this political time-bomb, perhaps you should.

    President Obama said before going to China this week that Asia can no longer live by shipping goods to Americans already in debt to their ears. "We have reached one of those rare inflection points in history where we have the opportunity to take a different path," he said. Failure to take that path will "put enormous strains" on America's ties to China. Is that a threat?
    It is fashionable to talk of America as the supplicant. That misreads the strategic balance. Washington can bring China to its knees at any time by shutting markets. There is no symmetry here. Any move by Beijing to liquidate its holdings of US Treasuries could be neutralized – in extremis – by capital controls. Well-armed sovereign states can do whatever they want.

    If provoked, the US has the economic depth to retreat into near autarky (with NAFTA) and retool its industries behind tariff walls – as Britain did in the 1930s under Imperial Preference. In such circumstances, China would collapse. Mao statues would be toppled by street riots.

    Mr Hu sounded conciliatory last week. China is taking "vigorous" steps to cut reliance on exports, still 39pc of GDP. "We want to increase people's ability to spend," he said.

    Beijing is indeed boosting pensions and extending health insurance to the countryside so that people feel less need to save, but cultural revolutions take time. All we have seen so far are "baby steps", says Morgan Stanley's Stephen Roach.

    The reality is that much of Beijing's $600bn stimulus has been spent building yet more plant and infrastructure so that China can ship yet more goods, or has leaked into property and stocks.

    Credit has exploded. Allocated by Maoist bosses for political purposes, it has become absurd. China is rolling as much steel as the next eight producers combined. It is churning more cement than the rest of the world. Fixed investment is up 53pc this year. Once you know that Hunan authorities have torn down two miles of modern flyway so that they can soak up stimulus by building it again, or that the newly-built city of Ordos is sitting empty in Inner Mongolia, you know what must come next.

    Pivot Asset Management said lending has touched 140pc of GDP, "well beyond" levels that have led to crises in the past. With the revolution's 60th birthday out of the way, the central bank has begun to tighten. New yuan loans halved in October. So be careful. Pivot said a hard-landing in China could prove as traumatic for world markets as the US sub-prime crash.

    The world economy is still skating on thin ice. The West is sated with debt, the East with plant. The crisis has been contained (or masked) by zero rates and a fiscal blast, trashing sovereign balance sheets. But the core problem remains. The Anglo-sphere and Club Med are tightening belts, yet Asia is not adding enough demand to compensate. It is adding supply.

    My view is that markets are still in denial about the structural wreckage of the credit bubble. There are two more boils to lance: China's investment bubble; and Europe's banking cover-up. I fear that only then can we clear the rubble and, very slowly, start a fresh cycle.
     
  2. badguy2000

    badguy2000 Respected Member Senior Member

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    it is really amusing to read the such sour grape articles from west.

    sometime, they scream that "china is to collaspe"!

    suddenly ,they scream that " CHina is to make west collapse"....

    are they the men ill of Schizophrenia?
     
  3. Vladimir79

    Vladimir79 Defence Professionals Defence Professionals

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    Threat of trade wars is apparent. China won't be willing to concede when their entire economic model is based on cheap exports. If they relent, they collapse. Amerika will be forced to play their hand.
     
  4. Daredevil

    Daredevil On Vacation! Administrator

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    Well, that's the reality. Trade imbalance leads to trade wars. That's a fact.

    How US is supposed to grow by depending on China/Japan/other countries lending. It will stop at one or the other time and that time is nearing. China has to buckle up for this occasion otherwise its economy will tank.
     
  5. RAM

    RAM The southern Man Senior Member

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    China has now become the biggest risk to the world economy

    China has now become the biggest risk to the world economy

    Far from taking over as the engine of growth from an exhausted West, China is making matters worse. Its "beggar-thy-neighbour" policies continue to play havoc with global trade and risk tipping the world into a second leg of the Great Recession.

    "The inherent problems of the international economic system have not been fully addressed," said China's president Hu Jintao. Indeed not. China is still exporting overcapacity to the rest of us on a grand scale, with deflationary consequences. While some fret about liquidity-driven inflation, Justin Lin, World Bank chief economist, said the greater danger is that record levels of idle plant almost everywhere will feed a downward spiral of job cuts and corporate busts. "I'm more worried about deflation," he said. Obama: US borrowing will not spiral out of control By holding the yuan to 6.83 to the dollar to boost exports, Beijing is dumping its unemployment abroad – "stealing American jobs", says Nobel laureate Paul Krugman. As long as China does it, other tigers must do it too.

    Western capitalists are complicit, of course. They rent cheap workers and cheap plant in Guangdong, then lobby Capitol Hill to prevent Congress doing anything about it. This is labour arbitrage. At some point, American workers will rebel. US unemployment is already 17.5pc under the broad "U6" gauge followed by Barack Obama. Realty Track said that 332,000 properties were foreclosed in October alone. More Americans have lost their homes this year than during the entire decade of the Great Depression. A backlog of 7m homes is awaiting likely seizure by lenders. If you are not paying attention to this political time-bomb, perhaps you should.

    President Obama said before going to China this week that Asia can no longer live by shipping goods to Americans already in debt to their ears. "We have reached one of those rare inflection points in history where we have the opportunity to take a different path," he said. Failure to take that path will "put enormous strains" on America's ties to China. Is that a threat? It is fashionable to talk of America as the supplicant. That misreads the strategic balance. Washington can bring China to its knees at any time by shutting markets. There is no symmetry here. Any move by Beijing to liquidate its holdings of US Treasuries could be neutralized – in extremis – by capital controls. Well-armed sovereign states can do whatever they want.

    If provoked, the US has the economic depth to retreat into near autarky (with NAFTA) and retool its industries behind tariff walls – as Britain did in the 1930s under Imperial Preference. In such circumstances, China would collapse. Mao statues would be toppled by street riotsMr Hu sounded conciliatory last week. China is taking "vigorous" steps to cut reliance on exports, still 39pc of GDP. "We want to increase people's ability to spend," he said.

    Beijing is indeed boosting pensions and extending health insurance to the countryside so that people feel less need to save, but cultural revolutions take time. All we have seen so far are "baby steps", says Morgan Stanley's Stephen Roach. The reality is that much of Beijing's $600bn stimulus has been spent building yet more plant and infrastructure so that China can ship yet more goods, or has leaked into property and stocks.

    [​IMG]

    Credit has exploded. Allocated by Maoist bosses for political purposes, it has become absurd. China is rolling as much steel as the next eight producers combined. It is churning more cement than the rest of the world. Fixed investment is up 53pc this year. Once you know that Hunan authorities have torn down two miles of modern flyway so that they can soak up stimulus by building it again, or that the newly-built city of Ordos is sitting empty in Inner Mongolia, you know what must come next. Pivot Asset Management said lending has touched 140pc of GDP, "well beyond" levels that have led to crises in the past. With the revolution's 60th birthday out of the way, the central bank has begun to tighten. New yuan loans halved in October. So be careful. Pivot said a hard-landing in China could prove as traumatic for world markets as the US sub-prime crash.

    [​IMG]

    The world economy is still skating on thin ice. The West is sated with debt, the East with plant. The crisis has been contained (or masked) by zero rates and a fiscal blast, trashing sovereign balance sheets. But the core problem remains. The Anglo-sphere and Club Med are tightening belts, yet Asia is not adding enough demand to compensate. It is adding supply. My view is that markets are still in denial about the structural wreckage of the credit bubble. There are two more boils to lance: China's investment bubble; and Europe's banking cover-up. I fear that only then can we clear the rubble and, very slowly, start a fresh cycle.

    China has now become the biggest risk to the world economy - Telegraph
     
  6. Daredevil

    Daredevil On Vacation! Administrator

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    People who get overwhelmed with China's relentless progress should have a look at the working conditions of the people as described in this report. Its downright inhuman.

     
  7. johnee

    johnee Elite Member Elite Member

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    Great post DD,

    China practises modern day slavery!!!
     
  8. badguy2000

    badguy2000 Respected Member Senior Member

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    well ,such a case indeed exist very popularly in chinese costal area.

    I need not deny it .

    however, although it is immoral,but it is inevitalbe during the early stage of industrilazaiton.....

    those peasants workers work under strict disciplines ,not only for the better life of their families,but also for the better future of the country.

    what they do should be repected .those peasant workers are the backbone of chinese economy miracle.without their devotion, CHinese would not suceed.

    unlike your babu-like cold-blooded sarasim ,we are working hard to shorten such a terrible stage and make sure that China can provide a better life for our children.
     
  9. Vladimir79

    Vladimir79 Defence Professionals Defence Professionals

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    And badguy2000 gets offencive when you call them labour camps... :sarcastic:
     
  10. RAM

    RAM The southern Man Senior Member

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    China hints at higher purchases from US to please Obama

    BEIJING: China has indicated it is ready to buy a lot more goods and services form the United States to help its economic recovery process. The indication came from Chinese premier Wen Jiabao, who told visiting US president Barack Obama on Wednesday that China was not trying to prove its capability to clock trade surpluses. "China does not pursue a trade surplus," Wen was quoted as saying.

    "Lively global trade and investment will help to overcome the international financial crisis and accelerate global economic recovery," he said. Wen also said his government wanted to “encourage a steady balancing of bilateral trade".

    The statement is seen as a clear hint that China was ready to expand imports from the US. What China wants in return was spelt out by Wen when he advised Obama to "oppose trade and investment protectionism". Chinese president Hu Jintao on Tuesday said the two countries should work to curb protectionism in trade.

    Beijing has been opposing several restrictions placed on Chinese exports, the latest being the imposition of high tariffs on China made tires. The decision resulted in angry protests in China but the US is yet to withdraw or dilute the decision.

    Wen’s assurance could be seen as a significant outcome of the 3-day visit of the US president, which is otherwise bereft of any specific deals or assurances on issues like the exchange rate of the Chinese currency.

    Curiously, Osama stayed away from any discussion of the massive holding of US treasury bonds worth $800 billon by China. Osama the holdings give China some special levers in dealing with the US government.

    "The $800 billion never came up in conversation, and the president dealt with every issue on his agenda in a very direct way and pulled no punches," Michael Froman, Obama's deputy national security adviser for international economic affairs, told reporters from his country. Obama told Wen he was pleased by the outcome of the visit as it has resulted in the deepening of relationship between the two nations.

    “A relationship that used to be focused just on economic and trade issues is now expanding to deal with a whole host of global issues in which US-China cooperation is critical,” he said.

    “We have had very productive discussions over the last two days. I think President Hu and myself agreed in our first meeting that we wanted to try to deepen the strategic partnership and relationship between the United States and China,” he said. Obama also get some assurance from China for co-operation in the efforts to curb the growth of North Korea’s nuclear capabilities and work together on the topic of climate change.

    China hints at higher purchases from US to please Obama - China - World - The Times of India
     
  11. Vladimir79

    Vladimir79 Defence Professionals Defence Professionals

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    Wow, TOI has some serious problems with their journalism.
     
  12. Daredevil

    Daredevil On Vacation! Administrator

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    World Out of Balance

    By PAUL KRUGMAN
    Published: November 15, 2009

    International travel by world leaders is mainly about making symbolic gestures. Nobody expects President Obama to come back from China with major new agreements, on economic policy or anything else.

    But let’s hope that when the cameras aren’t rolling Mr. Obama and his hosts engage in some frank talk about currency policy. For the problem of international trade imbalances is about to get substantially worse. And there’s a potentially ugly confrontation looming unless China mends its ways.

    Some background: Most of the world’s major currencies “float” against one another. That is, their relative values move up or down depending on market forces. That doesn’t necessarily mean that governments pursue pure hands-off policies: countries sometimes limit capital outflows when there’s a run on their currency (as Iceland did last year) or take steps to discourage hot-money inflows when they fear that speculators love their economies not wisely but too well (which is what Brazil is doing right now). But these days most nations try to keep the value of their currency in line with long-term economic fundamentals.

    China is the great exception. Despite huge trade surpluses and the desire of many investors to buy into this fast-growing economy — forces that should have strengthened the renminbi, China’s currency — Chinese authorities have kept that currency persistently weak. They’ve done this mainly by trading renminbi for dollars, which they have accumulated in vast quantities.

    And in recent months China has carried out what amounts to a beggar-thy-neighbor devaluation, keeping the yuan-dollar exchange rate fixed even as the dollar has fallen sharply against other major currencies. This has given Chinese exporters a growing competitive advantage over their rivals, especially producers in other developing countries.

    What makes China’s currency policy especially problematic is the depressed state of the world economy. Cheap money and fiscal stimulus seem to have averted a second Great Depression. But policy makers haven’t been able to generate enough spending, public or private, to make progress against mass unemployment. And China’s weak-currency policy exacerbates the problem, in effect siphoning much-needed demand away from the rest of the world into the pockets of artificially competitive Chinese exporters.

    But why do I say that this problem is about to get much worse? Because for the past year the true scale of the China problem has been masked by temporary factors. Looking forward, we can expect to see both China’s trade surplus and America’s trade deficit surge.

    That, at any rate, is the argument made in a new paper by Richard Baldwin and Daria Taglioni of the Graduate Institute, Geneva. As they note, trade imbalances, both China’s surplus and America’s deficit, have recently been much smaller than they were a few years ago. But, they argue, “these global imbalance improvements are mostly illusory — the transitory side effect of the greatest trade collapse the world has ever seen.”

    Indeed, the 2008-9 plunge in world trade was one for the record books. What it mainly reflected was the fact that modern trade is dominated by sales of durable manufactured goods — and in the face of severe financial crisis and its attendant uncertainty, both consumers and corporations postponed purchases of anything that wasn’t needed immediately. How did this reduce the U.S. trade deficit? Imports of goods like automobiles collapsed; so did some U.S. exports; but because we came into the crisis importing much more than we exported, the net effect was a smaller trade gap.

    But with the financial crisis abating, this process is going into reverse. Last week’s U.S. trade report showed a sharp increase in the trade deficit between August and September. And there will be many more reports along those lines.

    So picture this: month after month of headlines juxtaposing soaring U.S. trade deficits and Chinese trade surpluses with the suffering of unemployed American workers. If I were the Chinese government, I’d be really worried about that prospect.

    Unfortunately, the Chinese don’t seem to get it: rather than face up to the need to change their currency policy, they’ve taken to lecturing the United States, telling us to raise interest rates and curb fiscal deficits — that is, to make our unemployment problem even worse.

    And I’m not sure the Obama administration gets it, either. The administration’s statements on Chinese currency policy seem pro forma, lacking any sense of urgency.

    That needs to change. I don’t begrudge Mr. Obama the banquets and the photo ops; they’re part of his job. But behind the scenes he better be warning the Chinese that they’re playing a dangerous game.
     
  13. K Factor

    K Factor A Concerned Indian Senior Member

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    This is the price of the Chinese economic boom. Poor safety regulations, poor pollution control mechanisms and who is paying, and will have to pay for this in the future? The Chinese people.

    RIP to all the fallen.
     
  14. badguy2000

    badguy2000 Respected Member Senior Member

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    how about the saftey record of India?

    if a guy from developed countries questions the safe record of CHina, I can understand it...but if one Indian guy questions it, I feel it very amusing...
     
  15. Vladimir79

    Vladimir79 Defence Professionals Defence Professionals

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    No country has more mining accidents than China, no country has worse pollution than China --- anyone has a higher ground to stand on than Han Chinese.
     
  16. K Factor

    K Factor A Concerned Indian Senior Member

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    Hmm, you are very easily amused, and that too at the death of your countrymen.

    Look at the number of accidents and the dead that I have highlighted in my post above, and still you find it amusing.


    Show me that 500+ (minor accidents have not been mentioned here) people have died within 18 months in India, and I will comment no more on this issue.
     
  17. ZOOM

    ZOOM Founding Member

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    Please point me out India's saftey record?

    And which developed country are you talking about? since all the developed countries are belonging to Western nation other then Japan to whom you poor chinese call anti chinese.
     
  18. badguy2000

    badguy2000 Respected Member Senior Member

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    it seems that India has very special definition of "minor accident".

    Maybe ,any accident with a death of less than 500 are soooo frequent that such "minor accidents" even can not attracts any attention from medias.

    In CHina, any accident with a death of 12+ people is classified as " nationwide Serious Accident ".

    It is just because such accidents can not be covered or hidden any more as before during internet era that Medias now often report such "nationwide serous accidents" in china.

    Furthermore, CCP now seems very confident on itself and also doesn't want to "cover" such serious accidents at all as before.

    Instead, once such accidents are reported or revealed, CCP always arrests or sackors the boss of local CCP immediately,to releive the anger of the public.

    For you reference, Beijing has sackors the governor of Shanxi province for 3 time in the past 2 years for such "naitonwide serious accidents",where is full of coal mines. Now, all highrank CCP officials are very afriad to be appointed as the boss of that province.

    whether you acknowledge or not, CCP indeed succeeds in avoiding Chinese people's anger directly at Beijing.
     
  19. K Factor

    K Factor A Concerned Indian Senior Member

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    Your stupidity knows no bounds. I told you to point out accidents in any form in India stating that over 500 people have died in China in the last 18 months from mining accidents. In India, I am sure the figure wont be even 100.

    You are so blinded by the propaganda nationalism of your country a=that you cannot see or think clearly. Sad to see you justifying deaths of your countrymen instead of thinking of corrective measures. If your govt./dictators are so serious, why do these types of incidents keep happening?
     
  20. badguy2000

    badguy2000 Respected Member Senior Member

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    I input "India+accident+death" in "google",then press the key of "enter"....you know what I find? I amazedly find that what a terrible safe record India's train system has!

    BTW,in CHina, most such deaths are caused by accidents of coal mines. but every year CHina produces 20 more times more coals than India .
    [​IMG]
    [​IMG]
     

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