China PLA officers urge economic punch against U.S.

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China PLA officers urge economic punch against U.S.

Senior Chinese military officers have proposed that their country boost defence spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.

The calls for broad retaliation over the planned U.S. weapons sales to the disputed island came from officers at China's National Defence University and Academy of Military Sciences, interviewed by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency.

The interviews with Major Generals Zhu Chenghu and Luo Yuan and Senior Colonel Ke Chunqiao appeared in the issue published on Monday.

The People's Liberation Army (PLA) plays no role in setting policy for China's foreign exchange holdings. Officials in charge of that area have given no sign of any moves to sell U.S. Treasury bonds over the weapons sales, a move that could alarm markets and damage the value of China's own holdings.

While far from representing fixed government policy, the open demands for retaliation by the PLA officers underscored the domestic pressures on Beijing to deliver on its threats to punish the Obama administration over the arms sales.

"Our retaliation should not be restricted to merely military matters, and we should adopt a strategic package of counter-punches covering politics, military affairs, diplomacy and economics to treat both the symptoms and root cause of this disease," said Luo Yuan, a researcher at the Academy of Military Sciences.

"Just like two people rowing a boat, if the United States first throws the strokes into chaos, then so must we."

Luo said Beijing could "attack by oblique means and stealthy feints" to make its point in Washington.

"For example, we could sanction them using economic means, such as dumping some U.S. government bonds," Luo said.

The warnings from the PLA come after weeks of strains between Washington and Beijing, who have also been at odds over Internet controls and hacking, trade and currency quarrels, and President Barack Obama's planned meeting with the Dalai Lama, the exiled Tibetan leader reviled by China as a "separatist."

MILITARY SPENDING BOOST

Chinese has blasted the United States over the planned $6.4 billion arms package for Taiwan unveiled in late January, saying it will sanction U.S. firms that sell weapons to the self-ruled island that Beijing considers a breakaway province of China.

China is likely to unveil its official military budget for 2010 next month, when the Communist Party-controlled national parliament meets for its annual session.

The PLA officers suggested that budget should mirror China's ire towards Washington.

"Clearly propose that due to the threat in the Taiwan Sea, we are increasing military spending," said Luo.

Last year, the government set the official military budget at 480.7 billion yuan ($70.4 billion), a 14.9 percent rise on the one in 2008, continuing a nearly unbroken succession of double-digit increases over more than two decades.

The fresh U.S. arms sales threatened Chinese military installations on the mainland coast facing Taiwan, and "this gives us no choice but to increase defence spending and adjust (military) deployments," said Zhu Chenghu, a major general at China's National Defence University in Beijing.

In 2005, Zhu stirred controversy by suggesting China could use nuclear weapons if the United States intervened militarily in a conflict over Taiwan.

The United States switched official recognition from Taiwan to China in 1979. But the Taiwan Relations Act, passed the same year, guarantees Taiwan a continued supply of defensive weapons.

China has the world's biggest pile of foreign currency reserves, much of it held in U.S. treasury debt. China held $798.9 billion in U.S. Treasuries at end-October.

But any attempt to use that stake against Washington would probably maul the value of China's own dollar-denominated assets.

China has condemned previous arms sales, but has taken little action in response to them. But Luo said the country's growing strength meant that time has passed.

"China's attitude and actions over U.S. weapons sales to Taiwan will be increasingly tough," the magazine cited him as saying. "That is inevitable with rising national strength."

http://in.news.yahoo.com/137/20100209/760/twl-china-pla-officers-urge-economic-pun.html
 
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Since this will hurt USA so badly and teach us a nasty lesson why don't you do it instead of making idle threats,after all you guys are the new superpower on the scene do it and show the world the lesson you taught USA; and are ready to teach others.
 

Armand2REP

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Hell, this is a win-win for France. If China sanctions Boeing and Raytheon, that just means more orders for Airbus and Thales.
 

ajtr

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Its win-win for everyone.but i do see west getting all ganged up against china in support of usa after Copenhagen climate summit.I see another cold war in making.

Dealing with a More Assertive China

BRUSSELS — The mood on China in Western capitals is beginning to darken. From cyber-attacks to obstinacy in Copenhagen, Beijing’s assertiveness and the hardening tone of its diplomacy are prompting a rethink. If the competitive aspects of the relationship with China are going to dominate in the years ahead, have the United States and Europe got their strategies right? And if not, what are the options?

The deterioration in the West’s outlook on China has been startling. This is partly a result of the sheer range of different fronts on which Beijing’s assertiveness has been on display in recent months. It has been the primary blocking force against tougher sanctions on Iran and the lead obstructionist at the climate talks. It delivered a harsh sentence on pro-democracy activist Liu Xiaobo and executed the mentally-ill Briton Akmal Shaikh. And then there was Google’s announcement that the scale and nature of recent attacks may result in its pulling out of China, which illustrated both the growing anxieties about Chinese cyber-intrusions and the worsening climate in China for Western businesses.

Disagreements between the West and China on these and other issues are not new; what has startled China’s interlocutors is the brashness with which Beijing now asserts its interests — and its willingness to prevail, even at the expense of appearing the villain. President Obama’s borderline-humiliating visit to China in November was repeated in Copenhagen, where Beijing repeatedly snubbed meetings of heads of government by sending junior officials — one of whom nonetheless felt sufficiently empowered to shout and wag his finger at the U.S. president. European officials have recounted private Chinese demands that the EU’s next China strategy paper should be written “together” and Chinese statements that a failure to lift the EU arms embargo would mean that in the future Europe “will not be able to buy its arms from China.”

These incidents, although minor in their own right, reveal a China far less worried about cooperating or preserving smooth relations with the West than it once was. The West had hoped that Beijing would become a “responsible stakeholder” and use its stronger position to bolster the international system. Instead China seems intent on freeing itself from its constraints.

A nationalist public opinion and insecurities at home have played their part in this development. But it has mostly been driven by a change in Beijing’s perception of power relations since the global economic crisis. China’s success in surviving such a precipitous downturn has given the government a greater belief in its own resilience. And the perception that the United States and Europe need China more than China needs them has been fed by the new U.S. administration, whose conciliatory gestures toward Beijing have been treated as signs of weakness rather than goodwill.

Many Western officials believe, however, that China has miscalculated — and is shooting itself in the foot. Talk of giving Beijing more space on sensitive issues has evaporated. Support from business lobbies has weakened. Heads of government who would happily push China into the “important but not urgent” file have begun to review their strategies.

Already, Beijing is feeling the effects of this pushback. Recent weeks have seen the announcement of arms sales to Taiwan, confirmation of a U.S. presidential meeting with the Dalai Lama, and public criticism from President Obama and Secretary Clinton of China’s currency policies and its stance on the Iranian nuclear issue. The West hopes China will realize it has overplayed its hand and will make some conciliatory moves — such as a modest revaluation of the yuan and acquiescence to tougher sanctions on Iran — to reverse the political dynamic. For all the noise in the last week, Washington has made only a modest tactical shift. But the United States and Europe may yet see this as a wake-up call and make a more serious set of changes to their China policies.

What could that actually amount to? Here are some options being discussed:

Threats of targeted measures that limit Chinese free-riding, such as stricter sanctions against Chinese companies dealing with Iran. Punishment for currency manipulation, and carbon tariffs.

A move from comprehensive to selective engagement and integration. Parts of the vast architecture of dialogues and summits may be dismantled. Right now, China is the one to cancel and postpone dialogues, and Western powers are the perpetual demandeurs. This can be stopped. The headlong rush to give a new seat to China at every table in every international process can also be slowed.

A move to a less Sino-centric engagement and integration policy. Rather than making a bilateral beeline for Beijing, more effort could be employed in coordinating China policy with other like-minded countries. The United States has plenty of room to deepen its cooperation with its treaty allies in Europe and Asia has considerable scope. But more diplomatic energy could be focused on other potential members of a progressive coalition — India, Brazil, Indonesia, South Africa. Expanded economic, technological, security, and trade advantages can be offered to those countries that are willing to act as system-strengtheners rather than spoilers.

More consciously competitive policies could be initiated in areas where disagreements on values are likely to persist, such as aid policy or dealing with rogue states. The West would focus less on reaching agreement with China and more on maneuvering around it.

Beijing still has the opportunity to demonstrate that these steps are unnecessary. But it needs to appreciate that the concerns are genuine: a free-rider on China’s scale is just too great for the global security, economic, political, and environmental order to bear. And unwillingness to assume responsibility may come at a price.

Andrew Small is a Transatlantic Fellow with the German Marshall Fund in Brussels.
 

ajtr

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China’s hawks demand cold war on the US

MORE than half of Chinese people questioned in a poll believe China and America are heading for a new “cold war”.

The finding came after battles over Taiwan, Tibet, trade, climate change, internet freedom and human rights which have poisoned relations in the three months since President Barack Obama made a fruitless visit to Beijing.

According to diplomatic sources, a rancorous postmortem examination is under way inside the US government, led by officials who think the president was badly advised and was made to appear weak.

In China’s eyes, the American response — which includes a pledge by Obama to get tougher on trade — is a reaction against its rising power.
An independent survey of Chinese-language media for The Sunday Times has found army and navy officers predicting a military showdown and political leaders calling for China to sell more arms to America’s foes. The trigger for their fury was Obama’s decision to sell $6.4 billion (£4 billion) worth of weapons to Taiwan, the thriving democratic island that has ruled itself since 1949.

“We should retaliate with an eye for an eye and sell arms to Iran, North Korea, Syria, Cuba and Venezuela,” declared Liu Menxiong, a member of the Chinese people’s political consultative conference.

He added: “We have nothing to be afraid of. The North Koreans have stood up to America and has anything happened to them? No. Iran stands up to America and does disaster befall it? No.”

Officially, China has reacted by threatening sanctions against American companies selling arms to Taiwan and cancelling military visits.

But Chinese analysts think the leadership, riding a wave of patriotism as the year of the tiger dawns, may go further.

“This time China must punish the US,” said Major-General Yang Yi, a naval officer. “We must make them hurt.” A major-general in the People’s Liberation Army (PLA), Luo Yuan, told a television audience that more missiles would be deployed against Taiwan. And a PLA strategist, Colonel Meng Xianging, said China would “qualitatively upgrade” its military over the next 10 years to force a showdown “when we’re strong enough for a hand-to-hand fight with the US”.

Chinese indignation was compounded when the White House said Obama would meet the Dalai Lama, the exiled spiritual leader of Tibet, in the next few weeks.

“When someone spits on you, you have to get back,” said Huang Xiangyang, a commentator in the China Daily newspaper, usually seen as a showcase for moderate opinion.

An internal publication at the elite Qinghua University last week predicted the strains would get worse because “core interests” were at risk. It said battles over exports, technology transfer, copyright piracy and the value of China’s currency, the yuan, would be fierce.

As a crescendo of strident nationalistic rhetoric swirls through the Chinese media and blogosphere, American officials seem baffled by what has gone wrong and how fast it has happened.

During Obama’s visit, the US ambassador to China, Jon Huntsman, claimed relations were “really at an all-time high in terms of the bilateral atmosphere ... a cruising altitude that is higher than any other time in recent memory”, according to an official transcript.

The ambassador must have been the only person at his embassy to think so, said a diplomat close to the talks.

“The truth was that the atmosphere was cold and intransigent when the president went to Beijing yet his China team went on pretending that everything was fine,” the diplomat said.

In reality, Chinese officials argued over every item of protocol, rigged a town hall meeting with a pre-selected audience, censored the only interview Obama gave to a Chinese newspaper and forbade the Americans to use their own helicopters to fly him to the Great Wall.

President Hu Jintao refused to give an inch on Obama’s plea to raise the value of the Chinese currency, while his vague promises of co-operation on climate change led the Americans to blunder into a fiasco at the Copenhagen summit three weeks later.

Diplomats say they have been told that there was “frigid” personal chemistry between Obama and the Chinese president, with none of the superficial friendship struck up by previous leaders of the two nations.

Yet after their meeting Obama’s China adviser, Jeff Bader, said: “It’s been highly successful in setting out and accomplishing the objectives we set ourselves.”

Then came Copenhagen, where Obama virtually had to force his way with his bodyguards into a conference room where the urbane Chinese premier, Wen Jiabao, was trying to strike a deal behind his back.

The Americans were also livid at what they saw as deliberate Chinese attempts to humiliate the president by sending lower-level officials to deal with him.

“They thought Obama was weak and they were testing him,” said a European diplomat based in China.

In Beijing, some diplomats even claim to detect a condescending attitude towards Obama, noting that Yang Jiechi, the foreign minister, prides himself on knowing the Bush dynasty and others among America’s traditional white, Anglo-Saxon, Protestant elite.

But there are a few voices urging caution on Chinese public opinion. “China will look unreal if it behaves aggressively and competes for global leadership,” wrote Wang Yusheng, a retired diplomat, in the China Daily.

He warned that China was not as rich or as powerful as America or Japan and therefore such a move could be “hazardous”.

It is not clear whether anyone in Beijing is listening.
 

ajtr

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Let the fight begin

During last year’s G-20 summit in Pittsburgh, US President Barack Obama said that “global fiscal imbalances” had to be addressed for the world to get over its economic hangover. This wasn’t a Madison Avenue turn of phrase. But in its nerdiness was embedded a big geopolitical subtext. This manifest itself in the next few months as the US and China go for each other’s jugular. Godzilla versus Destoroyah. It doesn’t get bigger than this.
The origin of what one Washington lobbyist called “a tectonic shift regarding China in the US” is a consensus within the Obama administration that the source of the financial crisis, the reason the recovery has been jobless, and the primary reason why the crisis may happen again, is “fiscal imbalance”.
This school of thinking argues that during the Lehman Brothers Era the world was economically divided between those with China-like qualities and those with US-like ways and means. The China camp exported like crazy and used the resulting currency reserves to subsidise consumption in the American-style countries. The Americans lived off the cheap credit, imported like crazy but also used the money to blow up asset bubbles. Such imbalances are not unknown. In a market environment, however, the resulting imbalance corrects itself through exchange rates. But in one where the Chinese government pre-empts the market and deliberately keeps the yuan low, the result is crisis.
Washington pundits say the US has concluded that putting the Great Recession out of the way, once and for all, means putting the Great Currency Fix out of the way as well. The Democrats’ favourite Nobel economist Paul Krugman has calculated that Chinese ‘mercantilism’ will cost America 1.4 million jobs over the next few years.
China must export less if the US is to save more. That means the yuan must rise. This, not love, will make the world spin this year.
Obama held his fire earlier because he needed Chinese assistance on a host of other international issues. Beijing was less than helpful on Iran and North Korea. It humiliated Obama during his November visit to Beijing, though he angered many in the US by refusing to meet the Dalai Lama beforehand. Insiders say Obama described the atmosphere of his meeting with Hu Jintao as “frigid”.
The straw that broke Obama’s patience was Copenhagen. The US believes it had a pre-summit deal with China on climate change. But Beijing reneged and dumped the US. It then rubbed salt in the backstab. It sent low-level officials to meetings with Obama and prepared the ground for the US president to go back home empty-handed.
The Danish caper proved a step too far. The Democrats, remember, include human rights activists, green types, labour unions, Free Tibet people and a lot of people uncomfortable with the Chinese government. Their congressional supporters have been restrained from taking action against Beijing only because the Obama administration would whisper the words ‘climate change’ and ‘T-bills’ to them.
Copenhagen removed the first inhibition. House Speaker Nancy Pelosi is a known Sinophobe in the US system. But she kept quiet during her visit to China last year. “You know why? Because climate change was more important to her,” said a former member of the US climate change negotiating team. “Now she sees no reason to hold back.”
The second inhibitor, the T-bill issue, refers to the fact that China holds a quarter of the US public debt in the form of some $800 billion worth of US Treasury bills. The standard view is that China is now ‘the US’s banker’ and has the sole superpower by the short and curlies.
This was always exaggerated. The present view in Washington is that it doesn’t matter. If China dumps Treasury bills, it will stab itself because the value of its holdings will fall and US consumers will buy less Chinese stuff. More to the point is that the world is knee-deep in capital right now and there are enough alternative buyers of T-bills. Krugman is one of those who argue the T-bill threat is a bluff. “It would probably weaken the dollar against other currencies — but that would be good, not bad, for US competitiveness and employment. So if the Chinese do dump dollars, we should send them a thank you note.”
The US is preparing to fire broadsides into the Chinese economy. The ebb of any political support to at least keep Beijing cooperative was evident when the US imposed tariffs on imported China tyres and steel. It was overt during the recent contretemps between Google and the Chinese authorities over internet censorship. The White House publicly supported the US search engine company. The lobbyist explained the significance: “Recall that along with labour unions, Hollywood, the Jewish community and trial lawyers, Silicon Valley — and Google specifically — is one of the financial pillars of the Democratic Party.” China is responding in kind. “Note that China is not sending anyone senior to the latest Permanent 5+1 meeting on Iran.”
A senior US multinational executive said that the Obama administration has warned US companies to “button down” their investments in China by April. “That’s when the fur is going to fly.”
When others close to the Obama administration were asked whether the US president would try to restrain the momentum against China. They said, “He believes Beijing has done nothing but kick him in the teeth since he became president.”
 

Armand2REP

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China looks to be seeking a trade war they can't win. If they start taking punative actions against US trade interests it isn't Obama they have to worry about, but US business lobbies. There are more than a few major US industries that would love to see more tariffs placed on Chinese goods. There is also a strong protectionist sentiment that politicians can use for their own advantage. China thinks they have a strong enough economy that they can play a tit for tat but the facts say otherwise. 70% of Chinese real growth is reliant on export surplus since they only have 37% consumer spending, they have already lost a third of that surplus and had to spend $2 trillion last year to meet their target growth. If they screw up what little surplus they have their economic collapse will not be far behind. Don't even mention selling bonds, that would help US exports and destroy China's FOREX value. Look at what happens to countries that play "Cold War" with the West, USSR is gone and North Korea the failed state. Even those that just played it with the US, like Iran, are in a sorry shape.
 

amoy

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70% of Chinese real growth is reliant on export surplus since they only have 37% consumer spending
this is incorrect, roughly one third of GDP counts on export i/o 70%. That's why China turns to spur domestic consumption and fixed asset investment (infrastructure) for growth. Separately posted was the news on 'minimum wage' increase in Jiangsu province recently to
The monthly minimum wage will be increased to 960 yuan ($140) from the current 850 yuan.
as part of 'social security system' improvement to encourage spending.

China sees initial results in boosting domestic consumption



BEIJING, May 21 (Xinhua) -- China's domestic demand, as the government had long wished, has started to become more of a driving force for the country's economic growth than in the past.

Signs of a domestic consumption boost are apparent as people are spending more on domestic commodities, export falls, and the government plans for more consumption stimulus.

Data from the National Bureau of Statistics (NBS) last Wednesday showed that China's domestic consumption had maintained an upward trend since the beginning of the year. For example, China's retail sales rose 14.8 percent in April year on year. It was 0.1 percentage points higher than in March.

Rural spending, driven by a government rebate policy on home-appliance purchases and other commodities, grew by 16.7 percent in April, which was 2.8 percentage points higher than urban growth, according to NBS.

The booming property and auto market also showed the same trend as China became the world's largest vehicle market again with more than 1.15 million cars sold in April, up 25 percent from a year earlier.

In the housing sector, China's real-estate climate index was finally back to growth after ten months of decline. Property sales rose by 17.5 percent in acreage from a year earlier in the first four months of 2009.

The growth was 9.3 percentage points faster than the first quarter level.

"China's economic structure has started to enter a transforming period to a consumption-driven growth model," said Li Daokui, director of the Department of Finance at Tsinghua University.

SUSTAINED DOMESTIC DEMAND GROWTH

According to Li, economic growth of China's inland western and central regions, which relied less on export, had exceeded that of the coastal areas in the first quarter, reflecting a strong pull from domestic consumption and investment.

Data from regional statistics bureaus had shown that western and central China accounted for nine of the 11 provincial areas that had seen double-digit economic growth year on year in the first quarter.

Such growth was contrasted by coastal regions whose economy has been mainly driven by export, such as Shanghai, Zhejiang and Guangdong, gross domestic production (GDP) growth dropped to three- to- six percent.

"Domestic consumption, together with fixed assets investment, had become the main forces of China's economic recovery as export continues to weaken," Li told Xinhua.

His view was echoed by Zhang Liqun, a researcher with the Development Research Center of the State Council, a government think-tank, who said the continual growth in domestic consumption had provided "very strong" power for China's economy to move on.

China's surging loans also implied booming domestic consumption, as personal loans saw accelerating growth from 7.5 percent in January to 24.9 percent in April year on year, according to the central bank.

Lian Ping, chief economist with the Bank of Communications, said a personal loans surge showed that banks had begun to pay attention to consumer loans in a move to boost domestic demand.

With the same intention, China Securities Regulatory Commission (CSRC) announced this week that it plans to let non-deposit-taking institutions both home and overseas to offer consumer loans to Chinese citizens in pilot cities like Beijing, Shanghai and Tianjin.

According to CSRC's plan, debtors will be able to borrow loans so long as they are less than five times of their monthly income.

Government stimulus policies have been playing a big part in consumption growth, such as reducing purchase taxes for small cars and subsidies for farmers to buy agricultural equipment, said Yuan Gangming, an economic researcher at Tsinghua University.

EXPORT: WEAKENING, BUT SIGNIFICANT


In sharp contrast with the booming domestic market, China's export is facing continuous slump from the fourth quarter last year.

Exports fell 22.6 percent in April from a year earlier to 91.94billion U.S. dollars, steeper than the 17.1-percent decline in March, according to the General Administration of Customs.

Long-term orders had been continuously cut into smaller and shorter ones by foreign buyers, which would make exporters' benefits unstable and unsustained, according to a report on the Web site of the Ministry of Commerce (MOC).

Canton Fair, China's leading trade fair that ended early this month, saw export orders fall by 16.9 percent from last year.

However, the MOC report had stressed that stabilizing external demand was key to maintaining growth, as the "grim" impact could affect "all sectors" of the economy.

Sluggish external demand, which had a significant bearing on stabilizing exports and employment, could deter domestic investment and consumption for a long period, it said.

RESTRUCTURING: A LONG-TERM BATTLE

Despite favorable economic data on domestic demand, economists had warned that time for China to retool its economy for domestic consumption might be longer than expected.

"There is still a long way to go," said Li Daokui, pointing out that the infrastructure-focused government spending and rising domestic consumption could provide stable and continual energy to economic recovery, but it might not be the solution in the long run.

Consumption had been rising, but far from enough, as it had so far accounted for only 38 percent of China's GDP, which was not adequate to become a pillar for long-term growth, he said.

Xie Guozhong, economist and board member of Rosetta Stone Advisors, said during the second Lujiazui Forum over the weekend that consumption boosted mainly by government stimulus could only temporarily keep the economy from going down.

Economic restructuring would only be completed when consumers are provided with abundant fortune, which means the government needs to do more to increase family incomes, he said.

Coinciding with economists' opinions, the government is planning to move further on its way to a consumption-heavy growth model.

Wang Yiming, vice president of Academy of Macroeconomic Research under NDRC, pointed out that China's next step would be further consumption expansion through either offering direct purchase subsidies or perfecting social security system.

The government's affordable housing projects and further implementation of health care reform are included in building a perfect social security system, said Xu Lin, head of the Department of Fiscal and Financial Affairs, NDRC.
 

nitesh

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lately I feel Chinese have auqried one ability from there deeper then mountain and taller then ocean friends ................................. wet dreams
 

ajtr

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China Dumps US Asset Backeds and Corporates '

Dollar-denominated risk assets, including asset-backed securities and corporates, are no longer wanted at the State Administration of Foreign Exchange (SAFE), nor at China’s large commercial banks. The Chinese government has ordered its reserve managers to divest itself of riskier securities and hold only Treasuries and US agency debt with an implicit or explicit government guarantee. This already has been communicated to American securities dealers, according to market participants with direct knowledge of the events.

It is not clear whether China’s motive is simple risk aversion in the wake of a sharp widening of corporate and mortgage spreads during the past two weeks, or whether there also is a political dimension. With the expected termination of the Federal Reserve’s special facility to purchase mortgage-backed securities next month, some asset-backed spreads already have blown out, and the Chinese institutions may simply be trying to get out of the way of a widening. There is some speculation that China’s action has to do with the recent deterioration of US-Chinese relations over arm sales to Taiwan and other issues. That would be an unusual action for the Chinese to take–Beijing does not mix investment and strategic policy–and would be hard to substantiate in any event.
 

ajtr

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lately I feel Chinese have auqried one ability from there deeper then mountain and taller then ocean friends ................................. wet dreams
Even wet dreams can be realized into reality if pursued with single mindedness.....right?
 

Armand2REP

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this is incorrect, roughly one third of GDP counts on export i/o 70%. That's why China turns to spur domestic consumption and fixed asset investment (infrastructure) for growth. Separately posted was the news on 'minimum wage' increase in Jiangsu province recently to
as part of 'social security system' improvement to encourage spending.

China sees initial results in boosting domestic consumption
But you didn't listen to what I said. I said 70% of real GROWTH counts on exports. The Chinese consumption has decreased every year for the last decade where China has become exceedingly reliant on exports for growth. The financial crises saw a 1/3rd drop in export surplus so Chinese Banques had to lend out $1.4 trillion in bad loans to boost the economy along with $550 billion in stimulus spending. Increasing the minimum wage only increases inflation. To fight this the Cenral Banque had to buy up more FOREX, mostly US dollars which is decreasing the profitability of the Central Banque. The social security improvements the CCP plans aren't even a drop in the bucket to make Chinese consumers feel safe enough to spend more and save less. Spending $126 billion over 10 years on universal healthcare for a population of 1.4 billion is a joke.
 

nitesh

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Even wet dreams can be realized into reality if pursued with single mindedness.....right?
Well there is a logic behind using the word wet right?
 

amoy

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I said 70% of real GROWTH counts on exports. The Chinese consumption has decreased every year for the last decade where China has become exceedingly reliant on exports for growth.
Don't see where u derive 'decreased consumption' from - at least not for people around me! China auto sales up 17% in first half year_reliance on export is decreasing in fact. the peak is long gone.

The financial crises saw a 1/3rd drop in export surplus so Chinese Banques had to lend out $1.4 trillion in bad loans to boost the economy along with $550 billion in stimulus spending. Increasing the minimum wage only increases inflation.
your economic knowledge amazed me! Bad loans ? how can u conclude they're bad at the very beginning of lending out? any supporting data? increasing the minimum wage is a token not to allow underpaying workers who're relative disadvantaged. and in reality most wages are to be far higher than MININUM. again how does it lead to 'inflation' assumption?


To fight this the Cenral Banque had to buy up more FOREX, mostly US dollars which is decreasing the profitability of the Central Banque. The social security improvements the CCP plans aren't even a drop in the bucket to make Chinese consumers feel safe enough to spend more and save less. Spending $126 billion over 10 years on universal healthcare for a population of 1.4 billion is a joke.
Buy more FOREX? I'm confused. Explain pls when China already has the largest foreign reserve mostly USD in the world.

anyway wish u a happy Tiger year!
 

haike

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It can't be serious until China's indigenous commercial jet roll out in maybe 5~10 years. Some symbolic sanction is possible. And it's not meaningless to do so.
 

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Don't see where u derive 'decreased consumption' from - at least not for people around me! China auto sales up 17% in first half year_reliance on export is decreasing in fact. the peak is long gone.
Where have you been? We have talked up and down about how subsidised Chinese auto sales are. With a $4000 rebate and 50% tax incentive the cars are practically free. That is no indication of Chinese consumer spending when they spend less on a car than I do for a cheesburger. Most people buying these cars are hardly driving them based on petrol consumption. The loss of trade surplus in China is made up with nearly $2 trillion in stimulus and banque lending.

your economic knowledge amazed me! Bad loans ? how can u conclude they're bad at the very beginning of lending out? any supporting data? increasing the minimum wage is a token not to allow underpaying workers who're relative disadvantaged. and in reality most wages are to be far higher than MININUM. again how does it lead to 'inflation' assumption?
10 trillion RMB lent out in 12 months, half going to the asset market. The effects of half the bad loans are in all the empty residential and commercial space in China that lies empty because no one can afford the rents. The other half went to state owned business to increase production and provincial governments to stimulate short-term jobs. This has lead to excess capacity in all sectors of the Chinese economy. When China reigns in the stimulus and wreckless lending, it will fall like a house of cards. Asset bubbles will burst, industrial output will plummet. Trillions of dollars in non-performing loans will be on the books.

2010 is expected to break 2009's record lending. The more money you lend the more money supply there is. This increases inflation.

http://www.marketwatch.com/story/chinese-bank-lending-inflation-grow-in-january-2010-02-10

Your housing prices are out of control.

Buy more FOREX? I'm confused. Explain pls when China already has the largest foreign reserve mostly USD in the world.
China controls inflation with her FOREX since she doesn't have a free-floating currency. It is pegged to the USD so China must buy more FOREX to back the value of the RMB. If she tries dumping her FOREX, the value of the yuan will collapse and inflation will skyrocket.

anyway wish u a happy Tiger year!
Good luck, you and all of China will need it.
 

nimo_cn

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Hmm, good to come back! Since i was away for Chinese New Year holiday, DFI has changed a lot. Great to see these changes. The only problem they cause is that i have to reset my profile, not easy to find the picture i used as my avatar!

One thing haven't changed is that China is still a hot topic here. It seems that China still needs to do a better job to stay low.
 

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