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China is really moving up; Wow
Topic Started: Jun 23 2005, 08:09 AM (748 Views)
Rick Zimmer
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Fulla-Carp
This thread reminded me of the episode of the Simpsons when Selma was trying to adopt a Chinese Baby. The entire family had to go to China because she needed to have a husband and Homer was acting as her husband.

In one scene they are touring Beijing and get to Tienamin Sqaure. There was a plaque as they entered that said:

Tienamin Square.
Nothing Happened Here In 1989


:lol:
[size=4]Violence is incompatible with the nature of God and the nature of the soul -- Benedict XVI[/size]
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JBryan
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I am the grey one
Rick Zimmer
Jun 23 2005, 01:07 PM
JBryan
Jun 23 2005, 10:53 AM
We are open to them as long as they are unable to challenge us economically. Fair is fair.

A question for you, jbryan, since you are our resident expert on China.

In the late 80's/early 90's, the fear was that Japan would overpower the US in economic terms. Their economy was growing gangbusters like China's is now. They were buying American assets, etc. and the same things now being said about China wer ebeing said about Japan.

Then, a recession hit Japan because of the way they had financed their growth and they have never quite recovered; but the recovery has really slowed because of ingrained cultural values and mores.

As I understand it, one of the major problems in Japan's economic growth is the way the society is structured dealing with respect for and reverence of the elders. For an economy to grow and be vibrant, new ideas and new theories must come into play; which are usually brought in by the younger generation. But in Japan, authority is not given to the up and coming generation. Rather the older generation, with its more conservative world view and traditional sense of how business should function, maintains control quite simply because they are older. This, then, has been a major part of what has stymied Japan's economic growth.

So, my question to you is whether this may also occur in China, where reverence for age is also a major cultural value. Also, do you see other cultural aspects of China which will in essense become roadblocks for China's continued expansion as the economic forces begin to effect more and more of China's population.

Rick,

The Chinese have a reverence for their elders greater than us (this is changing) but I don't think it is like the japanese. I see little or no restraint on the younger generation imposed by their elders and they are adopting and adapting western ways of enterprise and doing business while adding their peculiar brand of ingenuity.

The problems I see ahead for China have to do with the widening gap between the increasingly wealthy city dwellers and the rural poulation which is stagnating economically. Many come to the cities to find fortune but most end up in menial work or begging on the streets.

There is also an influx into the ranks of poverty from the efforts by the central government to break the "iron rice bowl". They have closed down many state run operations that were unprofitable and draining resources only to keep people in jobs that added little to the economy. At some point this situation is going to manifest itself in a very likely ugly way.

Another thing we have to remeber about China is that its currency is not convertible and its value is pegged to the US dollar. This has had the effect of insulating them from the economic hardships that occured inthe Pacific rim during the late '90s when the currencies of many countries collapsed virtually overnight. Next year the Chinese plan to move their currency on to the world market and it will be interesting to see what results.

China is now experiencing rates of growth in th 8 to 9% range and they are plowing much of the wealth being generated into their military. This cannot be sustained for long but could also simply level off to a more sustainable rate. All of the things I have mentioned (in a somewhat rambling fashion) will conspire to bring about a collapse sometime in the next ten or twenty years if they do not address some of these problems.
"Any man who would make an X rated movie should be forced to take his daughter to see it". - John Wayne


There is a line we cross when we go from "I will believe it when I see it" to "I will see it when I believe it".


Henry II: I marvel at you after all these years. Still like a democratic drawbridge: going down for everybody.

Eleanor: At my age there's not much traffic anymore.

From The Lion in Winter.
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ivorythumper
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I am so adjective that I verb nouns!
I am curious as to where the Chinese get the hard currency to purchase US building supplies -- they've been buying up and driving up steel prices for the past 16 months. Are western companies extending credit based on the Chinese currency or are they only taking hard dollars?
The dogma lives loudly within me.
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Jeffrey
Senior Carp
JB: Next year the Chinese plan to move their currency on to the world market and it will be interesting to see what results. "

Source? I am not saying this is incorrect, or implausible, but I didn't know this was a known fact.
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JBryan
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I am the grey one
Part of gaining WTO status. Call me a liar, oh, that's right, you already have.
"Any man who would make an X rated movie should be forced to take his daughter to see it". - John Wayne


There is a line we cross when we go from "I will believe it when I see it" to "I will see it when I believe it".


Henry II: I marvel at you after all these years. Still like a democratic drawbridge: going down for everybody.

Eleanor: At my age there's not much traffic anymore.

From The Lion in Winter.
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Jeffrey
Senior Carp
JB: There was no reason for you to defend Larry on a point of proven fact after it had been quoted. There was also no reason for you to say that those who argued my side of the Schaivo case were like the perpetrators of the holocaust.

I take it then that your claim that China will let its currency float is based on your judgement that this is what is needed for it to gain WTO entry, not on some other source of information. Is that correct?
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JBryan
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I am the grey one
I just "make up stuff" so why would you even ask me such a question.
"Any man who would make an X rated movie should be forced to take his daughter to see it". - John Wayne


There is a line we cross when we go from "I will believe it when I see it" to "I will see it when I believe it".


Henry II: I marvel at you after all these years. Still like a democratic drawbridge: going down for everybody.

Eleanor: At my age there's not much traffic anymore.

From The Lion in Winter.
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AlbertaCrude
Bull-Carp
It's my understanding too that China will float its currency. It has been under considerable pressure by the White House also (http://www.washingtonpost.com/wp-dyn/artic...-2005Apr14.html) Not sure about the WTO requirement as Russia gained membership without floating the Ruble- but then the Russian economy is a net importer of value added goods and services and is dependent upon its own trade in raw materials and resources.

There is an article about when China will float the yuan in today's Hearld Tribune: http://www.iht.com/articles/2005/06/24/business/revalue.php
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kentcouncil
Fulla-Carp
Rick Zimmer
Jun 23 2005, 09:04 PM
This thread reminded me of the episode of the Simpsons when Selma was trying to adopt a Chinese Baby. The entire family had to go to China because she needed to have a husband and Homer was acting as her husband.

In one scene they are touring Beijing and get to Tienamin Sqaure. There was a plaque as they entered that said:

Tienamin Square.
Nothing Happened Here In 1989


:lol:

I LOVED that show! I almost bust a gut when that Chinese functionary dismissed Marge as a "childless servant". :lol:
It was a confusion of ideas between him and one of the lions he was hunting in Kenya that had caused A. B. Spottsworth to make the obituary column. He thought the lion was dead, and the lion thought it wasn't.

- P.G. Wodehouse
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Jolly
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Geaux Tigers!
JBryan
Jun 23 2005, 06:26 PM
China is now experiencing rates of growth in th 8 to 9% range and they are plowing much of the wealth being generated into their military. This cannot be sustained for long but could also simply level off to a more sustainable rate. All of the things I have mentioned (in a somewhat rambling fashion) will conspire to bring about a collapse sometime in the next ten or twenty years if they do not address some of these problems.

Since Chinese military expenditures are not known, there is tremendous speculation on where they are headed militarily, and at what technical level. They have imported a ton of Russian technology, particularly in their aerospace sector.

Are they the next military superpower?
The main obstacle to a stable and just world order is the United States.- George Soros
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AlbertaCrude
Bull-Carp
On a global scale I would say not, although they would be one regionally and in comparison to their neighbours . China lacks sea & long range air power projection capability.
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kluurs
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Fulla-Carp
One of the great ironies to me was that AFTER Zenith moved all of its television production out of the US (because they couldn't afford to be here), European and Japanese companies established production facilities to manufacture televisions in US plants.

Currently, the largest television manufacturing plant in the world is in the US. For a time, the lowest cost producer of televisions was in the US - again AFTER Zenith's management felt it wasn't cost-effective to manufacture in the US.

It will be interesting to see what happens over the next few years - how much of a player China becomes on US soil.

Ken
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Jeffrey
Senior Carp
AC - Thanks for the links. I personally don't have an opinion as to whether China will revalue or not, or what political event (WTO entry, for example) might trigger it. The currency futures markets suggest that the likelihood of this happening soon is low. But I'd be a fool to predict anything about currency futures. I was wondering if JB had some particular, creditable source of information for his judgement, given his connection to China. He might be right, he might be wrong. The currency futures suggest otherwise. But they can be wrong too.

I do see the Washington-based demands that China revalue its currency as another form of China-bashing. This "blame-others" attitude will be bad for us. I am not arguing that China's currency, if allowed to float, would not be higher, or that it is not, in principle, better for currencies to be set by a free market, rather than a government-determined peg. But for Washington to focus on this issue shows a lack of long-term strategic thinking. It wins votes to blame China's currency for the US losing jobs and control of assets. The real problem is that many of our products are uncompetative (see cars and GM), and science in our universities is starting to slip, and we think we are morally entitled to a certain standard of living and borrow rather than work to support it. Those are the real issues. We either start taking responsibility for our economy and actions, or rightly and justly will lose our standard of living and place in the world. As apple said, "Better late than never."
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AlbertaCrude
Bull-Carp
A good start would be for certain individuals in Congress to accept and respect the terms of NAFTA and get their *assinine* heads out of protectionism.
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Jeffrey
Senior Carp
AC - Another good point. China is not the only example.
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AlbertaCrude
Bull-Carp
We seem to find common ground on a few more points than just reruns of Dr. Who featuring Tom Baker .
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Jeffrey
Senior Carp


Anger over China's trade policies nears a boil. Greenspan warns against protectionist backlash.


June 24, 2005: 5:53 AM EDT
By Krysten Crawford, CNN/Money staff writer



NEW YORK (CNN/Money) - The mood on Capitol Hill was angry Thursday as Fed Chairman Alan Greenspan and Treasury Secretary John Snow arrived to defend the Bush administration's policy toward China.

Greenspan and Snow, testifying before the Senate Finance Committee, came under fire from some legislators impatient over the administration's handling of U.S.-China trade relations, which the lawmakers consider too accommodating.

The complaints about China's trade policies are well-known: At a record $162 billion in 2004, the U.S. trade deficit with China is the country's biggest by far. The main culprit: cheaper Chinese goods -- the result, critics say, of China pegging its currency, the yuan, to the dollar at an artificially low rate.

Meanwhile, rampant counterfeiting in China of American goods costs U.S. industry billions of dollars in lost sales every year.

But fears over China's growing economic muscle boiled over Thursday.

On Wednesday, one of China's largest oil producers, state-owned CNOOC Ltd., made an $18.5 billion unsolicited offer to buy Unocal, the nation's ninth largest oil and gas company. The overture renewed concerns about foreign ownership of critical U.S. resources -- especially by China.

"The problem once again is fairness and reciprocity," said Charles Schumer, the Democrat senator from New York who has co-sponsored a bill with South Carolina Republican Lindsey Graham to impose stiff tariffs on China over its trade policies.

China, continued Schumer, would not allow a U.S. company to take over a major Chinese operation. "We know countless instances where that hasn't been allowed," he said, pointing to the many hoops that U.S. companies often have to jump through to invest in China, including partnering with local companies or getting permission from China's military brass.

The hearing comes as Chinese interest in buying American companies appears to be growing. Earlier this week, a top Chinese appliance maker joined in a $1.3 billion bid for Maytag Corp. And in April IBM completed the sale of its personal computer business to China's Lenovo Group.

No obvious solutions
Schumer wasn't the only senator to express outrage at Thursday's hearing over the state of U.S.-China economic relations. And while everyone agreed that the trade imbalance, intellectual property rights and China's currency continue to be serious problems, there was considerable disagreement -- mostly along party lines -- about the best solution.

A series of pending legislative proposals, including the Schumer-Graham bill, call for across-the-board tariffs against Chinese imports, spurred by U.S. manufacturers who say China's imports are undervalued by as much as 40 percent -- and that tens of thousands of U.S. jobs have been lost as a result.

Several Democratic senators said it's time to force China, which joined the World Trade Organization (WTO) in 2001, to play by international rules.

Greenspan and Snow, clearly worried that spiraling U.S. deficits are driving Congress toward trade action against China, sought to soften the angry mood by pointing out the possible consequences should the U.S. retaliate.

Greenspan warned lawmakers that moves to limit China's involvement in the U.S. economy with tariffs could end up backfiring.

A U.S. policy of protectionism, he said, would threaten the growth in worldwide living standards since the end of World War II. He noted too that moves by China toward a more market-driven economy have benefited the world, and the United States in particular.

"My basic concern," said Greenspan, "is that, if we are forced to implement a very significant unilateral tariff, the dangers to the overall international financial system, in my judgment, are very large."

As for China's monetary policy, Greenspan said a more flexible currency "would be helpful to China's economic stability" and hence to that of the global economy, given its rising importance as a world trading power.

But he also questioned the idea that a higher-valued yuan would give the U.S. economy the boost that proponents expect.

"Some observers mistakenly believe that a marked increase in the (yuan's) value relative to the U.S. dollar would significantly increase manufacturing activity and jobs in the United States," said Greenspan. "I'm aware of no credible evidence that supports such a conclusion."

Moving toward a float?
Snow has led the Bush administration's push to get China to ease the yuan's peg at about 8.28 to the dollar -- in place for nearly a decade. He said financial diplomacy was working and that China could and should adopt a more flexible currency, which, if it made Chinese goods more expensive in the United States, could help U.S. manufacturers compete.

Snow said Thursday that he believes China is prepared to introduce some flexibility to its currency now, paving the way to an eventual shift to a full float system.

Tariffs are not the way to go, he said.

"Action on any of the punitive legislative proposals before Congress now would be counterproductive to our efforts at this time," Snow said.

Several legislators scoffed at the pleas by Greenspan and Snow to let the WTO and other existing venues for trade disputes handle the battle over China's economic policies.

"(T)his problem (is) getting worse and worse and worse," complained Sen. John Kerry, the Massachusetts Democrat. He said the discussion about China's currency policy has gone on for too long. He called the easy availability of counterfeit Hollywood movies on China's streets a "joke," but one that has "serious consequences" for U.S. companies.

"Are you powerless (to do anything about these issues) or are you oblivious or is it a combination of the two?" Kerry demanded of Snow.

The Treasury secretary responded: "We're not satisfied with this situation at all."

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