I made a post about this well funded plan (but I have lost the reference). It named three world class scholar/professors, (from Princeton, Yale and MIT, as I recall) that had essentially been “bought away,” but two did have Chinese sounding names, so perhaps "help the motherland develop" was also a factor. The article I read stated that the cost of construction, including the most modern research equipment for the labs, etc. was less than half what it would have been in US. That all 50 would be equal to, or excel, Harvard in a few years. As I think student attitudes (willingness to work / study hard late into the night, instead of "bar hop" etc.) are a very important, at least as important a factor in making a good university, especially in the "internet era," as being staffed by good professors (and China is now actively "buying" the world's best.) I fully believe that China will have 50, or more, Harvard-level universities in 5 years. In my recent post, I mentioned that China had already recognizes the very high cost of building reserves still higher, or even just holding most in dollar denominated bonds when dollar is falling, and may collapse. I.e. that China was very smart to spend dollars buying oil in the ground, a 20-year supply of iron ore from Brazil, etc. but I failed to list the most important non-financial long-term asset that China is now acquiring with their growing purchasing power: Excellent, foreign-educated, and experienced university professor brains. It really is scary how well China is implementing their 50-year growth plan.
I think this roughly true, but irrelevant. Imagine that my father had a canon aimed at me and the robber who just broke into my house had only a small pistol. Who do you think I should fear? It is the potential intent, not the size of their Dollar reserves that is important. So long as the Japanese Islands remain where they are, and Japan can project no significant military power, but must rely on the US to contain China and N. Korea, I do not worry about their large reserves. I worry a lot that China can, and will, collapse the dollar, not by simply dumping dollars on the world's financial markets one day, but by continuing what they are already doing, buying up commodities, doubling the price of most in past two year (oil included). In about three more years, commodity prices should double again ($120/barrel oil, etc.), especially if it is true that world oil production will never be higher. (Now at "peak oil.") China is increasing turning to places like Brazil for food stocks, raw materials etc. and must lessen* exports to US to trade for these goods. In 2005, Brazil's shipments to China were rapidly growing, but were 86% agricultural despite increases of low tech and semi finished good (concentrated iron ore is here considered "semi-finished" I think) Brazil had historically large trade surpluss (45 Billion dollars) in 2005 and is benefiting as US goes down by transforming into a "Chinese economic colony." Brazilian car makers are very scared that China's "Cherry Motors", "Great Wall" and other car makers will take their market soon. (I posted article giving more details) _____________________________________________ * Another reason why China may NOT need or want to export less to US: China does not have an economy significantly dependant upon customers driving to Wal-Mart, etc. as the US does. The rapidly growing wealth of their upper middle class will soon require almost everything now that Wal-Mart now sells etc. Termination of cheap exports to US, combined with gas at several time current prices will hardly hurt China, but destroy US. (Unlike Japan, I think destroying the US may be a secret intent of China's leaders. - Hence the "want" just below line above. ) Also the US with a collapsed dollar and collapsed economy can not afford the current level of oil importation, that too helps China. (The SUVs will be up on blocks to save their tires.) The average US wage has declined for the last 4 years. The average wage in China has been rising, but more important is fact that, like Brazil, wealth is being concentrated in China. Did you see my post where I mathematically prove that when only 2.5% of the Chinese population has ten times the average American's purchasing power, then that 2 1/2 percent's buying power is equal to the purchasing power of ALL Americans? This seems hard to believe, but possible soon true, if US wage keeps going down and China's keeps going up, ever more concentrated. Also, just to illustrate the effect, not a prediction, if the MBR were adjusted so that 4 RMB buys what 8 does now, the purchasing power of the financially sophisticated (top 2 1/2% surely is) would double by that fact alone. China is a society, like the old USSR, where "some are more equal than others." I believe that more Million dollar (or greater) houses are now being built in China than in any other country, even though these same houses would cost several million if built in US because construction is so cheap in China.
"foreign ownership of domestic assets." That sounds more like it. Japanese purchases of American skyscrapers and business headquarter buildings made massive headlines in the 90's and China just recently tried to purchase an oil company. The failure of them to be able to do this in the U.S. is probably one of the reasons why they want to shift their currencies elsewhere - so they can buy foreign refineries. You wouldn't expect any university in the Western world to be nicknamed afer one that is just becoming a rising star in a developing country: you'd expect the reverse. I'll have to look over that list as I'm interested to see which ones in Taiwan and maybe Hong Kong are on it. Probably Taiwan National University: it's considered the best in Taiwan. As I said, the Chinese will still come her to study, but as you even say, the numbers are now down. Lot of Chinese still want to come here for other reasons too: cultural difference, to learn English, enjoy our freedom, less crowded. Likewise, Vancouver is a popular destination for Chinese to go to in Canada, but Vancouver already has a large percentage population of Chinese there to make them feel more at home. Actually, I wasn't going to post it like that as the amount of Chinese coming her may remain the same as China's population rises, but the percentage of Chinese from theirising r population will most likely decrease as the quality of their education rises, and there is no doubt to that it is. I also do see a decrease in Chinese here at major universities already. MIT, CalTech, and other highly reputable engineering schools will still probably remain as hot choices, if Chinese can get here.
I just looked over the list and I was right: National Taiwan University is ranked 20. Also, Tsing Hua University is the same as Qinghua University: just a difference in the phonetic way of spelling the name. It's rated 21. As I stated above, Tsinghua is dubbed the MIT of China: it puts out a lot of scientists and engineers. Chinese University Hong Kong, Hong Kong University Science & Tech and the University of Hong Kong are ones that I would've expected to be near the top: they've been around for a long time dating way back when Britain controlled the colony. Beijing (Peking) University is rated 32 and Fudan University 41, with 11 others in Mainland China and Taiwan. That's: China 13% Taiwan 5% Japan 34% (no surprise there) Australia/New Zealand 18% South Korea 8% Israel 7% Singapore 2% India 2% Turkey 2% The surprise to me is to see only 2 in India within the top 100 Asia-Pacific Universities. There would obviously be a lot more Indian students studying in the states if they could get in, but I'm sure the limitation is due to immigration restrictions on studying here.
When you owe the bank 3,000 dollars, you are in trouble. When you owe the bank 3,000,000,000,000 dollars, the bank is in trouble.
It's really kind've funny and odd. You can go into some peasant rural areas, at least that I've seen on the outskirts of major towns, and see these multimilion dollar houses going up surrounded by shanty shacks and peasant huts with chicken roaming down the streets next smelly pig pens. If 4 RMB buys what 8 does now, that would be an increase in domestic purchasing power parity, but the Fed wants China to decrease the value of the yuan: increase the exchange rate from US $1= RMB $8. (I think I've got that right). This is what I don't understand. Why would they want it to go up? Not only would Chinese products be so much more cheaper for us to buy - fueling their economy to the extremes, but then look how much more Chinese would be able to invest in America - not just being able to buy more sophisticated technology, gadgets, and hightech devices: they have that now. Everybody in the major cities has a cell phone and digital camera, and probably when I go back again this year I'll be seeing tons of ipods. But then they'd be able to start buying out our corporations. As of December 2005 the United States Federal debt is $8.1 trillion. Of this, $6.5 trillion has built up during the past three decades, the last $2 trillion in the past eight years and the last $1 trillion in the past two years. "Our foreign creditors - major trading partners like Japan, China, and Europe - are believed willing to sustain the status quo [with the United States] because their own industrial output and employment levels are worth more than risking the implosion of their most important consumer market, but that, of course, assumes levels of rationality not necessarily found in a moment of crisis. All you have to do is imagine the first hints of things economic spinning out of control and it's easy enough to see that that China or Japan, facing their own internal economic challenges, might give them primacy over sustaining the American consumer. If, for example, a banking crisis developed in China, Beijing might feel it had no choice but to begin selling off parts of its U.S. bond holdings and use the capital at home to stabilize its financial system or assuage political unrest among its unemployed masses. Even if foreign capital just moves increasingly elsewhere and easy credit disappears for American consumers, U.S. interest rates could rise sharply. As a result, many Americans could experience a major decline in their living standards -- a gradual grinding-down process that could continue for years, as occurred in Japan after the collapse of its credit bubble in the early 1990s. Even if China, Japan and other eastern Asian nations continue to accommodate American financial profligacy, a major economic adjustment in the United States could still be triggered simply by the sheer financial exhaustion of its overextended consumers. The United States can ill afford even lagging economic growth, given the magnitude of its burgeoning and expensive overseas military commitments, especially in Iraq." Source: "Debt-financed growth could be our undoing at feet of rivals," by Marshall Auerback, San Francisco Chronicle, Feb. 20, 2005 http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/02/20/INGG9BBCVK1.DT United States National Debt is expected to be $10 trillion by 2008. See historic chart: http://www.cedarcomm.com/~stevelm1/usdebt.htm Scroll halfway down to chart: "U.S. Debt vs. GDP" "Debt is divided into two main categories: debt held by the public and intragovernmental holdings. Intragovernmental debt includes money for government trust funds, such as pension plans and the debt for social security, which is about $1.7 trillion as of May 2005. Overall, intragovernmental holdings account for over $3.1 trillion of the total debt at this time. The remaining $4.6 trillion or so has been purchased by the public, including foreign entities. This largely comes from the issuance of US Treasury securities. Nearly half ($2.2 trillion) is composed of Treasury notes (aka T-notes), while T-bills and T-bonds (including savings bonds) cover most of the remaining public portion of the debt. Bonds sold for infrastructure projects are also part of the national debt. It is common for individual Americans and businesses to buy bonds and other securities, though much of the debt is now held overseas. At the end of 2004, foreign holdings of Treasury debt were $1,886 billion, which was 44 percent of the total debt held by the public. Foreign central banks owned 64 percent of the Federal debt held by foreign residents; private investors owned nearly all the rest. The country holding by far the most debt is Japan which held $1.2 trillion at the end of March, 2005. In recent years the People's Republic of China has also become a major holder of Treasury debt, holding $223.5 billion at that time. Paying the debt: The most common method used today to "reduce" the debt is by growing the nation's GDP. The hope is that the deficit spending that increases the debt will increase GDP by a greater amount, and thus—in relative terms, at least—the debt would decrease. This worked to great effect in the U.S. between the end of World War II and 1980, even though the debt showed a net increase in absolute value over the same period. The debt could also be paid down by increasing revenue through increased taxes and other fees, such as import tariffs. Over 47% of the personal income tax (but not of total tax revenue) collected in 2003 was spent on paying interest on the debt. Additionally, if it were possible to avoid incurring new debt, current revenues could be used to pay off the bonds sold and the loans taken. By U.S. law, a budget surplus must be used to pay down what the government owes, though the nation continues to issue securities. It is also possible to repay the debt by simply printing more money. However, this is destructive to an economy, as it results in inflation, reducing the actual worth of the national currency. If the country attempted to repay a huge amount of debt at once with this method, hyper-inflation would result, leading to a drastic reduction in the value of cash. The United States government can't actually use this method as the sole right to print money is given by the law to the Federal Reserve." http://en.wikipedia.org/wiki/U.S._public_debt This explanation is fully supported by the graphs in the links above. This also supports what I said that the international economy today, with the EU, Asia's Rising Tigers, and that massively huge Chinese economic machine, make today's international economy and the logistics used to maintain it - and to maintain our own economy - a lot different today than they were in the 80's and 90's.
I don't understand either if I understand you and you are correct. $1 = 4 RMB helps chinese import california wine. $1 =16 RMB helps China export silk. I think we both agree on that. Every one needs to be careful to speak of the RMB value increasing or the exchange rate increase (the oposite effect for me) but If you are in China the presumption is you are buying dollars so if the rate changes to 1 = 16 then for you the exchange rate went "up," however if you are in USA the exchange rate went "down" - I still get confused when I trade $ for Real in Brazil by this. Fortunate the places where this is done, display two numbers, (they profit from the fact they are not exactly the same) - Rather than try to figure out if I should call the change from an earlier day's numbers, 'up" or "down" I just know that no matter what I am doing , I get the less attractive number. Please Register or Log in to view the hidden image! This built - in confucion is a good example of why numbers and machines are replacing words and people. Please Register or Log in to view the hidden image! Will read rest of your post now and may replay in few days - pas my bed time already.
A. Dollar Value Up = American Purchasing Power Abroad Up. Our American dollar is worth more and will buy more foreign goods and services. [thus a higher exchange rate with the yuan, as the Feds want 1:8 to say 1:10 or so, the dollar is valued upward and the yuan is devalued] B. Dollar Value Down = American Purchasing Power Abroad Down Since the value of the dollar is down it is worth less and will therefore purchase fewer foreign goods and services. C. Dollar Value Up = Foreign Purchasing in the U.S. Down When the dollar is too strong against foreign currencies, foreign businesses and nations will receive fewer dollars when exchanging their currency so they tend to purchase fewer U.S. goods and services. [so why would the Feds want to devalue the yuan? Incrrease the exchange rate. This would make the dollar stronger?] D. Dollar Value Down = Foreign Purchasing in the U.S. Up If the American dollar is weak, foreign businesses and nations will most likely purchase a greater amount of goods and services. Source: "Understanding the Effects of Currency Exchange," UNL Center for Economic Education, 2000. http://64.233.167.104/searchq=cache...on5.pdf taiwan currency value down from&hl=en "Besides tending to push up the dollar, a fall in the value of the [Japanese] yen brought about by increased liquidity in the Japanese economy would have other international consequences, some of them potentially severe. As Ken Courtis, vice-chairman of the investment house Goldman Sachs Asia, noted in an Australian television interview last Thursday, a fall in the value of the yen would be accompanied by a drop in the currencies of Taiwan, Thailand, Singapore and Korea. Faced with such a movement, the Chinese would not be able to maintain the value of the yuan against the dollar and would be forced to devalue." http://www.wsws.org/articles/2001/aug2001/corr-a10.shtml
valich, where are you getting the story that the Fed wants the Yuan to lose value against the dollar? I think you are mistaken. The Fed may disagree with Bush over whether a raised yuan helps the USA but I don't think the fed has ever called for a lowered Yuan. The Bush administration talks about desiring the value of the Yuan to rise against the dollar. Coventional wisdom says the US trade deficit with China would decrease if the Yuan increased in value. Conventional Wisdom is wrong. Moderate increases in the Yuan's value would not cause China to lose enough market share to offset the lowered value of US exports and raised values of Chinese exports. MONEY & MARKETING: Are the Chinese playing fair with currency policy? HEIKO D. WIJNHOLDS TIMES-DISPATCH COLUMNIST Jan 2, 2006 The U.S. has been trying for months to convince China to increase the value of its currency, the yuan, against the U.S. dollar. China now is sending signals that its currency's value will slowly rise. For some time now, imports of Chinese products into our country have grown at a phenomenal rate. In comparison, our exports to China are feeble. This has dismayed the Bush administration and various business and labor groups, including some Virginia exporters. ...................................................................................................................... January 6, 2006 Bush will be accompanied by his top economic adviser, Allan Hubbard Q. Does the White House have any plans to put any pressure on China to lift the peg on the yuan to the dollar? A.(by Hubbard) We have been very clear that we think it is in China's interest and we think it is in the world economy's interest, and we think it is in the American people's interest for the Chinese to move toward a more flexible currency. .............................................................................................................. WASHINGTON, June 23, 2005 Greenspan, in prepared testimony to the Senate Finance Committee, said some "mistakenly believe" that a marked increase in the value of the Chinese currency, the yuan, relative to the U.S. dollar "would significantly increase" manufacturing activity and jobs in the United States. "I am aware of no credible evidence that supports such a conclusion," he said. The United States' trade deficit swelled to a record $617.6 billion last year, including a $161.9 billion deficit just with China, the highest ever with a single country. Manufacturers believe the yuan is undervalued by as much as 40 percent. The weaker yuan makes Chinese goods cheaper in the United States and American products more expensive in China. ............................................................................................................... ALLURE OF FED: Wed Jan 4, 2006 3:20 PM GMT10 The dollar gained around 15 percent versus the euro and the yen last year as the raising of rates by the Fed at each of its policy meetings since June 2004 lured investors to dollar deposits and assets. The Fed is widely expected to raise rates for a 14th straight meeting at the end of the month, taking its key rate to 4.5 percent. But a recent raft of lukewarm U.S. economic data has convinced many market participants that the central bank may think twice about raising rates beyond that, which could put the dollar under selling pressure. The dollar has also lost support it gained towards the end of last year from a one-off tax break to U.S. companies repatriating overseas profits, which expired at the end of December. "The market went into the new year long dollar and the first piece of news we had was that U.S. rates weren't going to continue going up. A lot of people have been caught out," said Jeremy Hodges, head of FX sales at Lloyds TSB.
The use of the sometimes confusing currency exchange terminology vs. the value or devalue of a country's currency is what we have been discussing above. Right now the yuan is dirt cheap at about US $1:RMB $8. This means the value of the yuan is very low and is the reason that a US dollar can buy and import so many Chinese products at a low price. If the yuan is devalued further then the exchange rate goes up, for example to US $1:RMB $10, then this means that a US dollar can buy even more Chinese products at an even cheaper price: one dollar buys more yuan. However a stronger yuan - more valued yuan - would cost more US dollars to buy, this means the exchange rate goes down, say to US $1:RMB $4. Now the Chinese yuan is at a higher value and it costs more foreign currency to buy one yuan. ""Some observers mistakenly believe that a marked increase in the exchange value of the Chinese renminbi (RMB) relative to the U.S. dollar would significantly increase manufacturing activity and jobs in the United States. I am aware of no credible evidence that supports such a conclusion. Accordingly, an increase in the exchange rate of the RMB, relative to the dollar, would likely redirect trade within Asia, reversing to some extent the patterns that have emerged during the past half decade. However, a revaluation of the RMB would have limited consequences for overall U.S. imports as well as for U.S. exports that compete with Chinese products in third markets. Such a revaluation would affect Chinese value added but not the dollar cost of intermediate goods imported into China from the rest of Asia, which represents a significant share of the gross value of Chinese exports to the United States and elsewhere. (To the extent that exporters to China revalued as well, of course, the impact on overall Asian exports would be somewhat greater.) The broad tariff on Chinese goods that has recently been proposed, should it be implemented, would significantly lower U.S. imports from China but would comparably raise U.S. imports from other low-cost sources of supply. At only slightly higher prices than prevail at present, U.S. imports of textiles, light manufactures, assembled computers, toys, and similar products would in part shift from China as the final assembler to other emerging-market economies in Asia and, perhaps, in Latin America as well. Few, if any, American jobs would be protected." Source: "Testimony of Chairman Alan Greenspan," Fed Reserve Board, China Committee on Finance, U.S. Senate, June 23, 2005. http://www.federalreserve.gov/board...623/default.htm Also worth noting again: China has become a big buyer of U.S. Treasury securities in recent years, which in turn has helped the U.S. keep interest rates low and fund its ballooning trade and budget deficits, but now they plan to switch their foreign currency reserves [the second largest in the world] away from the US dollar "To maintain its currency controls, China has to buy large quantities of US dollars - an arrangement that Greenspan said "cannot go on indefinitely." http://www.taipeitimes.com/News/fro...6/08/2003258397 "Beijing's policy of fixing the value of the yuan at 8.3 per U.S. dollar. Critics contend that it gives Chinese companies an unfair advantage in international markets by keeping the yuan's value artificially low, making it almost impossible for many U.S. manufacturers to compete. The Schumer-Graham bill, which drew the support of 67 senators on a procedural vote in April, would impose duties of 27.5 percent on Chinese goods unless Beijing allows the [value of the] yuan to rise significantly. The prospect of such stiff duties on Chinese imports has aroused fears of a transpacific trade war, with both Greenspan and Snow imploring Congress that persuasion is more likely than threats to induce concessions from Beijing. Schumer and Graham said that while they would be pleased with a peaceful resolution, their bill had helped force movement by the Chinese. "The 67 votes was a great signal to the Chinese, to the administration, and to the international community," Graham said. Chinese officials have long said they want to have a more flexible currency but don't want to act too soon, lest they destabilize the nation's financial system. Schumer and Graham did not suggest that Snow and Greenspan made promises about the size or timing of such a step, but Schumer said, "What we've always said is that it has to be significant . . . and Secretary Snow and Chairman Greenspan have indicated that that is very much in the cards." http://www.washingtonpost.com/wp-dy...5063001832.html
See I think I did state that wrong? In Greenspan's second sentence he states "an increase in the exchange rate of the RMB, relative to the dollar, would likely redirect trade within Asia." If Greenspan's terminology is correct, then an "increase in exchange rate" or "increase in exchange value" means a lower exchange "ratio" - 1:8 goes down to 1:4 - and now the yuan is revalued upward, not devalued: it costs more to buy one yuan and the cost of Chinese products increases relative to the dollar.
Yes, what I said above is correct, but to show how confusing the terminology is, let me post the explanation of Exchange Rates from Wikipedia. To complicate matters further, we are using "direct quotation" but reversing the ratio numbers so that our "home currency" equals $1. This has made it easier for us to talk about the exchange rate relative to the dollar but this is not how it is stated in international exchange markets in most countries. Greenspan is correct in his terminology because he is using direct quotation which means that right now US $0.124 = RMB $1. "Quotes using a country's home currency as the price currency (e.g. £0.6960 = $1) are known as direct quotation or price quotation (from that country's perspective) and are used by most countries. Quotes using a country's home currency as the unit currency (e.g. $1.4368 = £1) are known as indirect quotation or quantity quotation and are used in British newspapers and are also common in Australia, New Zealand and Canada. Note that, using direct quotation, if a unit currency is strengthening (i.e. appreciating, or becoming more valuable) then the exchange rate number increases. http://en.wikipedia.org/wiki/Exchange_rate
High-Tech China on the Move: "The 863 Program" The 863 Program "is transforming China. It's why China has more than 700 multinational R&D centers, compared with fewer than 50 eight years ago. Why 59 percent of Chinese undergrads pursue science and engineering degrees, compared with 32 percent in the United States....Beijing has funneled 863 [Program] funds to new cutting-edge projects each year, boosting research on everything from aviation systems to mapping the rice genome. Nanjing University professor Wang Yuanqing, who won funding for his work on 3-D computer monitors, believes individual 863 projects are now "too numerous to be counted." During the same period, China's economy has racked up white-hot growth rates—in 2005 GDP expanded 9.8 percent. Beijing's boom has prompted some Western strategists to warn that China might supplant the United States as a tech leader in the not-too-distant future, and threaten Washington's Asian friends militarily. As China continues its economic rise, senior U.S. officials are asking publicly whether Beijing can become a "responsible stakeholder" in the international community. To be sure, China currently lags behind the United States in most if not all tech industries. Investment from multinationals such as Motorola, Nokia, Microsoft and Cisco Systems has driven much of China's high-tech growth. Although China recently supplanted America as the world's biggest exporter of information and communications technology, fully 80 percent of the mainland's high-tech and patented exports last year were produced by foreign-controlled firms.... Don't be fooled by Wang Xiaoyun's demure demeanor. The 39-year-old mathematician is an instrument of China's campaign to become a tech power. She is also a legend among Western cryptographers. "Please don't write too much about my research; it's so difficult for journalists to get the technical details right," Wang pleads in rapid-fire English and Shandong dialect. She has a point: let's just say she and two colleagues shocked the cryptography world last year when they exposed a weakness in a key U.S. government encryption code called SHA-1, thought to be virtually unbreakable. Renowned MIT cryptographer Robert Rivest, who helped develop the SHA-1 algorithm, calls the breakthrough "stunning." (The SHA-1 "hash" is used, among other things, in technologies that transmit credit-card numbers over the Internet.)" http://www.msnbc.msn.com/id/10756796/site/newsweek/ "It’s one of the most viewed displays at this year’s North American International Auto Show, but it’s not one of the huge spectacles of glitz and glamour put on by the Big Three U.S. automakers. Instead, China’s Geely Automobile Company has a rather ordinary display featuring a small silver sedan outside the main show room of Detroit’s cavernous Cobo Center. But its presence in Detroit is by no means unimportant. “This is the first Chinese automobile to participate in the Detroit Auto Show, so we’re unique,” said John Harmer, vice president and COO of Geely-USA....The silver “CK” sedan on show here in Detroit is about the size of a Honda Civic and a forerunner of the vehicle that will eventually go on sale in the United States. It will be very competitively priced when it goes on sale — below the $10,000 level, according to Li. Pricing is an important advantage for Chinese carmakers like Geely. They plan to offer low-priced cars for American consumers and undercut their American and Asian rivals. http://www.msnbc.msn.com/id/10779158/
Talking about exchange rates is not so hard once you get used to it. You just have to read and write carefully to not reverse the meaning of the sentence. As a traveler, you must be used to exchanging currencies on the personal level. Understanding the forces that push floating exchange rates to change is also not complicated. There is a supply and demand for currencies based on the supply and demand for the things that can be bought and sold in those currencies. If nation X buys more stuff from nation Y than nation X sells to nation Y then the people in nation Y get more nation X currency than the people of nation Y want to have. The large supply of nation X currency coupled with the weak demand for nation X currency causes the nation Y currency traders to reduce the value of nation X currency in nation Y. As the value of Nation X currency falls against Nation Y currency, the price of nation Y goods rises for the people nation X and the price of nation X goods falls for the people of nation Y. Basic macro economics textbooks predict that in this situation after currency X falls against currency Y, the people of X will reduce their purchases from Y and the People of Y will increase their purchases from X, and trade will become balanced, and the curencies will stabilize at the new exchange rate and everyone will live happily ever after. In the USA, debate over how the USA should feel about the artificially suppressed value of the Yuan, we have on one side everybody who remebers their first year economics course, everybody who have been reading the Wall Street Journal for years, everybody who care about American jobs and know a little about economics, and also it seems some the fools in the Bush administration versus corporations making money by importing and versus people like Greenspan, Warren Buffett and everybody else (including me) who has thought more deeply about the specifics of USA trade in these times. Here is the key as told by Greenspan "Some observers mistakenly believe that a marked increase in the exchange value of the Chinese renminbi (RMB) relative to the U.S. dollar would significantly increase manufacturing activity and jobs in the United States. I am aware of no credible evidence that supports such a conclusion." Our basic econonomics textbooks sort of told us that a rise in the value of the Yuan Renminbi would increase Chinese purchases from the USA and decrease USA purchases from China. In terms of the physical quantity of stuff purchased the text books are correct. But it is not the quantity of stuff that determinses the balance of trade. It is the market value of the stuff that determines the balance of trade. For a rise in the value of the Yuan against the dollar (which means when you bring a dollar to the currency exchange you get back less yuan than you used to) to reduce the US trade deficit with China, the reduction in the disparity in the quantity of stuff exchanged, must be larger than the changed exchange rate caused decreases in value of the stuff the USA currently sells to China plus the increases in the values of the that China sells to the USA. I consider this unlikely to be the case. If the Yuan traded at 3 Yuan for a dollar, China would not buy much more stuff from the USA and the USA would still by almost as much stuff from China or a cheaper third world manufacturer. As Greenspan pointed out moving the manufacturing of goods to be sold in the USA from to India or Vietnam accomplishes nothing for the USA. For the purposes of the effect of moving floating exchange rates, foreigners purchase of US treasury bonds, US real estate, stock in US corporations, or buying dollars as a currency reserve or for international trading, all have the same effect on the supply and demand for the dollar as buying the products and services made in America does. The Japanese buy dollars as a method of suppressing the floating Yen. Japan must suppress the Yen in order to be able to compete and sell their goods and services in the global market, in which countries advanced but lower cost countrieslike South Korea, are always trying to invade Japan's market niches. Of Course the Yuan Renmimbi is not a floating currency. It is pegged to the dollar as are about one third of the currencies of the various smaller nations in the world. This means that when the dollar rises and falls against the Euro or Yen the Yuan and many other currencies rise and fall aginst the Euro and Yen in unison with the dollar. Many international contracts are written in dollar amounts. If a Brazilian corporation today (Jan 2006) signs a contract to sell oranges at a set price to a Chinese Corporation in the future, say 2008, the set price may be in US dollars. Many decades of the dollar being the single largest currency, and a unusually stable currency has created a global tradition of using the dollar in ways that other currencies are not used. Other nations that have tried to peg their currencies to the dollar have had financial crises that forced them to unpeg their currencies from the dollar. I don't understand the complications of pegging a currency to a dollar but I am aware the pegging of currencies is more complicated than allowing currencies to float. Pegged currencies can create currency black markets.
China's trade with rest of the world tripled to 102Billion dollars in 2005 - BBC news. Greey motors now showing in Detroit auto show, first time china is showing in US. Car not for sale yet (must pass EPA and some safety tests etc. - 12 to 18 mnths delay) but will cost ~$10,000. Cherey Motors car, not yet with US name, to be in US market in one year also.
This comment belongs in the Cold War, China is obviously not communist where it counts (the economy). They have the ambition to become the worlds lone superpower because in medieval times they actually were the worlds only superpower so in they're eyes theyre just "reclaiming" it. I'd like to get a chinese wife before the billion man army marches Please Register or Log in to view the hidden image!
I don't know (perhaps Valich will comment) but suspect that years of female infanticide will make you pay dearly for her.
I don't see how getting a Chinese wife is going to do you any good as China becomes an economic superpower? A form of protection? Against what? As if they could care? Female infanticide: a sad fact, but what more can I say on the subject. If it's not infanticide, then it's abortion. Why does the U.S. adopt almost exclusively girls from China? Chinese need to have a son to carry on the family name and gain the inheritance. A girl is given away to another family when married and basically becomes that other families property. That is why there is a bride fee, and these arrangements become complicated depending on the rich-poor differential between each family, the relationships, and on the economic and rural-urban status of each family. China was never a "lone superpower": they tried their best to isolate themselves from the outside world during these years: thus the Great Wall of China. They had no ambitions to overtake the world, nor could they if they tried. Throughout the medieval times was a time of great power struggle within China: internal affairs. There was never any desire to conquest the world. This intenal power stuggle and their internal problems are their greatest problems today. As stated earlier: 50,000 riots last year, increased to way over 80,000 this year.
Greey Motors company is "independent" of Chinese government (entirely privately owned). Has been in business 10 years. Began as small maker of motorcycles. sold in China last year 100,000 units (surely an approximate number) - Forbes new of today. Was not given main floor space at the Detroit Auto show, but placed in a hallway off the main floor. - Perhaps the big three American car makers (who I presume control the Detroit show) did not like the $10,000 projected price of the CK sedan? Looks very much like standard sedan.
