Thread: China's Emergence As A Global Superpower

  1. #501
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    Quote Originally Posted by Billy T
    I doubt it. The old believe in saving and many of the young still respect the old - entirely different culture. Especially as he BoJ just announced the end of zero interest rates (or actually slightly negative ones as the inflation was greater than the nominal return on bank accounts.) -I.e. soon you may be able to earn a safe 0.5% real annual return in BoJ !
    Well, to me, the fact that BoJ is raising rates means that it wants to encourage people to save more, which implies that people would otherwise be spending their money. My impression of the situation is that people were saving very heavily during the past years because of the recession, and so BoJ dropped interest rates down to keep consumption spending alive. Now that the economy is recovering, people will be more likely to spend, both their income and accumulated savings, and so the bank is raising rates to prevent too much drop in savings... all of which adds up to growing Japanese consumer demand.

    Incidentally, Japan is the third-largest importer of US products, buying about $7 Billion every year, and also the third-largest importer of Chinese goods, totalling about $8 Billion a year. The Japanese may love to save, but at the end of the day, they're a bunch of rich people on a small island, so even moderate levels of consumption there add up to large export markets for other countries.

    Quote Originally Posted by Billy T
    I agree will almost all of this, excepting only the "obviously...not help China " part. - In my view China would like to have any additional markets, even their own people
    I didn't say it wouldn't help China, I said that it wouldn't help Chinese *exports*.

    Quote Originally Posted by Billy T
    If China could sell its entire output to Brazil etc, I think they would prefer that to the US market (assuming the money and or products they get of same current value.)
    Well, China exports about $750 Billion worth of stuff every year, and Brazil's only imports about $70 Billion a year, so I don't see how that scenario could ever arise. Especially considering that Brazil is a net *exporter* to China, and that China is growing much faster than Brazil. While China accounts for a big chunk of Brazil's trade, the reverse is not true. China's trade with Brazil is tiny compared to its trade with the US, South Korea, Japan or Europe. Far from becoming a market for Chinese goods, Brazil's trade with China will consist mainly of exports of raw materials and textiles.

    Quote Originally Posted by Billy T
    Reasons: (1) they know the dollar is fiat money that may collapse, leaving them holding a bag of green paper.
    Well, the yuan (and the real and the yen and the euro, etc.) is fiat money as well. So replacing US trade with some other foreign trade wouldn't have any effect on this. That's not to say that they might not want to diversify their foreign reserves, but I'm not sure what your point is...

    Quote Originally Posted by Billy T
    (2)They know that if they do not fill the shelves of Wal Mart, US manufactures may be able to stop closing plants and the US industrial decline would slow.
    Why would China want that to happen?
    Last edited by quadraphonics; 03-11-06 at 07:42 PM.

  2. #502
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    Quote Originally Posted by quadraphonics
    Well, to me, the fact that BoJ is raising rates means that it wants to encourage people to save more, ...
    Nothing wrong with the cause and effect relationships you suggest in this paragraph, but when it comes to motive for tightening money supply (all over the world, not just in Japan) I think you are suggesting the wrong motive. The Japanese central bank, is joining most others in doing this for the same reason most have, not for some reason unique to the Japanese (and many other Asian): the tendency to save much more than the "I want it NOW, put it on the credit card." Americans.

    Almost all over the world the price of real estate, especially housing, has been increasing much more rapidly than the general economy. Anyone who thinks, knows no sector of an economy can do this forever. A correction will come and the longer it is delayed, the more disruptive of the general economy it will be. The main job of central banks is to try to keep their economies growing, but at a sustainable rate, not promote boom and bust cycles. (You know all this, I am sure.) Well the "internet boom" did happen and then as always, it crashed. To avoid this crash becoming general, the central banks pumped out liquidity (eased money, low interest rates, etc.) and by and large they succeeded in containing the crash to IT stocks etc. However, the cure produced it own illness. - the house price boom, so now that the central bank's main worry is that this low interest rate/excessive liquidity induced boom is presenting potential for a crash that also can bring down the general economy, they have begun to raise interest rates. Fortunately, they have learned, from prior mistakes, to make many small adjustments over an extended period of time and not to either slam on the brakes or to trounce on the throttle, when they detect a need toturn the economy from an undesirable trend.

    This desire to avoid a "hard landing" as the housing boom trend is turned off is the motive for BoJ's (and all the major central bank's current actions to decrease liquidity.) not any concern by JoB that the Japanese population needs to be encourage to save more. (In fact BoJ wishes they would save less as their saving only adds to the "liquity problem" as banks lend the deposited money out.) Also it should be noted that Japan is the last to do this as they wnet thru a construction boom about two decades ago, controlled the crash to only a decade of stagnation and only now is the threat of boom requiring tight money return. I.e. the only thing somewhat unique about Japan was the fact that banks had in the 1990s especially, financed too much the very rapid expansion of the economy and were carring on the books many very questionable "assets" such as new office buildings that no one wanted to rent, etc. BoJ "stomped on the throttle" to prevent wide spread failure of banking system in Japan - it is hard to go bankrupt if the government is giving away money (making loans at effectively a slight negative interest rate or in real terms, actually paying you to take a loan from the bank.)

    Other than this disagreement on what the true motive for the current global tightening of money is, we agree here. I.e. I think you have JoB's motive for ending easy money wrong, even backwards because:

    "Saving for a rainy day" is so deeply ingrained in the Japanese culture that BoJ will not need to encourage saving for several generations, at least. They must keep the interest rates their population can earn with bank deposits much lower than most other nations to fight, not encourage, the tendency of the population to save, at least for 50 years more, as they have done for the last 50 years.


    Quote Originally Posted by quadraphonics
    Well, China exports about $750 Billion worth of stuff every year, and Brazil's only imports about $70 Billion a year, so I don't see how that scenario could ever arise....
    I only indicated what they might WISH, not that Brazil et.al. could now replace US market, but they are doing everything they can to help Brazil (and others) grow the imports from China so that some day they will not need to export to US, if they think a switch of their sales markets would help them in a struggle with US.

    At present, I think they prefer to sell non-durables to US to get more dollars. (This I call: "loading their economic gun" as they know their military gun is vastly inferior to the US's military gun. They also understand there are no winners in an all-out modern war, if both sides have inter-continental nuclear weapons, especially "MIRVed ICBNs," and both do.) An economic war they can win and appear to be doing so. IMHO, it is a hidden part of their 50year development plan.

    Quote Originally Posted by quadraphonics
    Well, the yuan (and the real and the yen and the euro, etc.) is fiat money as well. ...
    True, but there were two conditions on my statement: "they know the dollar is fiat money that may collapse, leaving them holding a bag of green paper." the second, now made bold so you will not miss it, is the important one. There is much to be said in favor of "fiat money" and because of this, almost all the modern world has "fiat money" -but the US (almost exclusively) is showing what is wrong/ bad about "fiat money." - I started a few years ago to run from this danger as best as I can, but it is hard as my major retirement saving are in TIAA/CREF and taking them all out in one tax year is not wise either. (TIAA/CREF is good place to be, if they dollar remains sound, but has very little offered for protection against dollar collapse. Their TIP bond fund is the best they offer in this regard, but you pay for even that limited protection with lower rate of return.)


    Quote Originally Posted by quadraphonics
    Why would China want that to happen?
    China would prefer to not have any competition in the industrial area. (again this is a statement of a WISH, not a current reality) China would be very happy to have the US as a supplyer of food and fiber, and Us does have some natural advantages over China in agriculture, I think, but certainly not over Brazil. Thus if US loses the tech sector to Asia, as I think it is now doing*, and the industrial sector is failing, as it clearly is, then the US will be reduced to a relatively poor competitor for the privilege of supplying raw materials, food and fiber to China. - The world's leading nation was once Holland, once France, once England. Perhaps "once US" may now be in the process of joining this list.

    No doubt, China would like to have the US in this "once US" position, not just for reasons of national pride etc, but perhaps to check Brazil et. al. from getting to greedy and charging too much for these low-profit-margin goods that China will need to import in 2050 and beyond. (until "once China" is added to the above list of "has been" nations in the distant future, perhaps by India, being world leader.)
    ---------------------------------------
    *I was so concerned about Americ's current little recognized decline, that I wrote Dark Visitor in effort to help reverse it. - I am pleased to note that my site, www.DarkVisitor.com is now back up after being down for months. See it for more on the decline of US and how to help prevent more decline.
    Last edited by Billy T; 03-12-06 at 12:04 PM.

  3. #503
    Quote Originally Posted by Billy T
    If I were young I would be studing this field for my career, but hope to live long enought to benfit from it. Bio tech will be to this century what physics was to the last. Go for it and good luck.
    Just as a matter of curiosity, what would you specifically study within the field?

  4. #504
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    Quote Originally Posted by Billy T
    Other than this disagreement on what the true motive for the current global tightening of money is, we agree here. I.e. I think you have JoB's motive for ending easy money wrong, even backwards because:

    "Saving for a rainy day" is so deeply ingrained in the Japanese culture that BoJ will not need to encourage saving for several generations, at least. They must keep the interest rates their population can earn with bank deposits much lower than most other nations to fight, not encourage, the tendency of the population to save, at least for 50 years more, as they have done for the last 50 years.
    Your analysis explains why the Japanese interest rates are so low in absolute terms, compared to other countries (around 0% compared to around 4% in the US). But that's not what we were talking about. We were talking about why the BoJ has recently *raised* interest rates. The marginal effect of any increase in rates is to decrease the growth of consumption spending, implying they felt that it was growing too quickly. Note that this is not the same as thinking that there is too much spending overall, just that it's increasing too quickly. Or at least that they can afford to slow it down; either way, the trend this points to is an increase in consumption spending. The fact that the savings rate in Japan is high by international standards is secondary; they still have a huge amount of consumption demand, due to the fact that they're rich and developed. Since they're on crowded islands, a very large portion of that demand gets filled by importing things. This adds up to make Japan one of the world's largest markets for exporters. Japan imports $450 Billion worth of stuff every year; Brazil imports only about $80 Billion.

    Quote Originally Posted by Billy T
    They also understand there are no winners in an all-out modern war, if both sides have inter-continental nuclear weapons, especially "MIRVed ICBNs," and both do.)
    No, that's not true. China does not have MIRVs, and has less than 20 ICBMs. A state of MAD has never existed between China and the US. An excellent essay on the current state of US nuclear weaponry and strategy is in the current issue of Foreign Affairs:

    http://www.foreignaffairs.org/200603...r-primacy.html

    (It's in the free section, so no subscription is required). Some highlights:

    "China's nuclear arsenal is even more vulnerable to a U.S. attack [than is Russia's]. A U.S. first strike could succeed whether it was launched as a surprise or in the midst of a crisis during a Chinese alert. China has a limited strategic nuclear arsenal. The People's Liberation Army currently possesses no modern SSBNs [nuclear missile submarines] or long-range bombers. Its naval arm used to have two ballistic missile submarines, but one sank, and the other, which had such poor capabilities that it never left Chinese waters, is no longer operational. China's medium-range bomber force is similarly unimpressive: the bombers are obsolete and vulnerable to attack. According to unclassified U.S. government assessments, China's entire intercontinental nuclear arsenal consists of 18 stationary single-warhead ICBMs. These are not ready to launch on warning: their warheads are kept in storage and the missiles themselves are unfueled. (China's ICBMs use liquid fuel, which corrodes the missiles after 24 hours. Fueling them is estimated to take two hours.) The lack of an advanced early warning system adds to the vulnerability of the ICBMs. It appears that China would have no warning at all of a U.S. submarine-launched missile attack or a strike using hundreds of stealthy nuclear-armed cruise missiles."

    "Since the Cold War's end, the U.S. nuclear arsenal has significantly improved. The United States has replaced the ballistic missiles on its submarines with the substantially more accurate Trident II D-5 missiles, many of which carry new, larger-yield warheads. The U.S. Navy has shifted a greater proportion of its SSBNs to the Pacific so that they can patrol near the Chinese coast or in the blind spot of Russia's early warning radar network. The U.S. Air Force has finished equipping its B-52 bombers with nuclear-armed cruise missiles, which are probably invisible to Russian and Chinese air-defense radar. And the air force has also enhanced the avionics on its B-2 stealth bombers to permit them to fly at extremely low altitudes in order to avoid even the most sophisticated radar. Finally, although the air force finished dismantling its highly lethal MX missiles in 2005 to comply with arms control agreements, it is significantly improving its remaining ICBMs by installing the MX's high-yield warheads and advanced reentry vehicles on Minuteman ICBMs, and it has upgraded the Minuteman's guidance systems to match the MX's accuracy."

    Quote Originally Posted by Billy T
    Thus if US loses the tech sector to Asia, as I think it is now doing*, and the industrial sector is failing, as it clearly is, then the US will be reduced to a relatively poor competitor for the privilege of supplying raw materials, food and fiber to China. - The world's leading nation was once Holland, once France, once England. Perhaps "once US" may now be in the process of joining this list.
    That theory would be a lot more convincing if any of the countries you named ended up as raw material/textile suppliers to the nations that overtook them. That's the thing about being a developed country: you've already got all of the infrastructure. As you said yourself two posts back, a drop in the dollar would reenergize US manufacturing, and undermine Chinese production. They've accumulated all those dollars, and driven the dollar up in doing so, precisely in order to boost their production and exports. So it doesn't make any sense to me when you suggest they're going to simultaneously maintain a production/export advantage AND destroy the value of the dollar.

    And don't go thinking that US production has somehow declined to the point where it can't respond to a drop in the dollar. Despite the huge trade deficits, the US exports $930 Billion worth of stuff every year, compared to China's $750 Billion.

  5. #505
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    Quote Originally Posted by Exhumed
    Just as a matter of curiosity, what would you specifically study within the field?
    I am a physicist, so hard for me to be very specific. I would suggest any and evey thing related to control of cells. When an why they divide, obviously, but also their "internal controls": All have complete DNA, yet what gets copied to RNA in one (say liver cell) is not same as what gets copied in another (say thyroid). Why & how? Cancer is a cell out of "proper" control. Genetic diseases are all control failures. An alternative to fixing the genes, may be to fix the erroneous control, for example, attach small molecult to undesired RNA being produced in excess etc. to render it harmless /ineffective.

  6. #506
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    Quote Originally Posted by quadraphonics
    ...We were talking about why the BoJ has recently *raised* interest rates. The marginal effect of any increase in rates is to decrease the growth of consumption spending, implying they felt that it was growing too quickly. Note that this is not the same as thinking that there is too much spending overall, just that it's increasing too quickly.
    I have agreed that higher interest rates do tend to decrease consumption, but as you said, we are speculating as to the motive of BoJ recent move.
    I think you also agree that there is what central banks now consider excessive liquidity in the world, so all (BoJ included) are raising interest rates to extract liquidity from the global economy. (Excess liquidity tends to fuel inflation as the ratio of money to produced goods is excessive when liquidity is excessive.) Surely you agree that raising rates does remove liquidity.

    Thus, it boils down to which is the main driving force: reduction of Consumption or Liquidity, when we speculate on BoJ's motives. It is certainly possible that both reasons figured in BoJ's decision, but to support you "consumption" answer, you need to show that consumption in Japan has increased to the extent that consumption demand is placing stress on production ability (I suggest the precent utalization of domestic production factories is a suitable index of this, not the percent utilization of export factories etc.) Can you support your "motive" with this type of data?

    Clearly there is support for my "motive" in that ALL central banks are pulling liquidity from the market. (Bussiness and people do not like this, so the central banks are openly defending the "necessity" of doing this by citing the increasing rates of inflation etc.)

    Until you can support your "motive" (which may be at least part of the reason, I admit) I think my "motive" is the dominante one.
    Quote Originally Posted by quadraphonics
    No, that's not true. China does not have MIRVs, and has less than 20 ICBMs. ...
    Again you produced a good reference. I think you are correct on this and I was probably wrong. (No one can be sure and China certainly has the technical ability to MIRV their missiles, so I was asssuming they have by now. Even one hidden MIRV surviving a counterforce strike by US is a powerful deterent. China, unlike Russia, does not have technical ability to make such quiet subs that the US can not know where they are at all times and shadow them. Consequently, I was not surprized by your reference's claim of only one functional.)
    Quote Originally Posted by quadraphonics
    That theory would be a lot more convincing if any of the countries you named ended up as raw material/textile suppliers to the nations that overtook them.
    Not sure I understand you here. Certainly China is a nation that "over took" even developed countries, like France and Italy, last year. As far as countries like Brazil, they are shipping rapidly increasing quanties of raw materials to China. I believe that some other Asian countries are even selling cheaper textiles to China now. I.e China is making quality shirt to sell to US and importing cheaper ones for Chinese labors to wear.
    Quote Originally Posted by quadraphonics
    That's the thing about being a developed country: you've already got all of the infrastructure. As you said yourself two posts back, a drop in the dollar would reenergize US manufacturing, and undermine Chinese production. They've accumulated all those dollars, and driven the dollar up in doing so, precisely in order to boost their production and exports. So it doesn't make any sense to me when you suggest they're going to simultaneously maintain a production/export advantage AND destroy the value of the dollar.
    Yes, If China does not fill the shelves of Wal Mart, (and tarrif barriers are in place to prevent Indonesia etc. from doing so) then US manufactures will do so, but at significanly higher cost to consumers.

    I did not intend (and did not state) that China would "maintain a production/export advantage" with US. What I intended you to understand was that IF China had the option to sell all they want to export to non US buyers, they would like that option, although China will continue to sell non durables (and junk) to US until their "economic gun" is fully loaded with dollars. (Even if they currently had that option.) They can not fire that gun to destroy dollar (and US economy, as it is lacking purchasing power for the required oil imports) yet, but are developing "non US markets" to make firing the gun they are now loading at least a credible threat, if not open "economic war" on the US. - That gun is not yet fully loaded and the alternative markets do not yet exist. - Thus, US economy will not be destroyed for a few years yet. (Unless US does it to itself, and that too seems to be in progress with the US military as the main agent of destruction - Vast sums are being spent on production of items that are not for sale, and this is a strong presure for inflation. The Fed restrains inflation with high interest rates and that can kill an economy also.)
    Quote Originally Posted by quadraphonics
    And don't go thinking that US production has somehow declined to the point where it can't respond to a drop in the dollar. Despite the huge trade deficits, the US exports $930 Billion worth of stuff every year, compared to China's $750 Billion.
    Surely a decrease in dollar's value will help many exporters, but certainly not all. For example if your product is strongly dependent upon energy (oil more expensive in dollars) such as cement, then your exports competivity will drop.

    It is not as simple as you are implying. For example, the value of the Brazilian Real has nearly doubled in less thn two years. The simple theory you are relying on would indicate that Brazilian exports should be drasticaly down (and this is true of textiles and some others) but the Brazilian economy needs to import many things that get incorporated into exports (and with strong real, this is cheaper now) so the net effect has actually been the opposite of what the simple theory of change in currency value effect on exports would predict. I.E. Brazil's net earning from exports set new record last year, and this despite the price of several of the major components (soy beans etc.) being lower than the prior year.

    Again I state: It is more complex. The dropping dollar value may (I think will, because of all the oil US must import.) actually reduce US export earnings, just as the rising value of the Real has boosted Brazilian export. (It is much too complex to apply the simple rule you are using.)
    Last edited by Billy T; 03-15-06 at 08:04 AM.

  7. #507
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    Quote Originally Posted by Billy T
    Thus, it boils down to which is the main driving force: reduction of Consumption or Liquidity, when we speculate on BoJ's motives.
    Well, I don't want to get too far afield on the minutia of Japan's economy and policy. Suffice it to say that Japan's recent troubles certainly do have a lot to do with liquidity:

    http://web.mit.edu/krugman/www/japtrap.html
    http://en.wikipedia.org/wiki/Zero_interest_rate_policy

    Whatever the primary motive of the BoJ was, the basic fact of the situation seems to be that Japan's economy is coming out of its funk, which means more consumption spending and, hence, more imports:

    http://www.smh.com.au/news/business/...095743731.html
    http://www.ssga.com/library/esps/Con...1123871894.pdf

    Quote Originally Posted by Billy T
    Not sure I understand you here. Certainly China is a nation that "over took" even developed countries, like France and Italy, last year.
    Well, it depends on what you mean by "overtook." China still has a smaller per-capita GDP than France or Italy, and is not as developed. But again, did either of those countries start exporting raw materials and textiles to China when they were "overtaken?" No, in fact they're still net importers from China. Even when the United States overtook various European countries, it has remained a net exporter to them. So the idea that the US is going to go from buying finished goods from China to selling raw materials and textiles to China is absurd.

    Quote Originally Posted by Billy T
    As far as countries like Brazil, they are shipping rapidly increasing quanties of raw materials to China.
    Right, Brazil is less developed than China, and is growing at a slower rate. Thus, they will export more and more raw materials and textiles to China, and import fewer things. This isn't a good example, because they were never in front of China, and so were never "overtaken."

    Quote Originally Posted by Billy T
    Yes, If China does not fill the shelves of Wal Mart, (and tarrif barriers are in place to prevent Indonesia etc. from doing so) then US manufactures will do so, but at significanly higher cost to consumers.
    Recall that your scenario involved a preciptious drop in the value of the dollar. Thus, it would not require tarrifs to keep out other foreign competitors, and it would not be cheaper to buy goods from China. If the dollar drops precipitously, it will be cheaper to make stuff in the USA than anywhere else. It is for exactly this reason that American production will increase if the dollar falls dramatically.

    Quote Originally Posted by Billy T
    What I intended you to understand was that IF China had the option to sell all they want to export to non US buyers, they would like that option
    I do not agree. Even if such a market existed (which it doesn't) it still wouldn't be a good idea for China to exclude the US from its exports, as this would amount to artificially reducing demand for Chinese products, decreasing their value and, hence, the profitability of production infrastructure in China. I don't see anything in your plan that would justify this; the very idea of an "economic gun" is almost an oxymoron.

    Quote Originally Posted by Billy T
    Surely a decrease in dollar's value will help many exporters, but certainly not all. For example if your product is strongly dependent upon energy (oil more expensive in dollars) such as cement, then your exports competivity will drop.
    It's true that rising energy costs would dampen the production gains of a drop in the dollar, but that's a secondary effect. Overall production would increase, especially in the long run, as less energy-intensive production is built.

    Moreover, the Chinese economy as a whole is much more sensitive to energy prices than is the American economy. This is because the Chinese economy relies much more on production, while the US economy relies much more on services, which are far less energy intensive.

    Quote Originally Posted by Billy T
    Again I state: It is more complex. The dropping dollar value may (I think will, because of all the oil US must import.) actually reduce US export earnings, just as the rising value of the Real has boosted Brazilian export. (It is much too complex to apply the simple rule you are using.)
    Well, there's always more than just one factor working at any given time. Brazil, in particular, has seen lots of productivity gains in agriculture during this same time. But the basic law of supply and demand dictates that, other things being equal, a falling currency will boost exports and cut imports. In Brazil's case, I would say that exports grew *despite* a strong currency, not because of it. Since manufactured goods are such a small part of Brazil's exports (most of it is raw materials, food and textiles), I can't see attributing the export growth to cheaper imports. It's growing productivity in Brazilian agriculture and growing demand in China that are making up for the strong currency.

    Moreover, I never said a weaker dollar would boost American exports, I said it would boost American production. A very large portion of that new production would go to the internal market, which currently depends heavily on imports that would become unaffordable.

    Anyway, you need to be more specific about your doomsday scenario. Are the Chinese going to do it by simply refusing to export anything to America, or are they going to do it by dumping all of their dollar reserves to buy oil? I feel like you keep changing the assumptions whenever I address any of these ideas.

  8. #508
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    There's a good article on the present state of US/Taiwan/China relations in the current issue of Foreign Affairs:

    http://www.foreignaffairs.org/200603...-movement.html

    Unfortunately it's not in the free area, so you can only read a preview unless you subscribe (or attend a University that subsrcibes). An excerpt:

    "Political developments in Taiwan over the past year have effectively ended the independence movement there. What had been a major source of regional instability -- and the most likely source of a great-power war anywhere in the world -- has become increasingly irrelevant. The peaceful transformation of relations between China and Taiwan will help stabilize eastern Asia, reduce the likelihood of conflict between China and the United States, and present an opportunity for Beijing, Taipei, and Washington to adjust their defense postures -- all without hurting Taiwan's security or threatening U.S. interests."

  9. #509
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    I will not reply in detail, line by line, to all, but let me again state you give good informative references. Do you work in the economics area? You are much better informed than most, and seem to have the facts, well defended.

    I like most every thing Krugman writes, and will return to study your first reference when I have time. (He and I sing from the same song book politically, but I have not seen him speak of an economic gun being loaded by US for China, etc.

    Glad you agree that at least part of BoJ recent actions may be liquidity related. I will certainly (as stated in prior post) agree with you that over heating domestic consumption, if true, is a factor. I suggest we drop the speculation on BoJ's motives.
    Quote Originally Posted by quadraphonics
    .... So the idea that the US is going to go from buying finished goods from China to selling raw materials and textiles to China is absurd.
    I agree it is almost "unthinkable", but not that it is "absurd." It is only possible if US has little other choice. I.e. Collapsed dollar (purchasing oil at $150 / barrel) will, if it happens, have such a disruptive effect on any economy with infrastructure built on suburban sprawl customers driving to Wal mart and to more central jobs that only the rural farm economy will survive. That is why I suggested that US could be reduce to an agriculture economy trying (not very well) to compete with the likes of Brazil where nature has given more sun and rain etc.


    Quote Originally Posted by quadraphonics
    ....If the dollar drops precipitously, it will be cheaper to make stuff in the USA than anywhere else. It is for exactly this reason that American production will increase if the dollar falls dramatically.
    So it says in Eco text 101, but not always so. Generally speaking US industrial infrastructure is a generation behind. The workers and even electricity for their machines, may not be available at the plant if oil is $150/ barrel. (Politicians edit plants close before schools and homes go without heat, etc.) The US economy / infrastructure of 1905 was better equipped to withstand a great increase in price of oil (or energy in general) - Hope you still have a coal furnace if you live in US and the dollar does collapse. Buy a bike - there will be few cars on the roads, if dollar collapses.

    As far as US being a service industry, yes it now is, but rapidly being "out sourced" because that can be done anywhere, for example in India, if you want economical "services" in English; however, in a Chinese economy dominated world, you must face fact that few in US know Mandrin or Chinese customs, laws and proceedures etc.
    Quote Originally Posted by quadraphonics
    ....it still wouldn't be a good idea for China to exclude the US from its exports, as this would amount to artificially reducing demand for Chinese products, decreasing their value and, hence, the profitability of production infrastructure in China.
    China would not "exclude US" - just that with very weak dollar, and not much of an industrial base functioning, (for reasons just mentioned and several others) the only thing produced in US that China might want dollars for is food and fiber. (I am of course assuming that oil can be bought for euro or yuan etc.)

    Quote Originally Posted by quadraphonics
    ....I don't see anything in your plan that would justify this; the very idea of an "economic gun" is almost an oxymoron.
    It's true that rising energy costs would dampen the production gains of a drop in the dollar, but that's a secondary effect. Overall production would increase, especially in the long run, as less energy-intensive production is built.
    Obviously I disagree, for reasons stated above. US is built on cheap oil, some what like a house on sand, US is at considerable risk in a storm.
    Quote Originally Posted by quadraphonics
    ....Anyway, you need to be more specific about your doomsday scenario. Are the Chinese going to do it by simply refusing to export anything to America, {no - see above} or are they going to do it by dumping all of their dollar reserves to buy oil? {not only oil, but every thing they need for future delivery} I feel like you keep changing the assumptions whenever I address any of these ideas. {sorry if I'm not always clear - Mine is such a strange view OF A POSSIBILITY that it is hard to follow I expect, but I do not think I have been changing much. See summary below}
    Billy T's view summary:
    First note this is not a prediction, only what could be true, and is not adequately recognized.
    1) China wants Taiwan back and is building a "fifth column" of support in Taiwan for reunion, especially in the business community of Taiwan. In the best of all worlds, from Chinese POV, Taiwan will vote to rejoin mainland.
    2) China cannot take it back by threat of force with strong US support of Taiwan, but is making major investment in stuff needed for an invasion as way to make Taiwan think twice about going for independence, etc.
    3) China cannot neutralize US military might, even off its own shoreline.
    4) Because of 1, 2 &3, China is also preparing for an economic struggle with US, (in case their efforts to get Taiwan to ask back in by vote, fail.)
    5) This "eco war" weapon is a hoard of dollars gained by selling non-durables and junk to US that does not make US stronger. Unlike the steel, dams, factories etc. China is acquiring from US and others. (Briefly: "loading the economic gun") It will be (and already is to some extent just by internal unavoidable needs.) used to drive up the cost of commodities, especially oil, when the gun is "fully loaded." An example of an "avoidable need," which may be used when gun is loaded, is for China to start building its own "strategic oil reserve."
    6) China does not want eco war with US as that will hurt entire world, including China. China only wants to make the threat of eco war.
    7) China needs to develop other markets for it production - It could and to some extent is, allowing internal consumption to grow, but propaganda and information control are keeping normal aspirations for more domestic consumption restrained as too well an informed and rich middle class is threat to CP. (Next thing you know, if they can freely Google etc., is they will want a choice in their government, two party system, etc.) I.e. it is safer for CP to develop foreign markets than the internal one, and this also helps to continue the low cost pool of labor when the rural migration to the cities slows as it must eventually.)
    8) Item 7 is to make item 6 creditable and thus make item 5 useable as threat to US to make achieving item 1 feasible.

    Hope this helps make my concerns (not predictions) clear. I have not put it all in one place before. Perhaps that is also part of why you do not follow my ideas?
    Last edited by Billy T; 03-15-06 at 10:05 PM.

  10. #510
    Bloodthirsty Barbarian
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    Quote Originally Posted by Billy T
    Do you work in the economics area?
    No, economics is merely a hobby for me. I am an engineer by trade.

    Quote Originally Posted by Billy T
    That is why I suggested that US could be reduce to an agriculture economy trying (not very well) to compete with the likes of Brazil where nature has given more sun and rain etc.
    Err... the United States already produces way, way more agriculture than Brazil. Brazil may have sun and rain, but it doesn't have much topsoil. America's agricultural output is roughly ten times that of Brazil, as seen here:

    http://www.fas.usda.gov/wap/circular...ap%2002-06.pdf

    The US has been a collossus of world agriculture for as long as anybody can remember; I'm not sure where you got the idea they'd have trouble competing with Brazil...

    Quote Originally Posted by Billy T
    Generally speaking US industrial infrastructure is a generation behind.
    Heavy industry, maybe. But the US has very much shifted away from heavy industry, so it's not a very big portion of the economy anymore. American high-tech infrastructue is a generation ahead of anywhere else, and the light industry is as good as anywhere. Don't forget that US military industry is state-of-the art, and far from insignificant.

    Quote Originally Posted by Billy T
    The US economy / infrastructure of 1905 was better equipped to withstand a great increase in price of oil (or energy in general)
    Not really. The energy intensity of the US economy (BTUs consumed per dollar of GDP) has consistently gone down over the past decades. As of now, the Chinese economy is 4 times as energy intensive as America's:

    http://www.eia.doe.gov/emeu/cabs/chinaenv.html

    It might have been less sensitive to the price of oil in 1905 (which isn't surprising for a coal-based economy), but it was much MORE sensitive to the price of energy overall.

    My overall feeling about your theory is that it overstates the importance of Taiwan and the US in China's strategic calculus. In the first place, the Taiwanese independence movement is pretty much shot, and America seems to be on-board with China's strategy of economic integration and peaceful integration of Taiwan. So I don't know that it's really they're top concern, or that there's a significant chance of them doing anything bold on that front. I agree with the broad idea that China is looking to increase its international standing mainly through economic measures, but I think you have the mechanics of how prosperity is applied to foreign policy all wrong. It's less of a "gun" and more of a "if you want us to scratch your back, you better scratch ours." If China were to try to leverage its economy to overturn the basic strategic position of the US, the whole thing would rapidly escalate into a military confrontation which, as you've already stated, they would lose. I just can't see the US standing still while China makes a blatant move to destroy the American economy and infrastructure. Even if the plan worked on the US as you say, you can't fire an economic gun without shooting yourself in the foot: their economy will get hammered in the process, and they have no way of ensuring that they'll come out on top in the resulting turmoil. Even discounting the US, they'd face an angry populace at home, and Russia and Japan on their borders.

  11. #511
    Please use Sugar Cane Alcohol Billy T's Avatar
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    You win.
    I really have enjoyed our discussion. I have learned a lot from you. Again you produced great references. You are better at getting good data than many "professionals" are and certainly better than my newspaper, where many of my "facts" come from. I was not surprised to see US produces more than order of magnitude more wheat than Brazil, as that crop likes colder climates, but fact that US produces 6 times more "coarse grains" did surprize me. I was over extending / generalizing the fact that last year I read Brazil had surpassed US in soybean production (in my local news paper, of course.)

    About the only parts of my view unchanged (well, even they may be a little modified, thanks to your good knowledge) is that:
    1) The continuing 50 year embarassment of "renigade" Taiwan is intollerable to the CP of the mainland. They will get it back some way. All hope it is peacefully and they are making progress in this, despite the last Taiwan election results.
    2) US has built an infrastructure (surburbia, roads, & private car) that is not well suited to $150/barrel oil. It will ultimately pay a price for this. (Should have taxed gasoline as other nations have, supported public transport more, not abandoned the cities to the poor, etc.)
    3) The services of a service based economy can not be prevented from migration to lower cost areas (outsourcing). Thus, US wages will not much, if at all, grow in real terms (Will drastcially fall, if expressed in terms of how many barrels of oil average Joe American's salary will buy.)

    This outsourcing is getting serious - today I received Ballot to vote on two new directors for Cornell's board of trustees (Did my undergrad work there.) It was mailed from FRANCE!

    France must have lower international postal costs. (I live in Brazil, but surely you know that already.) It is rapidly becoming one world of telecomuters, where the lowest cost service provider is used by all. If I had any stocks in a US, firm providing services, like insurance, reading X-rays, investment (brokers etc.), I would be looking for good exit opportunities. At least most local service to the individual will be safe from outsourcing (hair cuts, taking fast food orders, fixing flat tires, etc) but if the dollar and economy collapses, even these will contract as less income (real) is available to buy these services. (Real average income down for four years now, and I bet rate of decline is accelerating.)

    Summary of this last point: The coming US generation will have lower standard of living than their parrents did.

    Would you like to argue the other side on this? I hope I am wrong here too.

    (All my children and grandchildren live in US, but I have bought a second lot*, also overlooking large lake about one hour's ride outside Sao Paulo, partially so each of my two daughters can escape to Brazil, when they retire and I am dead, if US is falling apart. My best investments have always been raw land and Brazil seems very much like stepping back 50 years in time, so I think it a good investment here now and this is more of the reason for purchase.)
    ------------------------------------
    *To prove how crazzy I am, I am building with my own hands and back alone a house on the first lot. I am very expensive labor, (per unit of construction at least 5 times normal cost as I work slowly, watch boats & birds when tired etc.) just counting the cost of going there a few times each month to work two days on it. (I sleep one night locally, to reduce "per day of work" cost of bus trip to city near lake. - I leave my car in local motel as bus is cheaper than car and safer when I am very tired on return trip as I usuall fall asleep on bus.)
    It would be much cheaper to contract it done, but it gives me excuse to get out of Sao Paulo's pollution, do some manual labor, is fun, etc. and house is very unique in the design features/ details that would be hard to communicate to local labor. - sort of a hobby for me as well as a health measure. (Must do something in retirement. With luck, I should finish house by time I am 80, assuming I can still lift cinder blocks etc.)!
    Last edited by Billy T; 03-16-06 at 07:30 AM.

  12. #512
    Please use Sugar Cane Alcohol Billy T's Avatar
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    I will comment on a couple of your comments.
    Quote Originally Posted by quadraphonics
    ...the US has very much shifted away from heavy industry, so it's not a very big portion of the economy anymore. American high-tech infrastructure is a generation ahead of anywhere else, and the light industry is as good as anywhere. Don't forget that US military industry is state-of-the art, and far from insignificant.
    I am not so sure US is leading in the tech area, or at least others are rapidly closing any lead. For example, in stem cell research, (In MHO, biology is the area of the coming century, not electronics/ physics etc.) US lead is dropping fast. (Even Brazilian team's work was on cover of Science!) Or take robotics: Japan demonstrated a robot that can walk while playing a bugle about a year ago. Artificial vision is at least a toss up, but my main concern is the disproportionate number of hard-working, serious Asian students in US's best university science classes and a "reverse brain drain." - Why I wrote Dark Visitor a few years ago - see site under my name, it is back up after being down for months and give more of this.

    On military, and biting the hand that feed me for years, I have always been concerned about the dollars pumped out into the economy without any corresponding product in the economy to soak them up. - Seems like sure formula for inflation that forces Fed to restrain civilian growth, thus reducing standard of living from what it could be. (Many nations have a higher standard, by almost any measure, despite much lower resources, especially in Scandinavia.) I think one of main reasons for Japan going from utter destruction to 2nd economy in such short time is the lack of big military expenses.
    Quote Originally Posted by quadraphonics
    ...If China were to try to leverage its economy to overturn the basic strategic position of the US, the whole thing would rapidly escalate into a military confrontation which, as you've already stated, they would lose. I just can't see the US standing still while China makes a blatant move to destroy the American economy and infrastructure. ...
    If a "blatant move," yes, I agree with you, but it all depends on what is a "blatant move." I think US would be hard pressed, especially given it recent history under GWB, to start military ops against China of any nature, if China were to start filling a strategic oil reserve and this sent price of oil up 50% in months. - What do you think US would do in response to China doing what US has done?
    Last edited by Billy T; 03-16-06 at 08:13 AM.

  13. #513
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    Forbes had article today on China's peaceful approach to re-uniting Taiwan, by Yuwa Hedrick-Wong. See:
    http://www.forbes.com/global/2006/03...ews_newsletter
    for full text. It contained:
    "Beijing now recognizes that time is on its side. This is a 180-degree turnaround from the previous fear that time was on the side of Taiwan--that it was steadily drifting away from China, hence a strong stance and threats of massive use of force were needed. This turnaround is the result of a new reality: Taiwan is very much on the path toward a full integration with the economy on the mainland.

    Some estimate the number of Taiwanese working on the mainland at 1 million. And these are not average workers but the best educated--highly skilled technical professionals and business managers, typically between the ages of 25 and 50. They are about 10% of Taiwan’s 10-million-strong labor force. Some 50,000 Taiwanese businesses are operating in mainland China. Cumulative investment by Taiwanese businesses, according to official data, has reached around US$45 billion, whereas independent analysts’ estimates suggest it could be more than US$100 billion.

    It is this economic reality that allows Beijing to change the game and approach the Taiwan challenge diplomatically rather than militarily. As a result China has embarked on an approach of winning Taiwan’s hearts and minds. The Chinese market has now been opened duty-free to fresh fruit from Taiwan, a move aimed to benefit Taiwan’s farmers, a stronghold of President Chen’s* supporters. Mainland tourists are allowed to visit Taiwan on personal visits, a move that will stimulate the local tourism industry, generating income and employment in Taiwan, especially in the small-business sector.

    Beijing has also significantly liberalized the market for Taiwanese businesses, giving them the same preferred status as those from Hong Kong and Macau. Taiwanese businesses have had difficulty accessing Taiwan banks to finance mainland investments; last September China’s State Development Bank, a government-owned policy bank, established a credit line of US$3.8 billion earmarked for them to use. For their part, Taiwanese businesses are upping their stake in China, as well. As noted in FORBES ASIA (Feb. 27), Fubon Financial Holding Co., one of Taiwan’s largest financial groups, plans to buy into a regional bank in China through its Hong Kong unit. Fubon will make history as the first Taiwanese bank to do so.

    Taiwanese businesses have benefited hugely from their China operations. Increasingly, they are also benefiting from being able to sell what they produce in China, not just export from China. Their dependence on the China market is therefore a very deep one. President Chen may still be in denial, but an expanding set of his countrymen have an interest in de-escalating tension across the Strait, even as their elected leader hopes to raise it."

    Yuwa Hedrick-Wong is an economic adviser to MasterCard for Asia/Pacific. He is also director and chief strategist of Asian Foresight, a consultancy.
    ----------------------------------------------
    *Comment by Billy T, mainly for others, as Quadraphonics is well informed:
    Chen is the leader of the Taiwan independance movement as well as current president of taiwan. Just before the recent election that gave him the presidency, he was shot with very little effect, as if most of the gun powder had been removed from the bullet. The "criminal" was never caught, even though he fired from a dense croud of people. The pre-election polls, were too close to predict who would win, but the "sympathy vote" put Chen in the presidency. Draw your own conclusions as to why Chen was shot a few days before the election. I think the shot was timed to provide just enough time for the news that "some mainland agent tried to kill our leader" to spread throughout the rural area of Chen's power base, so all made the effort to get to the polls. Even Hugie Long (Populist demagogue of deep south, many years ago) could have learned a few tricks from Chen!
    Last edited by Billy T; 03-17-06 at 04:42 AM.

  14. #514
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    Answer to thread's question is Yes; but if in near future, it is more likely to be by US collapse than China's growth. See CNN program text on how it will probably happen. (You may not have seen the program. It may be "too distrubing" to show in US. - I saw it in Sao Paulo. - Program was first shown on CNN/ international on 19 March 06, but has been repeated in Brazil several times.) Read text at:

    http://transcripts.cnn.com/TRANSCRIP.../19/cp.03.html

    After "watching" (or in your case reading) you will understand how US can become a minor power in less than a year.
    Last edited by Billy T; 03-22-06 at 09:53 AM.

  15. #515
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    For information on perhaps most important event in current world affairs, definitely related to this thread, See posts in thread:
    "Chinese banks to transform global trade patterns." of the "World Events" forum.

    Many Americans reading this may be killed as result of this transfomation, as is discussed in second post of that thread. (Not a result of any military action between China and US, which is very unlikely in the age of nuclear ICBMs, but killed by other Americans.)
    Last edited by Billy T; 03-27-06 at 08:03 AM.

  16. #516
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    China now holds more dollars than anyone, including second place Japan.
    - Or at least "Hard Curency Reserves" - article not clear, but stating (incorrectly I think) reserve amounts as if all in dollars as follows:

    China...US$854 billion
    Japan.. US$850 billion

    The "economic gun" with which China can shoot the dollar's value down, just by using most of its hoard to buy oil to fill a strategic oil reserve with its hoard of dollars until oil is $150/ barrel will surely cause the US's suburban / big car / consumer driven economy to collapse and with that collapse the value of the dollar. Of course China will not fire this "economic gun" until the domestic and non-US markets can purchase all China's current sales to US, I.e. Wal Mart, etc.

    If China triggers a run to get out of dollars, as it easily can already, it will not be badly hurt as almost all are assuming. For example: Assume China buys a lot of oil (will actually be a mix of storable commodities in short supply, such as copper, iron ore, zinc, gold, etc. but to keep discussion simple, I just speak of oil) at average price of $100/barrel and continues to have expanding demand that keeps oil at $150 /barrel then China's oil purchased at $`100/barrel was a “bargain investment” showing a 50% profit or at least a value increasing asset. If it still held $800 billion but the purchasing power of those bills is only $400 billion in constant dollars, which would you rather have? - a 50% profit or a 50% loss?

    Less than 1% of Chinese have credit cards, but China is rapidly transforming its banking sector. (See thread “China’s Banks to transform global trade patterns” in World Events forum for details) Chinese population currently saves an astounding sum annually (~ 50% of GDP!) If even only 25% of the Chinese population adopt the American's "buy now / pay later" concept their purchasing power will stabily equal that of all of US's. For a few years, as they spend these great saving, only 25% can and would buy several times more than the US currently does, if the products were available - There will no doubt be long months, if not years, of waiting before the average Chinese worker, without good political connections, can buy his new car or appartment as even the great productive machine China is now building cannot produce products for 300,000,000 newly rich customers for several years. When VISA hits China, to be a CCC, "Card Carrying Chinese," will have an entirely new meaning and Chairman Mau will no doubt be spinning in his grave!

    Foreign banks are now pouring billions and credit card technology / know how/ marketing into the Chinese banking system as there are great profits to be made in credit cards, etc. - Soon China will have no need to sell any of Chinese production to US (but be needing a lot more oil for new car owners, heating previously unheated homes, etc). - Then it will be not only safe, but necessary to fire that economic gun. - US dollar hoard to buy much more oil (and other commodities.)

    Actually, China is not "filling an economic gun" - only saving now for a very foreseeable future need. It is just that the US will (with its inappropriate infrastructure of suburan homes, big cars, etc. for the "post-peak-oil" era) get "shot" in the process of China meeting it needs and oil going to $150/ barrel.

    By that time US needs to pay $150/ barrel and its dollar is collapsing, China's recent rapid expansion in military defenses, (especially costal defenses and cruise missiles that can sink hostile ships if fired in bunches), will make any US ideas of Iraq style "regime change" unthinkable, even if GWB were not now demonstrating how foolish that concept is even when applied to the tiny population of Iraq. (See thread "1 trillion dollar war" for more details.)

    All in all, not a pretty picture for the US, but at least as the Chinese curse goes: US will live in "interesting times."
    Last edited by Billy T; 03-29-06 at 01:56 PM.

  17. #517
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    Soon China can sell it production internally - will not need to accept US dollars. OR buy US treasury note and bills. - Without this recycling of dollars back to US, how will US deficits be financed?

    Only $102 billion in 2005 was due of nearly a trillion was due to imbalance in trade with China. Much of the huge US deficit was due to importing ever more costly oil.

    Soon oil will not be sold ONLY in dollars and many other countries also will not need to hold dollars. Dollar will drop drastically and US will not be able to import the oil it needs to run a suburban infrastructure economy. China's economic gun is almost fully loaded. Proof that they will not be sending much to Wal Mart or continue to add to their dollar holdings (finance US debt) follows from NY Times:

    Selected parts From:
    http://www.nytimes.com/2006/04/03/bu...syahoo&emc=rss

    By DAVID BARBOZA Published: April 3, 2006
    SHENZHEN, China — Persistent labor shortages at hundreds of Chinese factories have led experts to conclude that the economy is undergoing a profound change that will ripple through the global market for manufactured goods.
    The shortage of workers is pushing up wages and swelling the ranks of the country's middle class, and it could make Chinese-made products less of a bargain worldwide. International manufacturers are already talking about moving factories to lower-cost countries like Vietnam.…
    That kind of behavior was unheard of as recently as three years ago, when millions of young people were still flooding into booming Shenzhen searching for any type of work.…
    For all the complaints of factory owners, though, the situation has a silver lining for the members of the world's largest labor force. Economists say the shortages are spurring companies to improve labor conditions and to more aggressively recruit workers with incentives and benefits. The changes also suggest that China may already be moving up the economic ladder, as workers see opportunities beyond simply being unskilled assemblers of the world's goods. Rising wages may also prompt Chinese consumers to start buying more products …"The next great story in China is how they are going to move out of the lower-end stuff: the toys, textiles and sporting goods equipment," said Jonathan Anderson, an economist at UBS in Hong Kong. …Prosperity is also moving inland, and workers who might earlier have migrated elsewhere are staying closer to home.
    …The higher wages come at a time when costs are already rising sharply across the country for energy and land. On top of a strengthening Chinese currency, this is likely to mean that the cost of consumer goods shipped to the United States and Europe will rise.
    …According to government figures, minimum wages — which averaged $58 to $74 a month (not including benefits) in 2004 — have climbed about 25 percent over the past three years in big cities like Shenzhen, Beijing and Shanghai, mostly by government mandate. Wages at larger factories operated on behalf of multinationals — which are typically $100 to $200 a month — are also on the rise.
    …Government policy is playing a role in creating the coastal labor shortages. Trying to close the yawning income gap between the urban rich and the rural poor in China, the national government last year eliminated the agricultural tax, and it also stepped up efforts to develop local economies in poor, inland and western provinces, which have mostly been left behind. Now, even remote areas are starting to develop — sprouting malls, housing projects, restaurants and infrastructure projects. These are creating jobs in the middle of the country and offering alternatives to many young workers who once were forced to travel thousands of miles for jobs on the coast.
    According to Goldman Sachs and other experts, the beginnings of a demographic shift have already been reducing the number of young people between the ages of 15 and 24, who make up much of the migrant labor work force. Similarly, the number of women between the ages of 18 and 35 began falling this year, according to census data.
    …"When the economic reform started, migrant workers were very hard-working, and usually stayed for a long time at factory jobs, but the new generation has changed," said Chen Guanghan, a professor at Zhongshan University in Hong Kong. "They are reluctant to take factory jobs that are harsh and pay very little." Many are going to college to avoid the factory floor. Last year, Chinese colleges and universities enrolled over 14 million students, up from about 4.3 million in 1999.

  18. #518
    The non-believer
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    God not communists please NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

  19. #519
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    Interesting article in today's New York Times (free registration required):

    http://www.nytimes.com/2006/04/03/bu...8e2b8e&ei=5087

    An excerpt:

    "Labor Shortage in China May Lead to Trade Shift

    SHENZHEN, China — Persistent labor shortages at hundreds of Chinese factories have led experts to conclude that the economy is undergoing a profound change that will ripple through the global market for manufactured goods.

    The shortage of workers is pushing up wages and swelling the ranks of the country's middle class, and it could make Chinese-made products less of a bargain worldwide. International manufacturers are already talking about moving factories to lower-cost countries like Vietnam.

    'We're seeing an end to the golden period of extremely low-cost labor in China,' said Hong Liang, a Goldman Sachs economist who has studied labor costs here. 'There are plenty of workers, but the supply of uneducated workers is shrinking.'

    Because of these shortages, wage levels throughout China's manufacturing ranks are rising, threatening at some point to weaken China's competitiveness on world markets."

  20. #520
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    Quote Originally Posted by quadraphonics
    Interesting article in today's New York Times (free registration required):
    http://www.nytimes.com/2006/04/03/bu...8e2b8e&ei=5087...
    I too found it interesting and posted extracts two post earlier. I added some comments. Do you agree with them?

    PS my ref it via Yahoo and no need to register.

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