BRIC+ News & comments

Discussion in 'Business & Economics' started by Billy T, Aug 10, 2008.

  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "... The Pentagon underestimated the speed at which China has developed and fielded a ballistic missile that may be capable of hitting a maneuvering U.S. aircraft carrier, the head of Navy intelligence said today.

    The DF-21D missile now has so-called initial combat capability according to his analysts and U.S. Pacific Command head Admiral Robert Willard. The Chinese have tested the DF-21D missile over land a sufficient number of times to conclude that “the missile system itself is truly competent and capable,” Dorsett said.

    Dorsett said it was too early to tell whether the U.S. also has misjudged China’s capability to build a stealth fighter jet comparable to the U.S. F-22. The purportedly stealthy aircraft, known as the J-20, would be a first for China. ..." Here is photo of it:

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    All above but photo from:

    "... China has made significant gains toward fielding a missile system designed to sink a moving aircraft carrier from nearly 2,000 miles away, the top U.S. commander in the Pacific said Thursday. The so-called "carrier-killer" missile and a new showpiece stealth fighter jet may not be a match for U.S. systems, but represent rapid advances for China's homegrown technology and defense manufacturing. ..." From:
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "... China announced a $736 billion investment plan for clean energy in the next decade. New private and public sector investments in core clean energy leapt by 53% in China last year, according to the Global Wind Energy Council. It added 37 gigawatts of total renewable energy power capacity, more than any other country. ...
    Danish wind turbine maker Vestas, the world's biggest maker of wind turbines, ... announcing an order (for 58 turbines with total capacity of 49.3 megawatts) from Chongli Construction Investment Huashi Wind Power Company Ltd. ... said last week that its orders from China last year reached a record high. "In 2010, Vestas has announced almost 1,000 megawatts (MW) worth of orders in China alone, which is a record high order ...

    While China was becoming the world's biggest wind turbine market in 2009, energy infrastructure markets in the West remained depressed due to the economic downturn. ... In response, Vestas, which has its largest* integrated manufacturing plant in Tianjin, China, opened a research and development center in Beijing in October and has declared it reserves its entire Chinese manufacturing capacity to meet China demand this year. ..."


    Billy T comment: Unlike the US, China is "putting its money where its mouth is" about reducing use fossil fuels, especially coal, for power. But the US does not have any funds for that unless China will lend more to it. China is ordering 245 new nuclear power plants, mainly from western makers. That will both help reduce the use of coal and spend down more than half a trillion dollars from their reserves. AFAIK, this sum is IN ADDITION to the $736 billion investment in truly green energy, which includes a national "smart grid" and more hydroelectric dams, large solar cell power farms in the Mohave desert, etc. If so, the expenditures on new energy capacity alone, will remover 1.3 trillion dollars from reserves! Perhaps on what remains, China can afford the lose 50% on as it dumps bonds to destroy the dollar -send US and EU into the world's "Greatest Depression"?

    In addition to the economic advantage of removing the US and EU as competing buyers for the imports China needs, there is deeper and stronger reason why China wants to smash Western economies. See post 358 to understand it.

    China + Russia** also has a new hammer to smash the EU whenever it wants: Currently the EU depends upon Russian gas and oil. The just completed big pipeline can move 1/3 of the oil is now supplied to the EU eastward - currently only to a Pacific port, as China is behind schedule on the construction of the pipeline inside China from Russian border to Beijing. A new large pipeline for moving Russian natural gas to China is under construction, but I don't know the expected completion date.
    * A major reason why a Danish wind machine maker has its main production plant in China is of course to be closer to the world's main market, but also of importance is the fact each machine needs many pounds of rare metal (neodymium*** or presidium, I think) in its permanent magnets. Because of pollution problems, China has closed all small rare Earth mines and is reducing product at some larger ones. With the growing internal demand and reduced supply, I expect in 2012, China will not export any of the badly needed Rare Earth metals.

    ** I don't think Russia want to smash the EU, but does want them to pay much more for the energy Russian sends them, which may have about the same effect.

    *** "... export restrictions combined with rising demand have caused the price of neodymium, used in Toyota’s Prius hybrid car, to surge four-fold to $80 a kilogram from $19.12 in 2009, according to Lynas ..." From:
    And as they say, "You ain't seen nuffen yet" as DoD needs it too.
    I think the typical Rare Earth mine and processing releases 1000s of times more radioactivity than a nuclear power plant is allowed too:

    "...A four-story tailing dam containing radioactive waste 12 kilometers (7 miles) from Baotou has been “a serious problem” and polluted rivers, Chen Zhanheng, director of the academic department of the Chinese Society of Rare Earths, said in an interview. Baotou Steel Group, which operates the Baiyun Ebo mine, has spent 500 million yuan ($75 million) with the local government to relocate five villages after seepage from the dam polluted agricultural land and drinking water, China’s official Xinhua News Agency reported on Nov. 7. ... “All rare earth ores contain uranium and thorium, which could pose a danger if not disposed of responsibly,” said Dudley J Kingsnorth, who managed Australia’s Mount Weld rare earths project for Ashton Mining of Canada Inc. for 10 years. ..." From same Bloomberg link just given.

    When California's environmentalists learn this, "more than 1000 times a power plants radioactive release", it could be decades in the courts before MolyCorp's mine in CA is operating on a large scale.
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  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Second paragraph below is more of what I have been saying and predicting for years:

    "... labor strikes erupted at factories around China, prompting private companies as well as local governments to increase wages by as much as 30%. Beijing didn't blink an eye -- indeed, some have argued that the government even subtly encouraged the strikes in its media statements.

    The takeaway, experts have said, was that Beijing recognizes now more than ever that the Chinese economy must move away from heavy industry and towards domestic consumption to retain its competitive edge in global markets -- and the government also recognizes that higher wages are an essential part of this process. ..."


    Billy T comment: An even more important reason, as I have often stated, but this American firm's article does not dare to, is that the CCP realizes that the US is broke and can only buy from China if China lends it the money to do so.

    Thus, China's CCP has no choice but to give its people a better life instead of long days at low pay in sweet-shops so that Americans can buy cheap at Wal-Mart, even though raising living standards is risky for the CCP. - The people may want more freedoms etc. as well as more material goods to enjoy.
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  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    China is following Russia's North Pole flag planting plan:

    " ... The war for the world's resources is getting fiercer by the day. And a red flag from the People's Republic, recently* placed at the bottom of the South China Sea, is making matters worse. ..." From today's Email from: Money Morning's Publisher's Series <>

    * From another source: "On October 12, 2010, a Red flag was pushed into the sand 3 ½ miles under the South China Sea ... "
    That at least demonstrates some impressive technical robotic capacity.

    Billy T comment: Only Japan is strong enough and with some claims to dispute with China. There is no love lost between them especially after what the Japanese did in Najing etc. during their WWII occupation of China.

    It is highly unlikely either will be persuaded by words to give up its claims. So perhaps they should just go to war now and settle the issue as to which owns the resources of the South China Sea? If, as the Japanese claim, the Chinese fishing vessel intentionally rammed a Japanese naval vessel, perhaps China is trying to provoke just that.
    Last edited by a moderator: Jan 20, 2011
  8. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Is the quoted blue text below not EXACTLY what I predicted China would do several years ago? Perhaps you should also believe the last part of my old prediction? I.e. That there will soon (less than 5 years now) come a day when it is to China's economic advantage to destroy the dollar by dumping its remaining holdings of US bonds and taking that ONE TIME loss to send US and EU into deep, long-lasting, depression so that EVERY YEAR, its imports cost less without US & EU competitively buying the same items, like oil, iron ore, etc. I.e. China will say: "Go to hell, USA. Your green paper is worthless now. We don't need to lend you money to buy our goods as now we mainly trade with other Asian nations and the suppliers of the energy, raw materials, and food stocks we must import." There is also a stronger, deep psychological reason why China wants to destroy the western economies. To understand it, read post 358 at:

    "... China has made it perfectly clear that they are unhappy with current U.S. monetary and fiscal policy, and with the direction the US dollar is heading. ...
    China has begun to diversify their foreign exchange reserves by tweaking their investment allocation. This shift is the main driver that makes this issue vitally important. But if they're not buying Treasuries, what are they buying?

    China is very active in Brazil, Russia and Venezuela. All of these emerging countries have a common element -- Natural resources. China is a major consumer of oil, iron ore, and base metals like copper. They are redirecting a greater portion of their foreign exchange reserves to these investments, circumventing funds that would generally be used to buy U.S. Treasuries.

    China's foreign exchange reserves have grown so large that they eclipsed the World Bank in total global lending in 2010. Once upon a time, China was the biggest borrower of funds from the World Bank -- now they ARE the "Bank".

    Many of the loans are cleverly tied to oil production and other resources that would be directed straight back to China. China is also lending to emerging markets that are denominated in Yuan, which are in turn used to purchase Chinese goods and equipment. China is clearly finding ways to diversify their exports and have less reliance on developed economies like the U.S. and Europe. ..."

    Part of today's Email from:
    The Tycoon Report <>

    Billy T comment: China's 6 increases in bank reserve requirements and other measures seem to be working as last quarter of 2010 GDP growth slowed to "only" 9.8% yet despite this, China’s full year 2010 GDP growth rate was 10.3%, but China’s rate of real growth is much higher. This is because GDP does NOT measure the material growth but the dollar value of it. Because everything made or service provided in China costs much less,, their dollar measured growth was only 10.3% but their production of goods and services increased something like 50%.

    For example, a 1 Km taxi ride in Beijing cost only 10% of what a 1 Km taxi ride in the NYC does and is essentially the same “service” created and provided. Thus, to make the same dollar contribution to GDP, China must produce 10 taxi rides for every one that takes place in NYC. The same is true of a newly made bridge, or highway, or pig farm, or new city*, etc. The net effect of this is that even though China’s GDP is only 1/3 as large as that of the US China is already (or before the end of 2011) producing more goods and services than the US is. – I.e. a larger real economy!

    China's under valued Yuan also adds to this effect. E.g. if 7 Yuan to the dollar were changed to 3.5 Yuan to the dollar, then a million Yuan of economic activity becomes twice as many dollars of economic activituy. I.e. China's GDP, measured in dollars, would double by this change of FX rate alone! That is why looking at the real production of goods and services is a more realistic measure of the economic strength of China. A higher valued Yuan is also a not yet much used but strong tool China has to fight inflation as after re-evaluation it will be more expensive for foreigners to invest in China, (lower FDI) etc. Thus, expect the upward movement of the Yuan to at least continue and probably accelerate.

    They are making rapid advances in their military might too. More than a year ago, China shot down an Earth orbiting satellite. China planted the Chinese flag 3.5 miles down on the bottom of the South China Sea, now has a "carrier killing" ballistic missile that can sink a "zig -zagging" US carrier 1800 miles away, a stealth jet fighter, etc. See post 361 at:

    China is also advancing rapidly in home grown civilian technology: China has twice placed satellites in orbit about the moon (The next man on the moon will speak Mandarin.) Has and is exporting the world's fastest trains with more than the rest of the world's total miles of high speed tracks by end of 2011, has a rapidly growing domestic large aircraft production capacity, but demand is growing so rapidly that Boeing and Airbus will still be selling to China for a few years more, is the world's largest producer of both solar cells and wind machines (but the Danish Vespas owns their main wind machine factory).

    *In this and the next 5-year plan, China will build 100 new cities for populations of at least one million each. The first, White Horse Village, was completed a few years ago. China two years ago began to permit the peasants to rent “their” land (it really belongs to the state). This has two very important effects: (1) it makes large efficient farms possible & (2) has greatly increased the urban populations in the interior of China (hence the need for new cities). These former pig farmers** etc. now have a secure income, rain or no rain, and the greatest mass urbanization in human history is well under way as a result. Population in many interior cities are expanding at more than 15% per year and their economies at about 18% per year, as China shifts production for exports from coastal cities to more production for domestic consumption in the interior, builds high speed rail to inter connect these new interior cities, etc.

    For example, FoxComm, closed two coastal factories and relocated them to the interior as the salaries it had to pay in the costal factories to attract workers were increasing at 30% per year. Now that the peasants do not need travel far from home to get a steady, higher-paying, factory jobs compared to raising pigs and vegetables, Foxcomm has decided to go to where the workers are now staying – the interior.

    The amazing transformation of China that has taken place in the last three decades (average GDP growing of nearly 10%) is really just getting started as China transitions to an urban, rather than rural, economy. As they say: "You ain't seen nuttin yet!"

    ** This is why I frequently have called the peasants "pig farmers" with no intent to slur them:

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    Last edited by a moderator: Jan 21, 2011
  9. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    What is not said by ChinaDaily tells more than what they report:
    Only Egypt related news is that two planes have been sent to help get Chinese get out and Mubarak's speech about resigning in September is reported.

    Nothing about people demanding their rights and taking to the streets to do that!.
  10. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Not really news as I posted about this more than a year ago, but now respected financial firms, specializing in Asia (China included obviously) are confirming my posts:

    "... Currently, all the top manufacturers have facilities in coastal areas, and despite a three-year average wage increase of 18% within major cities, labor shortages have persisted. The shortage has come as some migrants have found jobs closer to home following increased economic activity in their home provinces and also because there simply aren't enough migrant laborers to meet growing production demands. This has left manufacturers across a broad range of industries—including the laptop producers we visited—unable to hire enough workers to staff coastal facilities.

    Under normal circumstances, the sharp rise in labor costs may have been acceptable to coastal manufacturers given their cities’ solid infrastructure, well-built supply chain and the easy access to ports and airports. However, with fewer available coastal laborers to meet growing production demands, companies are establishing production plants inland. Four of the top five laptop manufacturers are planning to open facilities in inland cities like Chengdu and Chongqing. Besides the availability of more workers, other potential incentives to moving inland include tax breaks and lower operating costs such as land and utilities. However, the firms we spoke with did not necessarily believe that overall costs would be lowered after considering such factors as the higher logistical costs of setting up further away from ports and established supply chains. ..."

    From today's email from: From: Matthews Asia Funds <>

    PS in my earlier posts, a year ago, I noted that FoxComm had already closed two coastal factories and relocated their production to the interior. What MatthewsAsia fund fails to notice is that this movement to the interior did not just happen. It is part of the CCP's plan to switch to a domestic, instead of export economy. The same reason that in 30 interior provences the minimum wage is up 32% in the last 12 months!
    Last edited by a moderator: Feb 4, 2011
  11. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "...Major trading partners of the United States, including China, did not manipulate their currencies to gain an unfair advantage in international trade in 2010, according to a report released by the US Treasury Department on Friday. ... Treasury said in its long-delayed semiannual report to the Congress on International Economic and Exchange Rate Policies. ..."

    Billy T wonders why released on Friday after long delay

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    That could not have anything to do with Friday be the biggest demonstration / protest in Egypt taking up all the TV time could it? Of course not -that would imply the government is manipulating the news / us

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  12. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

  13. quadraphonics Bloodthirsty Barbarian Valued Senior Member

    No, that's completely backwards. That 10% GDP growth rate is already stated in real terms - the nominal growth rate is much larger, since China exhibits substantial inflation. The growth rate in nominal terms is something like 15%.

    Not that Chinese economic statistics are anywhere close to meriting the description "reliable" in the first place, mind you.

    No, China's GDP measured in PPP is around 60% of US GDP. In exchange-rate terms, it's about 30% the size of the US economy.

    Depends on what aspect of "economic strength" you are interested in. If it's geopolitical clout, then the exchange-rate value of the GDP is a more relevant measure than the PPP GDP. The fact that a cab ride is cheap in China does not do much for China's geopolitical clout. The fact that the USA can buy China's entire output 3 times over does a lot for the USA's geopolitical clout.

    If you're just comparing economies in the abtract, then so what? The level of economic activity associated with housing, clothing and feeding China is absolutely massive - but that doesn't really tell us anything except that China has a very large population.

    The anti-inflationary effects of revaluation are caused by the commiserate cheapening of imports and suppression of exports, not from effects on FDI.

    And there is no first-order effect on FDI from revaluation. FDI is not driven by the absolute cost of buying a factory in China, but rather by the prospect for ROI. To the extent that revaluation will tamp down on FDI, such will be because Chinese-made products will be less competitive and so the expected ROI will go down. And there are plenty of factories in China already whose profit margin depends entirely on various states subsidies (particularly currency manipulation). It's not a question of "too expensive" (else we wouldn't see China investing in the USA), but of "not profitable."

    What is true is that revaluation will reduce the size of the FDI relative to the Chinese GDP - China will get that many fewer new factories and jobs per dollar of FDI. But from the perspective of the foreign investors, they've still got the same amount of money to invest, so unless the expected ROI changes they will continue to invest at the same rate.
    Last edited: Feb 9, 2011
  14. quadraphonics Bloodthirsty Barbarian Valued Senior Member

    It's long been openly understood that currency manipulator designations are politicized, especially when it comes to China. There is no reasonable definition of "currency manipulator" that would not apply to China - whether the Treasury makes such a designation is a simple matter of politics, and not of facts.

    But Friday has always been the favored timing for burial of sensitive news releases, irrespective of what other events are occurring. This is because people don't watch as much news, either on Friday or over the weekend, and so by the time Monday rolls around the news cycle has moved on.
  15. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    I did not make up the assertion that because things are much cheaper in China the GDP does not measure the real production. I got that from this post and its source here: Barrons is not likely to be very wrong. Again, what is your source?

    They specifically stated that Chinese production of goods and services would pass that of the US in 2012, but only if NOT measured in dollar terms of the GDP - but measured in number of Km taxis drove, square feet of housing built, miles of railroad track laid, capacity of power plants installed, etc.

    I did find my source, so I want you to tell yours for:
    From your 60 & 30% I think you are agreeing that the low cost does underestimate the production of goods and services in China by a factor of two. My source had a significantly larger factor, but not the full factor of 10 that taxi ride cost have.

    That is very hypothetical ! Are you assuming that China would lend the US the money to do that as well as to cover it deficits?

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    China is just now setting up a review panel to rule on foreign purchases – Ie. Planning to get even for US not allowing them to buy UniCal back in 2005. See details of this news at:
    Certainly those are important, but in all the faster growing emergent countires, there is strong FDI driven inflation pressure – It is the main reason why, for example Brazil’s real has become so strong. The artificially low cost of borrowing in the US the FED is making is exporting inflation to much of the world and causing the growing “currency wars,” the new restrictions on capital flows, etc. A lot happens by “anticipation” For example, for years I did not buy any stocks in China (there ADRs actually) but now own about a dozen as I expect when the RMB is more valuable the upward revision of their value in dollars will help make them more profitable. I.e. I am a very tiny part of China’s inflation problem – why they are now setting up limits on FDI etc. as stated in the above link.

    I disagree, especially when one anticipates and upward evaluation of the RNB. Also, China is buying real assets all over the world as it does not want to hold so much in declining value dollars. The US is no exception. China is also buying in US to get its hands on new technology – such as horizontal drilling and hydro fracturing for shale gas production.

    Yes That is true but also that is why the current FDI is in part anticipation of the more valuable RMB.
    Last edited by a moderator: Feb 13, 2011
  16. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    If you don't find a job in the US go to China where there is a labor shortage and rapidly growing salaries, low cost of living, no real estate taxes, etc.

    "...They went home for the spring festival holiday in early February and never came back. Across China, factories are reporting millions of job slots left empty when migrant workers went home for the holiday {the new year of the rabbit} and never returned to work. ...
    Before the holiday, the Ministry of Human Resources and Social Security predicted that enough migrant workers would not return from their holiday trips to their home villages to create a 10% labor shortfall in China’s key factory provinces of Guangdong, Zhejiang, and Fujian.

    That prediction may have been conservative. Guangdong, for example, reports 2 million unfilled job slots, according to Caixin Online ( ..." From:

    As Billy T has been saying / predicting for years: China's CCP knows their old economic model (Export to broke USA & EU is a case of the walking dead - only propped up these last few years by Chinese loans.) The CCP had no choice but to raise salaries rapidly, improve healthcare with much lower out of pocket cost to the sick, make new jobs in the interior, designed for the domestic market, not export production, make new urban centers, allow the farms to be rented so large efficient ones are formed thus sending millions of former pig farmers into the new interior cities, etc. even though these improvements in living standards etc. do make a real risk for the CCP. - The now better off population will want the freedoms most with their new living standards enjoy, i.e. to freely speak their mind, tell the government off, end of the corruption and low cost loans which have been so profitable for higher party members, etc.

    It has been very interesting to read between the lines at the ChinaDaily recently noting what they don't tell about the fire raging in the mid east and N. Africa. For example long coverage of how China got 30 bus loads of Chinese out but little about the main story of popular revolt.
    Last edited by a moderator: Feb 25, 2011
  17. quadraphonics Bloodthirsty Barbarian Valued Senior Member

    The problem isn't in the source, but in your (re)interpretation of it. I.e., that chart in PPP dollars shows China growing at about 10%. So, the PPP growth rate is 10%, as I said.

    You seem to have treated that as a nominal growth rate, and then applied a (huge) PPP adjustment to it - that's wrong. And not just because the data was already stated in PPP: the correction between exchange rate and PPP doesn't have any bearing on the growth rate, just the absolute numbers (supposing the exchange rate hasn't changed). 10% growth in ER-GDP is 10% growth in PPP-GDP. The only way to get a change in growth rate in the conversion is if the exchange rate has changed over the same period - but given that the yuan has been appreciating (slightly) wrt the dollar, that adjustment would run the other way. I.e., some portion of the ER growth rate is simply yuan appreciation, so the PPP growth rate must be lower than the ER growth rate.

    It's more when you're worrying about accounting for inflation that you get adjustments to the growth rate - but those also work in the other direction (nominal GDP growth will be greater than real GDP growth, if inflation is occurring, which it is in China).

    That would be the low exchange rate - I'm comparing ER and PPP GDP there. The source is here:'s_Republic_of_China

    It's an interesting question - I'm unsure of exactly what methodology/data is used for estimating PPP in China, and note that this is especially difficult in a big country that features a highly uneven distribution of development (i.e., coast vs. interior vs. western colonies - probably it makes even less sense to apply a single PPP correction factor to China than it does to the US) and a history of screwy economic statistics practices and selective state intervention.

    It's hypothetical in the sense of China exporting its entire production and the USA wanting to buy all of it. US GDP is three times that of China in exchange rate terms - we could buy their entire output, fund our entire government expenses, and still have about 1/3 of our GDP left over. No, nobody would want to operate that way, but that's the scale of the situation.

    A couple of things - first of all, "FDI" refers to long-term purchases of productive assets by foreign entities, and excludes stuff that is either short term (stock market speculation) or in the currency or commodity markets. Even though the latter stuff does technically amount to foreign entities investing money.

    Second of all, none of those international investments (FDI, carry trade, etc.) cause inflation by themselves. Yes, they represent injections of capital into the economy, which is a pro-inflationary factor. But they also boost the exchange rate of the country in question by exactly the same amount - so it's only if the state receiving the investment pursues some policy to restrict imports (by intervening to prevent their exchange rate from rising, say) that this actually gets expressed as inflation. In places without such restrictions, the pressure gets expressed as a reduced trade surplus. Of course, the emerging economies in question are attracting all of these investments exactly because they are pursuing export-oriented strategies in the first place.

    You can see this dichotomy in the material I just quoted - the "inflationary pressure" is making the currency stronger (in exchange rate terms) - which is exactly the opposite of what inflationary pressure typically does.

    What China has is not so much an inflation problem, so much as a "difficulty choosing between inflation and increased imports" problem. If they weren't determined to run a huge trade surplus, and keep an artificially low currency, there'd be no foreign-capital-induced inflation to worry about.

    Right, and this goes exactly against your earlier assertion that they'd curtail FDI through (upward) exchange rate revaluation. Instead they are curtailing FDI in order to reduce the upward pressure on the currency (and so, inflation, since they are determined to keep currency appreciation minimal).

    That's only applicable to stock speculation, carry trade, etc., and not the sort of stuff that is properly called "FDI." That the yuan will appreciate doesn't make it any more profitable to own a factory in China - possibly the opposite.

    Except, the dollar isn't declining in value (much) these days. And there is no prospect of China getting down to less than 50% of its foreign exchange reserves being held in dollars in the medium term.

    Again, speculation in the currency and stock markets is not "FDI." This misuse of the term "FDI" is causing confusion. The term for what you seem to be talking about is "portfolio investment." See here:
  18. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    “We cannot allow price rises to affect the normal lives of low-income people,” Wen said in his state-of-the-nation report to the annual meeting of the National People’s Congress yesterday. “We will reverse the trend of a widening income gap as soon as possible.”


    Wen gave the 11th National People's Congress (NPC) the central government's draft 12th Five Year Plan (2011-2015), which almost 3,000 NPC deputies will review {Pass into law / official guidelines /, after a week of discussion and minor modifications}.

    The major focus this year will include reining in inflation, boost the incomes of farmers and pensioners, increase consumer demand, enhance agricultural development and speed up economic restructuring {Conversion to a domestic instead of export economy}. , Wen listed measures that will ensure more people share in the fruits of reforms and economic development. These include the creation of more than 9 million jobs, reducing the tax burden on low- and middle-income people and increasing government subsidies for the rural cooperative medical care system.

    The new 5-year plan calls for at least 7% annual real salary increases, forested land expanded by 1.3% during the five years, a further reduction in energy consumption per unit GDP of 16% with corresponding reduction of CO2 release / unit GDP of 17%. {More nuclear power and less coal in the GDP, I think, with more of the coal power produced by new "super critical" steam plants, which get nearly 50% more KWH from each ton of coal, compared to the older plants.}.


    Billy T notes: that China has already cut the out-of pocket cost of medical services by more than 50%. I forget the exact numbers but ~ 2/3 was paid by the patient and now less than 1/3 is*. China is doing this more to convert funds that were save for future medical costs (>50% of salaries were saved) into current spending to more rapidly grow domestic demand. (A healthier population is only a side effect.). It is for this same reason all over China the minimum wage is nearly doubled and higher salaries are rapidly in purchasing power. ~20% real increase in the coastal factories which now have serious labor shortages and nearly 10% in rural regions, but for the former pig farmers, now renting their farms make large more productive farms and taking a job in one of the 100 new cities being built, each for one million population, their real incomes have at least doubled. The land reform laws, which now permit land leasing, have made a huge change, both in farm land productivity and rural economies.

    *Perhaps China is moving to essentially free and universal health care system, at least outside of the major urban centers where incomes are higher. – Only a dream in the US.
    Last edited by a moderator: Mar 10, 2011
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    China's "economic restructuring" to a more domestic economy with less exports to US and EU took big step in February. China had a negative trade balance:

    " China reported an unexpected $7.3 billion trade deficit, the biggest in seven years, ... Exports rose 2.4 percent in February from a year before, the least since 2009 as Lunar New Year holidays disrupted shipments, and imports climbed 19.4 percent, customs bureau data showed today. Central bank adviser Li Daokui said that the full- year trade surplus will shrink from the 2010 level. ..." {But Billy T adds: Growth will be at least 7% with higher real salaries and cheaper health services plus the right to have new bank accounts tied to gold*.}
    Quote from:

    US trade deficit rose, increasing from a favorably revised $40.3 billion in December to $46.3 billion in January and weekly initial jobless claims rose by 26,000 to 397,000, versus last week's figure which was upwardly revised by 3,000 to 371,000.

    Summary China has a plan for transforming its economy that appears to be working, but US, if it has a plan, it is only to rapidly go deeper into debt (and hope).

    * For details on these new (less than 3 months old) gold holding bank accounts already opened by more than 1 million Chinese buying 12 tons of gold via their bank, and why China created them, see: where calculation showing that the average new account was opened with deposit (in Yuan) equal to $550. Anyone know what the average US bank account value is? (even for the more wealthy Americans?)
    Last edited by a moderator: Mar 10, 2011
  20. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "BEIJING - China, the largest US creditor, should stop buying US Treasuries because the "cost" of lending to a nation that may face a default on its debt is too high, said former Chinese central bank adviser Yu Yongding. ..." from:

    Perhaps China will buy more gold and silver instead in addition to its established policy (of several years) of trying to reduce its dollar holdings with up-front payment in full for 20 to 30 years of delivery of raw manterals it will need, stock-pilling copper, etc.
  21. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    I predicted long ago that Brazil would avoid the depression I predicted would quickly follow a run on the dollar, by becoming an "economic colony" of China.

    It looks like that is well under way already:

    "... At least 91 percent of Brazil’s exports by value to China in January were raw materials and their derivatives, according to government data. Brazil’s top eight imports from China by value were manufactured goods. ..."


    "... The world’s second-largest economy overtook the U.S. as Brazil’s biggest trading partner in 2009 after becoming Chile’s leading export market in 2007. Chinese exports to Chile have more than tripled in the past five years, ..." {from same link}

    Obama will be in (at least) three different Brazilian cities on 19 & 20 March11 and then go to Chile for at least a full day (two nights there, I think) partially to try to reverse China's growing dominance in both countries, but not much is expected to change because he can not reduce either the farm subsidies (WTO ruled the cotton one illegal and gave Brazil the right to retaliate with tariffs on US exports) OR the 54 cents /gallon on imports of Brazilian alcohol.

    These are laws passed by Congress, but the alcohol tariff is of minor importance now as the local alcohol demand is rapidly growing. One 200,000 ton/year plastic plant using sugar as the feedstock has been in full operation for a few months and a second, of the same size, will be producing in less than a year. (One makes polyethylene and the other polypropylene.) Because of their demand and possibly some contractual obligations to supply Alcohol fuel to Japan (and others?), alcohol is now significantly more expensive than gasoline at many filling stations - approximately 10% at some stations.

    Fortunately, Brazil's fleet of cars are at least 50% "flex fuel" and now many only use gasoline. Both in Brazil and in less developed lands that can, the growing of sugar cane is or will be expanding. Oil near $100/ barrel is not competitive with sugar as a petro-chemical feed stock, but it will take years for new chemical plants designed for sugar as the feedstock to be built. Perhaps these new plants, like Brazil's cars, will be "flex feedstock"
    Last edited by a moderator: Mar 18, 2011
  22. AndrewH Guest

    On a lighter note, it seems China has began to win some "cultural battles" and without even speaking a word!

    Taken from article on Kansas City Star titled "Hollywood tries to stay on China's Good Side"

    The article mentions China is currently Hollywood's 5th largest market. If BillyT's predictions come true, I'm guessing that number may jump significantly once US Movie goers can no longer afford to watch movies! Also, I just have to LOL at Tripp Vinson's "scarier, smarter, more dangerous Red Dawn". I'm sure American will be shaking in their boots over North Korea.
  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member


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