BRIC+ News & comments

[Billy T]

"... China approved plans to build 2,018 kilometers (1,254 miles) of roads, ... The government also backed nine sewage-treatment plants, five port and warehouse projects, and two waterway upgrades, according to statements on the website of the National Development and Reform Commission yesterday. No investment amounts were given. ..."

They think 7.5% GDP growth too small so are stimulating again.

 

[Billy T]

".. The four Asian juggernauts that topped Citi’s global {per capita in 2050}* wealth report — Singapore, Hong Kong, Taiwan and South Korea — are already growing at a remarkable pace, following in the footsteps of China and its massive consumption machine.

In China, for example, wages have been growing by around 12% a year in real terms over the last decade. And in spite of China’s economic growth slowing to a three-year low near 7.6%, retail sales are still growing like gangbusters, with a 13.1% year-over-year growth in retail sales.

... Note last year (2011) retail sales were up > 17% over 1010 sales."

China´s retail market is already larger than the US´s "replacement market" for many high value added items, like refrigerators, air conditioners, cars, cell phone, digital computers and cameras, etc. and luxury items, like Coach´s purses, French wines, and top of line Swiss watches, etc. but in less than 5.5 years even the current reduced 13.1% growth will double its size. I.e. China is making good progress on it "balancing plan" to become more of a domestic market than an exporter; however despite shrinking exports to impoverished / debt ridden / belt-tightening EU & US, China´s exports are growing because to other Asian nations they are up annually 25% + or - 5% and to many in S. America, nearly the same, but to Africa it is more like 40% + or - 10% on a smaller prior year base.

* Read Citi´s full "wealth report" at: http://www.thewealthreport.net/The-Wealth-Report-2012.pdf but be warned it is 68 pages long.

In some markets trade will double in less than 2.5 years! See blue insert below:

Billy T´s excerpts from 2 September 2012 speech by Wen Jiabao, Premier of China, to nearly 90 leaders from Eurasian countries and international organizations and more than 1,000 Chinese and foreign entrepreneurs at the Opening Session of at the Second China-Eurasia Expo: ... Over the past ten years, China's trade with countries in Central Asia, West Asia and South Asia has surged from 25.4 billion U.S. dollars to over 370 billion U.S. dollars, growing at an average annual rate of 30.8 percent. Chinese companies have made direct investment worth 250 billion U.S. dollars in Eurasian countries and signed project contracts worth about 470 billion U.S. dollars.

{BT insert: A 30.8% annual trade increase is a 97% increase in 2.5 years. Current Asian trade 370billion growing 97% is 728.9billion in Asian trade 30 months from now. US/China trade was 503 billion in 2011 and is not growing. Thus as I have noted, in 30 months, China can have trade growing (by 728.9 - 503 = 226 billion) without exporting anything to the US. With no dollar trade surplus earned, China will not help finance US´s more than trillion dollar annual deficits by buying US bonds. US deficits will increase even faster than now as US pays off China´s maturing US bonds with “printing press” dollars.}
...
In the new century, Eurasian countries and peoples should draw strength from our historical heritage and, in the same pioneering spirit of our ancestors and with greater confidence, proudly assume the responsibility entrusted by history and work together for new glory of the Silk Road and a better future of the Eurasian people. In conclusion, I wish the second China-Eurasia Expo and Economic Development and Cooperation Forum a complete success. Thank you. ..."

Read all five pages of it here: http://usa.chinadaily.com.cn/china/2012-09/03/content_15727475.htm

This from post at: http://www.sciforums.com/showthread...uture-issues&p=2976203&viewfull=1#post2976203 where you can read other "Billy T extracted" economic "high lights" from Wen´s 5 page long address that opened the China-Eurasia Expo of 120 nations. Note this expo is really Number 21 but was re-named last year so this is the 2nd with the new name.

 

[Billy T]

"..In a statement, Hon Hai, the world's largest assembler of electronic devices which trades under the Foxconn name, (1) said on Wednesday it will set up a new production complex to make tablets, smartphones and components in Brazil, investing some 1 billion reais ($500 million) to create about 10,000 jobs. {and} (2) the new complex in Sao Paulo will house five production sites, and it will sign an agreement with Sao Paulo city on Thursday. .."

Not only does the rapid rise in the purchasing power of the mid & lower class in China attract affordable consumer goods makers, but Brazil is second only to China in the mass lifted up into the middle class. (Perhaps ahead in terms of the percent of the population with greatly improved purchasing power.) The very anti-communistic doctrine of letting Chinese peasant lease to large agri-corporations their ancestoral farm land (right of use not actually owned) and Brazil´s "Bolsa Familia" (transfer of wealth to the very poor who agree to keep their kids in school until age 18 and get their vaccinations) have produced huge social revolutions peacefully with very rapid growth in the domestic markets.

 

[Billy T]

A quick lesson on the US´s currency war and its effects on Brazil (or others):

Brazil has a tax, IOF which is about 0.5% on “financial operations” and that even includes putting money in the bank and then taking it out in less than 30 days. It certainly hits transfer of large amounts of dollar into Brazilian Real, but I duck it by bringing back only the legal amount of dollars in cash with each return from the USA and sell it for Real with no records.

Because of US Fed´s misguided* belief that printing more money will cure the US´s economic problems, especially the employment problem (3 million fewer jobs than 2008 for population that is 10 million larger than then) and its slightly more valid idea that historically lowest interest rates will aid job creation, the US is making a “currency war” on all countries which do not also want their currency to lose value in the long run. US currency has been losing value more slowly than it normally would have with these policies of the Fed because for many with money the US dollar is the least ugly whore in the international whorehouse of finance.

I.e. the wealthy (both people and corporations with cash) in troubled Euro zone are selling Euros, and buying dollars to invest, mainly in US stocks but in rental property etc. too. – IMHO main reason there has been slight recovery in home and apartment prices. Thus the more pronounced effect of false low interest rates is the Carry Trade, i.e. borrow cheaply in the US and invest in places like Brazil (I have funds applied in a CD like fund of a bank that still grows by 0.68% PER MONTH, but three or four years ago, when Brazil´s basic interest rate was 15% per year, grew at 1% per month.)

This influx of dollars (not all borrowed in carry trade) into Brazil is a problem for Brazil. There is not sufficient demand for them and they are useless in Brazil where the currency is Real. I.e. the dollars must buy Real before they can earn interest in Brazilian bank (as I mainly do) or a factory etc. Thus there is a surplus of dollar in supply and shortage of Real. As always happens when supply exceeds demand, the price of that surplus item falls. I.e. it takes less Real to buy a dollar. Or stated the other way round, the Real gets to be stronger. That means a Brazilian can import instead of buy from local manufacture and that local manufacture can not export as much as when the Real was weak. Furthermore, his employees still want to be paid in real but he is earning in say dollars with his exports which no longer buy as many Real. So he closes his factory lays off his workers and they are voters too.

This makes the government leaders worry they may be voted out of office. “Something must be done” they tell Finance Minister Mantega, the director of “Brazilian Fed” etc. all of whom understand the cheap money (low interest) in the US is the root cause of this “currency war.” against Brazil and other countries. What to do? One obvious answer to save their elected jobs, is buy up much of the flood of dollars so there is no surplus of dollars and the Real will not be so strong that Brazilian factories close. How to do that?, is obvious too: Just print more Real to buy dollars with but that makes inflation.** So there must be a better way they think. Oh yes, there is the IOF, lets jack it up so no longer is it so attractive for dollars to come to Brazil. Also as the dollars are coming to take advantage of Brazil´s high interest rate, lets reduce them (they are now only 7,5 %, not the 15% of a few yeas ago).

These lower interest rates are making too much demand with so many once dirt poor Brazilain now in the lower middle class wanting to buy their first refrigerator or car. The factories making these products for the domestic market are at capacity and these newly middle class are will to pay higher prices for the supply that is available – I.e. this “solution” to the US´s currency war makes inflation too.

• For more on the uselessness of QE3, see this post: http://www.sciforums.com/showthread...ly-recovered&p=2985547&viewfull=1#post2985547

** To avoid that Brazil usually does what “super Mario” is planning to do with the newly printed Euros he is giving to the weak “Club Med” government or their banks. – It is called “sterilization” i.e. to remove the newly printed currency from circulation, they issue (sell) bonds. In Brazil´s case this is very expensive as to sell them they must pay at least what the banks do on deposits.

 

[Billy T]

Embraer, world´s third largest maker of airplanes, has just opened a 60,000 square meter factory in the industrial park near Portuguese town of Evora. It will make carbon fiber tails and wings* for assembly in Brazil, mainly. Embraer invested 177 million euros to build and equip the factory. Last year, Embraer open is first US factory in Flordia, but for several years has had a maintaince and training center there. (Fact that pilots speak English almost all over the globe may be partly why they put the center there. I.e. some of their training is free in the grocery store, etc.)

Brazil´s government did a little "QE tiny" last week. I.e. gave the two banks it controls (13 +8.1) billion Reais to increase their loans with - the 8.1 "earmarked" for agriculture, which always has cost before the harvest to finance. They have ordered these two to lower the interest they charge as a way to pressure the private banks to charge less also. Also other measures are planned to stimulate the slowed economy - things like reduction of taxes on exports and an increase in the IOF (See start of post 684) to make the destructive flood of cheap dollars coming to Brazil in a "currency war" less and possibly still more reductions in the basic interest rate for the same effect plus making marginal domestic investments by Brazilian firms more viable.

Individuals are making jobs for themselves in troubled Club Med countries too: CNN had story about Moroccan man, resident of Span, who lost his job but now spend ~15 days there, buying goods at very depressed prices (merchants have few customers) to pack in (or tied on top of) his van. Then he takes the 15km ferry ride back to his native land and sells them in about 15 days too. That is a lot better than the Greeks going to Scandinavia with their brooms and toilet brushes to get jobs cleaning toilets or sweeping street and parking lots etc.

* Probably for their very popular corporate jets - one of which collided with big Boeing and killed the ~300 people on board as it broke into two pieces, but the little Embraer jet with 6 on board (crew of 2 included) flew on to safely land about a half hour later with tip of a wing missing and part of tail destroyed! After that the order back log climbed to a three year delivery delay but if you had a used one available for immediate sale you could sell for thousands of dollars more than buying new from Embraer delivered three years later. (No one knows for sure but the big jet breaking into the two pieces found on the ground many miles apart probably was not an immediate effect of the collision. Perhaps control wires were cut and then aerodynamic forces tore the Boeing apart. The south bound Boeing did not make the 1000 foot altitude change needed to get into the south bound lane when "handed off" to a new ground control station. It is not clear if this was a ground control or pilot error, but few blame the little jet´s pilots although it is almost certain they had accidently turned off the collision avoidance system/ warning.)

 

[Billy T]

".. Pharmaceutical firms have been aggressively looking for real estate space in Mumbai. Major players such as Cipla, Sanofi-Aventis, Pfizer, and Johnson & Johnson have recently started the process of moving into modern buildings with better amenities. According to market estimates, pharmaceutical companies are expected to lease 10-15 lakh square feet of office space in India in the next two years. Large local consumption, abundant talent pool and comparative lower cost in India have led to pharma companies setting up shops in India in the recent past. .."
{Billy T notes: a lakh = 10,000 (and a core = E6, I think.) I.e. unlike the west, India puts the commas in between every two 00s. i.e. a lakh =1,00,00}

It is not just in IT software etc. that India is taking jobs from the US. Face it (you must eventually), the US lives "high on the hog" only because it can pay for much of it needed imports with green paper but only so long as the dollar is the international reserve currency. Four oil selling nations now prefer gold instead of dollars for their oil.

China has been a slight net seller of US treasury bonds for two years now. How long before others don´t buy new equal to their maturing also?

 

[Billy T]

Here is nice graph showing the Yuan is 19% more valuable than ~5 years ago:

and Dollar has lost about the same.
So Yuan is a currency of relatively stable or increasing value (purchasing power) but if Chinese bought dollars at start of graph they would have lost about 1/3 of their buying power by end of the graph. China did buy a lot of dollars (US Treasury bonds) back then. So it is easy to understand why they have not been net buyers of US bonds for two years now.

 

[quadraphonics]

Here is nice graph showing the Yuan is 19% more valuable than ~5 years ago:

That is a graph of the exchange rate between Chinese Yuan and US dollars. Are you defining "value" as "US dollars?" Because if you are, then you have defined out the possibility that the US dollar could "lose value." If you are not, then your statement as written is wrong and you should admit your error in conflating exchange rate with "value."

Dollar has lost about the same.

The statement "the yuan is up 19% against the dollar" is equivalent to the statement "the dollar is down 19% against the yuan." It does not, however, imply that the yuan has gained "value" by 19% and that the dollar has simultaneously lost "value" by the same amount. "Value" is a third variable, not captured by exchange rate fluctuations. For all we can see from the data you provide, both currencies could have gained in value over that time, or both could have lost value over that time. We have no way of knowing, and you have not provided any visible definition of "value." Instead, you seem to be conflating it with exchange rate in a way that makes a total hash of the situation.

So Yuan is a currency of relatively stable or increasing value (purchasing power)

The data you provide tells us absolutely nothing at all about purchasing power. It only shows the exchange rate between the US dollar and Chinese yuan.

but if Chinese bought dollars at start of graph they would have lost about 1/3 of their buying power by end of the graph.

No, that does not follow. In the first place, you seem to be double-counting the 19% exchange rate fluctation to get to your "1/3" figure there. In the second place, exchange rate is not purchasing power. It is perfectly possible for one currency to appreciate against another even as they both gain in purchasing power, for example.

China did buy a lot of dollars (US Treasury bonds) back then. So it is easy to understand why they have not been net buyers of US bonds for two years now.

Your analysis is exactly backwards there. The reason that the yuan has appreciated against the dollar is exactly that China has loosened its currency peg policy, which consisted of buying lots of dollar bonds. I.e.: the reduced bond purchases caused the rise in exchange rate, and not the other way around. Had China continued to purchase bonds at the previous rate, the rise in exchange rate would not have occurred.

Anyone with even a passing familiarity with the basic outlines of Chinese monetary policy knows that, and would not have made such a silly, elementary error as you commit here. Likewise, anyone with a working grasp of basic economics would not have committed the silly errors conflating exchange rate and purchasing power which you made here. You need to get a clue and stop talking out of your ass.

 

[Billy T]

That is a graph of the exchange rate between Chinese Yuan and US dollars. Are you defining "value" as "US dollars?"

No. I said "purchasing power" was the "value." to quote myself from post 687: "Yuan is a currency of relatively stable or increasing value (purchasing power)" that makes it very clear I was not defining the dollar as "value" so don´t understand how you could be confused.

The data you provide tells us absolutely nothing at all about purchasing power. It only shows the exchange rate between the US dollar and Chinese yuan. ...

That is true. I did not document the dollar´s loss or the yuan´s gain of purchasing power. Few, and certainly not you who seldom agree with me even when I just quote some other source, would agree on any documentation I supplied on purchasing power.

I was just vaguely referring to fact that for many items like the Dow Jones stocks or gold or corn etc. it now takes significantly more dollars to buy X of them than 5 years ago when the graph stated but some what less for China to buy many of the items it imports, like iron ore, grains, etc. with its Yuan. Yes exchange rates with Yuan increasing value wrt the dollar by 19% are part of why this is true, but not identical with the changes in purchasing power I agree.

 

[quadraphonics]

No. I said "purchasing power" was the "value."

You provided no data whatsoever on purchasing power. The graph you provided only describes exchange rate. So, you have entirely failed to support your assertions.

to quote myself from post 687: "Yuan is a currency of relatively stable or increasing value (purchasing power)"

That statement is totally unsupported, and also false. China is exhibiting higher inflation than the USA, and has for a long time. You seem to be laboring under some severe misconceptions about how any of that does (or does not) relate to the exchange rate between the dollar and yuan.

that makes it very clear I was not defining the dollar as "value" so don´t understand how you could be confused.

It's because you go on to confuse exchange rate with purchasing power, make a bunch of unsupported, false assertions about purchasing power of various currencies, etc.

I did not document the dollar´s loss or the yuan´s gain of purchasing power.

Not only did you not provide any support, you continue to traffic in false assertions. The yuan is losing purchasing power, and at a faster rate than the dollar.

Few, and certainly not you who seldom agree with me even when I just quote some other source, would agree on any documentation I supplied on purchasing power.

Valid data does not brook "disagreement," although it will not support your assertions (inflation in China is positive and greater than in the USA, in opposition to what you claim). And that's true even of the official Chinese bullshit statistics which understate inflation there.

Regardless, if it is your position that there is no scientific consensus available on what the purchasing power of the yuan is, then what you have produced is not a justification for making assertions about such without substantiation. You are arguing that such is simply unknowable.

I was just vaguely referring to fact that for many items like the Dow Jones stocks or gold or corn etc. it now takes significantly more dollars to buy X of them than 5 years ago when the graph stated but some what less for China to buy many of the items it imports, like iron ore, grains, etc. with its Yuan.

The fact that gold, corn and the Dow are up in dollars, and that iron and grain are down in yuan, is not a valid analysis of changes in purchasing power. You aren't even comparing comparable baskets of goods, nor are the baskets representative of general consumption in those two countries. In the case of China you are only looking at the cost of imports, which is to say that you're only capturing exchange rate fluctuations (and the massive drop in demand for iron ore due to China's economic slowdown).

You seem to be more or less admitting that you haven't done any real analysis of purchasing power, and that you aren't going to bother trying. Which is fine so far as it goes, but it also means that you have to stop trafficking in unsubstantiated - not to mention, false - assertions about such.

 

[Billy T]

... The yuan is losing purchasing power, and at a faster rate than the dollar. ...

I don´t have much faith in either US or Chinese published data on inflation, which you base this claim on. Certainly some aspects domestic buying, especial purchasing food, now require significantly more of both country´s local currency than than they did a few years ago. And China´s percentage increase is greater than the US´s but one also must consider that real wages are at best static in the US and increasing by double digits in China!

Other aspects like housing have come down in their nominal cost in both countries. I just know price of many things China buys from Brazil have lower prices now. - Part of why Brazil is in a slump. Vale, world´s largest producer of iron ore, is not doing nearly as well as when I bought its stock a few years ago (ADRs at little more than $22/sh) as China pays LESS for Vale´s iron ore now. I.e. for imports, in most cases, the yuan has increasing purchasing power even for those items for which the dollar price has slightly risen as each yuan buys more dollars now. For another example: price of gold in dollars has gone up more than it has in yuan. It is really IMPOSSIBLE to not consider exchange rates as you seem to want me to do. i.e. the graph of post 687 IS relevant to purchasing power, but not the same as relative purchasing power.

 

[Billy T]

China and Brazil getting increasing ties:

"..China is fast-becoming a major player in the global auto industry. Unlike Toyota, however, whose biggest market is the United States, two Chinese companies are zeroing in on the emerging markets for the opportunity to drive home profits.

Last week the Brazilian finance minister revealed that Chinese carmakers JAC Motors and Chery will soon open factories in Brazil. JAC’s plant will be in Camacari in the northeastern state of Bahia. Construction starts Nov. 28, and the plant is expected to be operational by late 2014. Chery’s factory will be in Brazil’s largest city, São Paulo.

I {Rudy Martin of uncommon wisdom daily} commented on a CNBC interview that Brazil wants to be viewed as more than just a provider of food and raw materials. And in a move that should help raise its profile in the auto industry, last week the Brazilian government announced a new program that gives four-year tax breaks to manufacturers of economy cars. The program, which will go into effect in 2013, is aimed at encouraging automakers to produce more compact, fuel-efficient cars.

But while Brazil is a country investors watch closely the real growth story continues to be China. (And not just in the automotive sector.)
China has been busy ramping up growth in other sectors as well. For instance, recently issued data indicates that China’s maritime economy has grown faster than the country’s actual GDP in recent years. According to the Ministry of Land and Resources, the sector saw a 13.5% annual growth rate during 2006-’10, exceeding the overall economic growth rate. Its total output last year hit 4.56 trillion yuan ($720 billion), more than double the 2006 level.

Indeed, with output accounting for 9.7% of the nation’s GDP, the maritime sector employed 34.2 million workers in 2011. ... Traditional maritime industries have continued to expand. China now has the world’s greatest shipping capacity, as its 20 ports each have an annual cargo throughput capacity exceeding 100 million metric tons. {photo below inserted from another source to show Chinese port sizes}

It is also the world’s biggest ship manufacturer, exporting vessels to 169 countries and regions. In addition, emerging maritime industries — such as offshore wind power and tidal power-generating electricity projects, are being commercialized or are in trials. .."

Also at that link:
".. According to the World Gold Council, Putin has doubled his gold reserves in the past five years ... making the Russian gold pile the fifth-largest in the world. Why? Because Putin sees what’s dead ahead: The demise of the dollar and the potential collapse of the American empire. And he’s not alone. Countries like China, Turkey, South Korea, India, Venezuela, Slovakia, and Ecuador are also hoarding the yellow metal. .."

 

[Billy T]

I predicted this would happen, years ago in this thread:

".. CHINA, you may have heard, announced its latest growth figures on Thursday. The speed of growth attracted most of the attention, but the source of growth is perhaps more striking. The National Bureau of Statistics pointed out that in the first three quarters of this year consumption* contributed over half (55%) of China's growth, exceeding the contribution from investment. If that pattern holds, China's growth this year will not be investment-led (let alone export-led), but consumption-led.**

That hasn't happened for over a decade. ... But earlier this week the new edition of the China Statistical Yearbook arrived on my desk with a thud. Its revised figures show that consumption contributed 55.5% of China's growth in 2011; investment contributed only 48.8%. (Net exports subtracted 4.3%.) In other words, China's growth was consumption-led last year as well.

* Consumption includes government consumption as well as household consumption.
** These calculations refer not to consumption's share of GDP (C/GDP), but to its share of GDP growth (ΔC / ΔGDP). Consumption is still unusually low (and investment unusually high) as a share of China's GDP. But as long as consumption's contribution to growth exceeds its share of GDP, that share will rise.

I also predicted many years ago the Yuan would gain on the dollar (up ~11% under Obama) as China needed to control inflation (more valuable currency helps that) and would want less of an export economy as US and EU, would eventually go broke and already needed back then loans from China with which to buy Chinese products. (How China amassed about 3 trillion dollars.)

 

[Billy T]

RMB gaining:

“.. SYDNEY -- China's currency, the Renminbi, has begun an 'inevitable'climb into the Asia Pacific's regional reference currency as western quantitative easing intensifies, leading experts say.

Two recent studies by the Petersen Institute for International Economics have highlighted the RMB's ascension over the US dollar in Asia as the reference currency. Paul Bloxham, chief economist of HSBC Australia New Zealand, told Xinhua that the latest currency movements are only the beginning. "I think the Yuan is destined to be one of the global reserve currencies, given China's size and wealth," he said.

"So the wider use of the Chinese currency across the Asian region is just one step along the path towards the almost inevitably large role that the yuan will eventually play." An HSBC survey released last night revealed widespread confidence in the future of RMB as a major global trade and investment currency among mainland Chinese corporates.

The survey found the vast majority (77 percent) of Chinese corporates surveyed expect one-third of all Chinese trade (circa $2 trillion) to be conducted in RMB by 2015 (against 10 percent YTD) and 30 percent plan to use RMB for investment-related purposes in the next 12 months. Andrew Skinner, head of Global Trade and Receivables Finance for HSBC Bank Australia told Xinhua that China would be among the top three currencies within three years.

"RMB internationalization is underway and we expect it to be one of the top three global trade currencies by 2015 with half of $2 trillion of Chinese trade being settled in RMB by that time." The latest PIIE research confirms that Asia is moving much faster than generally understood towards an RMB bloc, despite attempts in the United States and Europe to attack the value of China's currency through increased quantitative easing.

More and more countries are accepting the RMB to settle accounts with China, marking the end of the US dollar domination as a reserve currency. At the end of March, Australia signed a critical currency swap deal with China's central bank worth 30 billion Australian dollars. This deal and others like it will transform the RMB into possibly the region's primary trade currency in the next years.

The swamp of quantitative easing -- money printing -- in Europe is designed at its crux to shift the embattled Euro even lower -- effectively generating wealth for German, Italian and other European manufacturers just as the US works to keep the greenback artificially low to guard low interest rates.
With China-bashing now an integral part of the US electioneering, the winner, regardless of who it is, will renew pressure on China to lift the RMB beyond its natural evolution as a key domestic agenda and the cost of entrance into the growing American market. If a global currency war results, Australia and its buoyant dollar will be among the first casualties.

To that point, HSBC has begun encouraging Australian companies to become Renminbi-ready as Renminbi cross-border usage broadens. "With RMB internationalization moving full steam ahead, we see a clear place for the currency within Australia and the region's trade flows, "Skinner said.

"The role of the RMB in international trade, investment and markets is strengthening because Chinese officials are quickening the internationalization process. Market demand for cross-border use of the RMB and the rapid development of China's trade cooperation globally continues to pick-up speed." "We've already seen this play out in Australia where authorities supported the RMB via a bilateral currency swap agreement between the Reserve Bank of Australia and the People's Bank of China," Skinner added.

Despite the support from authorities on both sides, HSBC research shows a disparity between the expected use of RMB among Chinese and Australian companies whereby Chinese companies'use of the RMB exceeds that of Australian companies.
Skinner said that HSBC was working to'bridge the gap'by educating Australian companies on the benefits of being RMB-ready in order to tap into China's growth story.

China has well over 20 bilateral local currency swap arrangements with countries in and outside Asia, totaling $157 billion. With positive trade data coming out of the PBOC, hinting at a managed stimulus package, economic growth is predicted for early 2013, suggesting any further appreciation in the RMB is unlikely after it snapped to its highest level in almost 20 years at 6.28 to the US dollar. ..”

 

[Billy T]

US railroads are museum pieces.

".. A high-speed train passes through Weifang, Shandong province. Chinese infrastructure companies have already completed projects in developing economies, ... "We hope we can work on some good railway projects in the UK," said Liu Yuling, general manager of China Civil Engineering Construction Corp, which has built railways in Algeria, Libya, Nigeria and other countries. His words were echoed by CITIC Construction Co Ltd, another Chinese company, whose projects include a $3.5 billion housing project in Angola. {For few years still, during construction, is the world´s largest ghost town.} .."

".. China will have established a high-speed railway network covering almost all its cities with a population of more than 500,000 by 2015, according to a latest official program. According to the plan, China should basically complete the construction of a high-speed railway network with a total operating length of more than 40,000 kilometers by the end of 2015. .."

About twice the total high speed track the rest of the world has. The longer term plan, shown below, has Chinese high speed rail, reaching both Moscow & London!

... Unlike the US, China has infrastructure plans extending up to 50 years into the future. (Ten consecutive "5 year plans") and is already negotiating with 17 other nations to complete an amazing rail system. Specifically, China has already agreed to finance a rail link into Myanmar in exchange for the rights to that country’s lithium reserves. Russia and China have announced plans to build a new trans-Siberian link. Iran, Pakistan, and India are each negotiating with China to build domestic rail lines that would link into the overall transcontinental system. …” {as shown above}

“…China would spend its own money building the rail links in exchange for resources it currently lacks. According to Wang Mengshu, a consultant working on the project, “We would actually prefer the other countries to pay in natural resources* rather than make their own capital investment.”
From: http://www.thetransportpolitic.com/...continental-ambitions-with-massive-rail-plan/ *{China wants to use dollars in its reserves for real assets, and this is just another way.}

The China-made CRH380A train hit a speed of 416.6 kilometers per hour on a test run to set a new world train speed record. ..."
From: http://www.chinadaily.com.cn/china/2010-10/19/content_11430672.htm

"..{Sept 2012} China's largest train manufacturer, CSR Corp Ltd, on Monday announced its subsidiary company has secured a contract worth $400 million to supply freight electric locomotives to South African logistics firm Transnet. {China has replaced US as Africa´s main trade partner 2 years ago.}

 

[Billy T]

Brazil working to become colony of China:

"..The Brazilian Confederation of Agriculture and Livestock, the main body representing millions of farmers in Brazil, will open an office in Beijing next Wednesday aiming to increase bilateral agricultural trade and attract Chinese investment in Brazilian infrastructure.

"By 2015, 30 million Chinese are expected to join the middle classes, increasing demand for food. This is a very important opportunity for Brazil," said the president of confederation, Senator Katia Abreu, who is heading the entity's delegation in Asia.

Apart from intensifying trade relations with China and other regional markets, another aim of the new office in Beijing will be to find opportunities for Chinese direct investment in Brazilian infrastructure, especially in transport logistics and in storage and distribution of agricultural products. .."

 

[Billy T]

".. more cash is trickling down to Chinese laborers. More than half of the country's growth last year "has come from domestic consumption, and it's really because the government is pushing for more money to go into the pocket of everyday Chinese -- 21 of China's 31 provinces increased the minimum wage by 22%," Rein said. .."

But still the domestic market, while fastest growing is only 1/3 of the Chinese economy and the rich are getting richer faster than the poor (as in USA) so the gap between is increasing even with the above great gains of the poor.

"..The nation has an estimated one million people with a net worth of $1 million or more, and that is expected to grow 2.5 times in the next three years, Rein said.
But much of the hope of the rising domestic spending rests with China's growing middle class. There are an estimated 350 million people in China's middle class, which are households that earn between $6,000 and $15,000, Rein said. A government think tank predicted last week that by 2020 there will be 600 million Chinese earning middle-class incomes. .."

 

[nietzschefan]

To conquer quickly you need rail lines.

 

[Billy T]

For a decade Geane Menezes earned no more than $250 a month cleaning the home of a wealthy Brazilian family. Now she sells souvenirs at an airport store in the northeastern city of Recife and plans to open a business. “I feel more valued and earn twice as much,” Menezes, 34, said ...

Menezes isn’t the only one hanging up her apron. With unemployment in Latin America’s biggest economy at record lows, poor women who for decades formed a pool of cheap domestic labor for the middle and upper classes are pursuing better-paying, higher-skilled jobs. The result is a shrinking supply of help, which has allowed the remaining nannies, maids and cooks to command wage increases at more than double the rate of inflation since 2006.

Brazil led Latin America in reducing poverty over the past decade, with its middle class -- those defined as earning $10 to $50 per day -- expanding by over 40 percent, according to a World Bank study published this month. ... Brazil’s nationwide unemployment rate plunged to a near-record 5.4 percent in September, less than half the level a decade earlier.

“The maid’s daughter no longer wants to be a maid,” said Marcelo Neri, an economist who researches poverty trends and is president of the federal government’s Institute for Applied Economic Research, known as IPEA. “She’s studying, going to high school, and wants a better profession.”

Menezes said she’s making plans to attend night school to study tourism and hospitality, and one day wants to open her own beachfront store in Recife. She said she’s confident that government-provided credit will help her achieve that goal.

Under Lula, Brazil boosted spending on the poor. He expanded his flagship Bolsa Familia* welfare program to the poor to 12.7 million in 2010 from 3.6 million families in 2003, according to IPEA. His protégé and successor Dilma Rousseff is more than doubling his housing program, which subsidized credit for 1 million mostly poor families to buy their first home through August 2012.

The shortage is also reflected in wages for domestic workers which increased 83 percent since 2006, more than double the rate of inflation, according to the national statistics agency. The average monthly wage for domestic workers was 723 reais in September, according to the statistics agency. Brazil’s legal minimum salary is currently 622 reais. {Billy T inserts: In São Paulo it is higher. Nearly = $500 / month.}

Fewer middle class homes are being built with sleeping quarters for maids, and service elevators traditionally used by the help are no longer a fixture. “The way people care for their own houses, using washing machines more and contracting day help instead of live-in maids is a sign of modernization,” IPEA’s Neri said.

The jobs boom has contributed to a 91 percent increase in the incomes of Brazil’s poorest 10 percent over the past decade, more than five times faster than the earning power of the richest 10 percent, according to an IPEA study published in September.

Hell, that bold text is "small potatoes" vs the US´s progress in the last decade, where the richest top 10%´s earning power is up 400%.

*Billy T has many (more than 60 hits with search on "Bolsa") posts about Bolsa Familia - Here is one from early 2008: http://www.sciforums.com/showthread...amp-comments&p=1969667&viewfull=1#post1969667 Which also tells a pregnant maid (et al with low wages) in Brazil gets 6 months off from work with the government paying her regular salary. (As well as essentially free education thur college and free medical care for all but admittedly in poor areas, like the NE of Brazil especially, both leave a lot to be desired, still, but are improving everywhere too as more funds are made available.)**
Here is one from Nov 2012: http://www.sciforums.com/showthread...ear-old-girl&p=3010048&viewfull=1#post3010048 It tells that after Malala was shot, Pakistan is adopting at least the educational incentives of Brazil´s Bolsa Familia. Many of the world´s poor would be greatly helped by doing the same, and several poor nations are as the costs of Bolsa Familia are nearly recovered immediately (as explained in some of my posts) with huge economic gains in one generations (greater than the US´s WWII GI education bill made as those helped are often even illiterate when first getting the aid!)

**IMHO, the US is far from a civilized country - the worst "advanced country" in the world by the Gini index too, which measure the gap between rich and poor.

 

[Billy T]

One factory with > half a million Chinese make many J-15s.

China's "first generation multi-purpose carrier-borne fighter jet," known as the J-15, successfully completed its first landing on the Liaoning, an aircraft carrier China built using an abandoned Soviet hull, according to China's official news agency Xinhua.

The J-15's capabilities are comparable to the Russian Su-33 jet and the U.S. F-18, Xinhua reported. The Chinese-designed jet can "carry multi-type anti-ship, air-to-air and air-to-ground missiles, as well as precision-guided bombs, the report said.
The U.S. military, in its latest annual assessment of China's military capability, predicted "it will still take several additional years for China to achieve a minimal level of combat capability for its aircraft carriers."
The Liaoning will be able to carry 30 J-15 fighter planes and will have a crew of 2,000, according to a People's Daily Online report published when it completed its first sea trials in August 2011.

Above link also states:
"The Pentagon report said another carrier, one made from components made in China, may already be under construction and ready to sail in 2015.
"China likely will build multiple aircraft carriers and associated support ships over the next decade," the U.S. assessment said."

"We are going all out to resolve the bottleneck in the country's rapidly growing aviation industry — reliable and high-performance engines for passenger aircraft," Lin Zuoming, chairman of Aviation Industry Corp of China, told China Daily. The group, with at least 500,000 employees, has just produced the first prototype of a high-bypass turbofan engine for large commercial aircraft. But it may take "years",* and numerous tests, before it soars into the sky, he said.

Lin, 55, made the remarks on the sidelines of the 18th National Congress of the Communist Party of China this month. He was elected to the 205-member Central Committee of the CPC. Lin's company, listed in the Fortune Global 500, manufactures aircraft for the Liaoning, the country's first aircraft carrier, ...

* With England´s financial troubles, I wonder if they will (or have?) tried to buy all or part of Rolls-Royce airplane engine division, which is the world´s second largest manufacturer of turbofans and is most noted for their RB211 and Trent series, as well as their joint venture engines for the Airbus A320 and McDonnell Douglas MD-90 families. Such an offer might be accepted when England is back in recession.