BRIC+ News & comments

China Eclipses U.S. as Biggest Trading Nation

http://www.bloomberg.com/news/2013-...ecome-the-world-s-biggest-trading-nation.html

 

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Bad as the following is, it is a big improvement as thousands of simple rural clinics and at least a hundred rural hospitals have been created in the last decade. China still has a long way to go to make all it can for its sick, but is moving fast in the right direction.

" {Rural Chinese} patients still frequently slip “tips” in red envelopes to China’s underpaid doctors and surgeons in hopes of getting scheduled to be seen more quickly or receive more attentive care.

While some urban areas have better hospitals that cater to expatriates in China and residents who are both willing and able to pay for private care, the vast majority of Chinese clinics are public and simply lack resources.

Patient care is deficient as ill-paid doctors typically try to fetch more compensation by over-prescribing medications in order to get kickbacks from drug companies.

Fortunately, however, the government has pledged to reform its health care system, and triple its spending in this area to US$1 trillion by 2020.
China’s government health care spending has already been growing rapidly and China is now the third largest health care market in the world. Despite this growth, China’s health care spending as a percentage of GDP is still among the lowest the in the world at 5%, compared to about 16% in the U.S in 2011.

With both urbanization and an aging population on the rise, the government has recently targeted an increase in health care spending to as much as 7% of GDP by 2020" – Quote from Email from Matthews International Capital Management, LLC.

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Also medical care has been made more affordable - Now patient pays 1/3 of the cost, not 2/3 as was the case about 5 years ago. China did this mainly to decrease the saving rate of the population, but old habits die slowly - it is still nearly 50% of discretionary income. Note also with China´s rapid growth of GDP, 7% will be more of an increase in funds spent. - Perhaps more that Europe spends per capita.

 

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Chinese drug lord and three underlings were executed Friday.

They killed some Chinese sailors operating on the Mekong, which now China polices thru four other countries all the way to the ocean as the Mekong is main trade river for southern inland China which is far from the coast.

 

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Brazil must be doing something right. I think a lot of the improvenment for the masses comes from the 13 years old and growing "Bolsa Family" program that bring qualifying poor into the cash economy with modest cash grants. More on the cost / benefits in my old post at end with most of China related part now removed.

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It would be interesting to see same display for the USA.
I bet it would be like this one but read from right to left as the middle class in the US is shrinking %, but in Brazil it has more than doubled in the last two decades!
The economic classes in Brazil are defined by hard facts. Like: Do you own a car, own your house, have signed work contract, level of education, taxes paid, etc.
The class boundaries are not subjective judgements and have never been "adjusted" AFAIK but currency values are stated in constant Real.

* China has ~7 times more poor than Brazil. China is doing "something right" for its masses too (purchasing power of interior salaries growing 15% + or - 3% annually!)

 

More on what Brazil is doing "right."

BTW#1: Our maid just gave birth to a boy last week. She has 6 weeks off, about 3 remaning, with full pay, but not by us. The government pays as part of the INSS program. - Sort of like US´s Social Security in that we and she pay into the INSS every month (and also like Social Security that govenment must help support it from general taxes, etc. but with much smaller fraction of the total cost than the government´s support for the free health care services.)

BTW#2: For the first time in its long history Cornell´s current freshman class was more women than men. (52% vs 48%). Same is becoming true in Chinese education. Thus, not only does the future belong to China, it belongs to Chinese women! Men are increasly less needed. 10,000 can be replaced by an insulated jug of sperm held at liquid N2 temperatures. I.e. In the distant future, with pre-natal sex selection, the female to male ratio can be stable at 10,000 to 1.

 

None of this settles in the dying "PetroDollars":

Rusian Chinese trade in 2012 was 88 Billion dollar worth (but none in dollars), up 11% from 2011. In 2013 it will be ~100 billion and then in year or two more climb to 150 billion. By then, by mutual agrement of ~2 years ago China´s trade with India will be ~100 Billion before 2014, also not in dollars. China is the main trading partner of 35 countires now. Most of that trade does not use dollars. The growth ONLY of China´s trade with others than US and EU will this year pass the total trade with US and by end of 2014 pass the total trade with both US & EU. I.e. in 2015 even if China did not trade at all with US & EU, the trade would still be growing, but not at the current ~20 to 25% per year. - Why if US and EU collapes in deep depression in 2015, China will only slow its trade growth.

 

The BRICS´s annual meeting officially starts tomorrow, but is producing headlines already. Most important is that they will create a BRICS alternative to the IMF* and broaden the non-use of the dollar. Current China dominates this with bi-lateral currency swap agreements with all the other BRICS + Japan, S. Korea, Vietnam, Indonesia, and at least two dozen others it trades with. A total of 35 countries have China as their largest trading partner.

The BRICS have 40% of the world´s population, 25% of global GDP, 20% of all FDI and all of these percentages are growing, while they shrink in US and EU.

To show the importance China attaches to this 5th BRICS summit, China´s new president is already there in Durban S. Africa, cutting more deals for spending China´s dollars for real assets like oil, minerals, coal, food stocks, & gold** and for more Yuan replacing dollar. Recently Nigeria, an important supplier of oil to China, agreed to switch it reserves to Yuan and that is now 40% complete. UAR, Kuwait, Iran, of course, Venezuela, and some others prefer rising value Yuan to falling value dollars, but are not yet publicly admitting that. The PetroDollar has been sent to the intensive care unit, but is still growing weaker.

*It is a “done deal” with the headquarters of this new alternative development bank to very likely be in India, but that part is not yet firm.

** China was world´s largest buyer of gold in 2012 purchasing more than 500 tons and for more than three years has admitted to producing 125% of what #2 producer produces, but probably much more.*** China is preparing for the day if will issue Yuan bonds, backed by gold, for central banks and the IMF. See more details at: http://www.sciforums.com/showthread...e-worse-news&p=3054468&viewfull=1#post3054468

*** See next post 728.

 

That "production" refers to the 6.6 billion dollar commercial mine / concentration plant; however, for about a decade, individual called Ninjas (as they illegally mainly work at night and carry the gold ore in green turtle-like back packs. There are estimated to be 60,000 ninjas!) and more recently even truck loads of gold ore occasionally move unofficially into China, less than a two hour drive away. See photo of both below:

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The Oyu Tolgoi mine in Mongolia's Gobi Desert is one of the world's biggest copper and gold discoveries, ... The mine is part-"owned" by Rio Tinto and the Mongolian government; the latter wants to increase its ownership in the project and in turn boost its share of the billions of dollars in predicted revenue. "Owned" is in quotes as Mongolia has (on 27Feb2013) cancelled some license to mine there:

 

Australia is beating Brazil in race to become economic colonies of China:

 

Labor shortage in China:

If you can not find job in US, learn Mandarin. China has one waiting for you, but probably not at FoxConn where the producion line problem is being solved with 100,000 new production line robots.

 

Brazil officially has "inflation targeting" (4.5% is goal) as guide for monetary policy and in theory the central bank, BCB, does set that policy. They are not however officially independed, but serve at the will of the govenment. None the less until the current left-wing workers party took control, the BCB was in practice independent. Now, goverment officials with increasing frequency tell what the monetary police should be, but have not yet fired the officers of the BCB.

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The infaltion (red line) is increasing and the basic interest rate (blue line) needs to also rise; but Brazilian economy is in a slump as commodity prices have declined, so instead the governement is mandating stupid prices - unofficial controls - in certain sectors. For example, electric rates have been reduced by ~1/3, and PetroBras has not been allowed to significantly raise the price of gasoline for five years - now sells it at small loss, as refined oil products are largely imported at world prices (Brazil needs to build new refineries - but will not with negative incentives from government policy) and sells its excess of crude production at lower price than imported gasoline, etc. Brazil also needs to build more hydro- electric plants, but there too government has made the incentive negative.

These price control measure are popular with the voting masses, but very damaging to Brazil. Perhaps that will be understood by the voters, and PT will be thrown out of office, but I don´t hold my breath for that. Probably need a few months of rolling blackouts and gasoline in short supply - long gas lines etc. - The world has changed, especially under US leadership: We now live in world where masses vote for whoever promises to give the voters the most "goodies" and send the bill to future generations.

 

Change in Rio, Brazil:

Of course what will probably happen, if plan is completed, as happens in other cases of urban gentrification, is the original residents will sell out to young and newly rich, wanting the fantastic view, and cleaner air of a locally car free area and short cable car ride to the beach etc.

 

As I predicted more than five years ago, China is and MUST become more of a domestic oriented economy with fewer exports to the broke US & EU who can only buy if China finances their purchases. China will of course continue to rapidly expand exports to other prospering Asian nations and its suppliers of raw materials and energy:

 

Not sure I follow your thought. Germany, I think, on a per capita basis is by far the world´s greatest export based economy.

 

France leads EU in RMB:

I think SWIFT has forgotten S.Korea. which has China as it largest trading partner, and a currency exchange agreement too. - I.e. they don´t buy with dollars, but RMB.

 

Brazil playing "catch-up" to China in Africa:

 

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As I recall, China´s trade with ASEAN grew 55% in 2011 over 2010 and was projected to be bigger than China´s trade with the US by 2014 (or was it 2015?) Someone may want to check. An way China´s trade with US and EU is static or slowly growing while it trade with the BRICA is growing by double digits annually and with many others in Asia (all the way over to Iran, including India, Indonesia, and Burma, is growing by the mid 20s% percent. None of them need to borrow funds form China with which to buy, as the US and EU do. Only a few years now before China tells US & EU:

Go to Hell. We don´t need to sell to you and will no longer finance your deficits. (Print money as you need it.)

Exactly when depends a lot on how rapidly they can get Chinese to save less and spend more, so China´s economy is mainly domestic rather than export based. There internal market is larger than US + EU and is mainly a "first time buyer" market, not the much smaller, on even a percapita basis, "replecement market" of US & EU. When that is considered, the Chinese market is effecively at least 10 times larger than US + EU for at least a decade.

 

End part of quote below, now bold, is about right I hope. Brazil is intrinsically one of the richest countries in the world, but for decades wealth was very concentrated. Then a little more than a decade ago things began to improve for the very poor mainly via a program (Bolsa Family) that paid parents if their kids stayed in school up to age 18 and got their vaccinations. It lifted many millions out of deep poverty and even though the schools were not good they were better education than going to work in the fields at age ~12, barely able to read and do simple math. Also TV and to some extent the internet expanded horizons beyond how far their horse could take them.

The majority of the population was no longer happy with "Taxes like Sweden, Services like Nigeria" - a common way to describe Brazil. The better educated youth are now "Mad as hell & I'm not going to take it anymore."

As you probably know, the current unrest stated with a modest increase in transportation fares, but they were rescinded and by time that was done, the demonstrations had morphed into as stated here:

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" The people living in Brazil, a country that's pretty well-off, feel like the government is the reason they're not seeing the tangible benefits of the broader economic prosperity. Corruption is a broad term, obviously, but the above are the popular complaints pointed out {in your link}. Those sentiments highlight what protesters told the AP: "We don't have good schools for our kids. Our hospitals are in awful shape. Corruption is rife. These protests will make history and wake our politicians up to the fact that we're not taking it anymore!" one woman said. "

I hope, and expect, that some fundamental changes will finally come out of this. In less than half an hour, the lady president is scheduled to go on TV and address the nation - That may give an indication if anything will be done to end the corruption in government. Fastest way to get very rich in Brazil now is to get elected to congress. And it is not just bribes. They make it too. For example a few years ago, ambulances were bought for all the local Governments of the party in power (and a few others they could cite to make it seem less like politics) Trouble was you could by the same ambulance for 1/3 the price the government paid for 100s of them. Etc.

It is ironic - When Brazil was under the CIA assisted dictatorship, she was leading street demonstrations, was arrested, and tortured in jail.