China about to flex it's muscle?

[crocat]

Killer cough syrup... dead  doggies... lead poisoned kids...

and now this...  http://www.forbes.com/afxnewslimited/feeds/afx/2007/08/08/afx3997945.html

[kimba1]

I say bring it on
this maybe the kick in the ass we seriously need

[Mr_Perceptive]

Remarkedly, I agree with kimba. Perhaps we need to be shaken out of our boots.

Bring it on!

And while we're at it, bring on those Middle Eastern oil types. Might as well get 'em all at once!

I've got a Hummer, a convertible, two pickups and my wife has a SUV for the grandskids and her ugly Prius. We'll park 'em all but the Prius for a while.

Americans are too spolied.

My solar energy system provides one-third of my energy requirement. Perhaps it is time for an upgrade.

[crocat]

Remarkedly, I agree with kimba. Prrhaps we need otbe shaken out of our boots.

Bring it on!

I also agree...but not wanting to cut off my nose to spite my face... I gotta wonder if China is flexing a big muscle for show...maybe we haven't seen the 'river' card yet.

I was looking at some of the Chinese publications and was pretty astounded.  There some serious worried grumblings from Chinese economists in Aug 03, a small but not really good enough sigh of relief in July of 04.....in July of 06 they were damn near heady in their joy over over taking the US in exportation  but now they have some serious concerns about that very fact.  Here is that article... 
China ends forex reward system for exporters

www.chinaview.cn   2007-07-10 14:00:49

If people have a hard time opening... I did save it as a word doc.... but it is a bit chewy for a fast paced debate chat club

[Mr_Perceptive]

So, what do YOU think is really going on here?

[crocat]

So, what do YOU think is really going on here?

The truth is... and I will go out on a limb here.

Firs,t I think much of the international parsing is just lip service to keep the masses at ease..... working out trade agreements and pretending to find equity in what goes out and what comes into any given country.  We have slowly been melding into an international society. 

Here state side (in my day) China was looked upon with a little apprehension and mystery...now we will be watching "Survivor China."

But I digress, my thoughts about China is that they have had a bit of a bad run of luck and are threatening to  quay the fallout (which to my mind have been significant).  Here they are at the doorstep of the Olympics which is a huge coup and they have been exposed in just about every social arena.   According to the article I mentioned China has it's ass hanging out regarding its exports.  With all the fear about unsafe products I am not sure that it will not feel a 180 which will be too much for other areas to pick up.

[Michael Tee]

Cro's link was to a page full of articles, the only one of which I could find that would relate to this thread was about China's policy to back "outbound investments," which basically means they should continue buying foreign resource properties like oil wells and various mines, although of course it wouldn't be limited to that, it could be anything from IT to hotels.  Not necessarily buying dollar-denominated properties either.  Depending in part on political considerations.

As far as them dumping T-bills, it sounds like cutting your nose to spite your face.  They couldn't dump the whole hoard all at once, and if the first dump had any significant effect on the dollar, it would simultaneously devalue all of China's remaining T-bill holdings, plus most major currencies would probably be lifted as the dollar fell, so their reinvestment of the proceeds of their first T-bill sale would also be buggered up.  They are doing very well with current economic policies and in addition to their export markets have a vast internal market to satisfy.  They are basically faced with the problems all industrially developing nations have faced, shortages of raw materials, which used to be solved by imperialism and now need a more modern form of the solution, economic imperialism and neo-colonialism.  For which they will definitely need to continue developing their military muscle, much as they are already doing.

[crocat]

Cro's link was to a page full of articles, the only one of which I could find that would relate to this thread was about China's policy to back "outbound investments," which basically means they should continue buying foreign resource properties like oil wells and various mines, although of course it wouldn't be limited to that, it could be anything from IT to hotels.  Not necessarily buying dollar-denominated properties either.  Depending in part on political considerations.

As far as them dumping T-bills, it sounds like cutting your nose to spite your face.  They couldn't dump the whole hoard all at once, and if the first dump had any significant effect on the dollar, it would simultaneously devalue all of China's remaining T-bill holdings, plus most major currencies would probably be lifted as the dollar fell, so their reinvestment of the proceeds of their first T-bill sale would also be buggered up.  They are doing very well with current economic policies and in addition to their export markets have a vast internal market to satisfy.  They are basically faced with the problems all industrially developing nations have faced, shortages of raw materials, which used to be solved by imperialism and now need a more modern form of the solution, economic imperialism and neo-colonialism.  For which they will definitely need to continue developing their military muscle, much as they are already doing.

Michael... here is the article

2007
   
China ends forex reward system for exporters

www.chinaview.cn 2007-07-10 14:00:49
     

    BEIJING, July 10 (Xinhua) -- China has scrapped a reward scheme set up eight years ago that gave preferential treatment to domestic companies which earned the largest amounts of foreign currency in the latest attempt to keep tabs on its soaring trade surplus and foreign exchange reserves.

    The State Administration of Foreign Exchange and the Ministry of Commerce on Monday told local foreign exchange and trade departments in a joint statement to stop grading local companies based upon their previous year's foreign currency revenue. The regulation took effect on July 1.

    The annual grading, which began in 1999, divided export companies into three categories: honorary foreign exchange earners, the average and the high risk.

    Companies rewarded with distinctions would then enjoy preferential interest rates for loans, more access to foreign trade development funds, higher export tax rebates and greater freedom in the management of their own foreign currency revenue.

    They were allowed to keep a maximum of 30 percent of their annual foreign trade volume in their current accounts, double the figure allowed for average companies.

    Export firms that were deemed "high risk" and failed to report their foreign exchange revenue correctly to local authorities, or had been ranked high risk for two consecutive years, had their imports and exports licenses revoked.

    "The system played a significant role in encouraging firms to declare their export revenue in full, strengthening foreign exchange controls and preventing arbitrage," said the joint statement.

    "Ending the grading system was a decision made in line with the current trade situation," it said.

    The past ten years has seen China develop from a country facing foreign exchange shortages to a global trade power with a trade surplus for the first five months of this year of 85.7 billion U.S. dollars, up 84 percent over the figure of the same period last year.

    By the end of March, China's foreign exchange reserves had surged by 37 percent to exceed 1.2 trillion U.S. dollars, the world's largest.

    The Ministry of Finance imposed extra export tariffs and cut import duties on June 1 to narrow China's widening trade surplus and recently issued special bonds for foreign exchange investment to absorb excess liquidity.
Editor: Song Shutao


I agree with the cutting off the nose

[Michael Tee]

Thanks, cro, that's a very interesting article.  Basically it means they have enough foreign currency sitting around, more than they need for current transactions AND reserves.  Which means in turn, they don't see themselves buying a whole lot more from the round-eyes in the future than what they've already prepared for buying.  I'd bet most of that "foreign currency" is dollars anyway, which doesn't look good for the U.S.  If their present balance of trade with the Chinese is unhealthy for Uncle Sam, it looks like it could get a lot unhealthier in the next few years.  This ties in pretty neatly with the Chinese ambition to equal the U.S. in state-of-the-art military technology within 15 years.  Historically, the Chinese were always interested in being self-sufficient although in these times, "self-sufficiency" would have to include a healthy dose of neo-colonialism.

[crocat]

MT,

I agree but like your point of them losing money on the second sell off... ya gotta wonder what will happen to all of the producers of those things that are exported.  The  farmers have not made any significant improvement over the years.  This could be a political twist to make the Chinese feel that this lack of export is because the Chinese governments choice and not trade sanctions.  It will be interesting to watch.

I try to buy American whenever possible.  That said it is damn near impossible because most American cars have foreign parts and also have a foreign clone auto to match them.

[Mr_Perceptive]

Thanks, cro, that's a very interesting article.  Basically it means they have enough foreign currency sitting around, more than they need for current transactions AND reserves.  Which means in turn, they don't see themselves buying a whole lot more from the round-eyes in the future than what they've already prepared for buying.  I'd bet most of that "foreign currency" is dollars anyway, which doesn't look good for the U.S.  If their present balance of trade with the Chinese is unhealthy for Uncle Sam, it looks like it could get a lot unhealthier in the next few years.  This ties in pretty neatly with the Chinese ambition to equal the U.S. in state-of-the-art military technology within 15 years.  Historically, the Chinese were always interested in being self-sufficient although in these times, "self-sufficiency" would have to include a healthy dose of neo-colonialism.

Excellent. Thank you.

[Mr_Perceptive]

MT,

I agree but like your point of them losing money on the second sell off... ya gotta wonder what will happen to all of the producers of those things that are exported.  The  farmers have not made any significant improvement over the years.  This could be a political twist to make the Chinese feel that this lack of export is because the Chinese governments choice and not trade sanctions.  It will be interesting to watch.

I try to buy American whenever possible.  That said it is damn near impossible because most American cars have foreign parts and also have a foreign clone auto to match them.

I also try to buy American-made, but, as you note, it is extremely difficult to do so. I try to do my part.

[kimba1]

I`m bad
I just buy anything cheap
which is mostly from china
if possible I`l buy a quality item
which is mostly from japan.

[crocat]

You are bad... you need to reevaluate  how you are saving money.

I chatted voraciously back in the mid 90's through the early  2000's  and at that time there was a sharp decline in manufacturing.  I read post after post regarding the fact that all of  the people that the lost manufacturing jobs should learn new skills and become part of the booming 'service industry.'  I tried to make the point that solutions are never simple.  An auto industry guy has a wife and a couple of kids... he is making pretty good money and spending even more.  Wife has someone come in every other week and clean.  They have a lawn service and fertilizing program.  Johnny plays soccer and ice hockey...Jane is a cheerleader and an avid shopper.  They end up with 3 to 4 cars and plan on going to U of M or Michigan State.  Suddenly everyone on both coasts decides that they are going to look after their own pocket and buy a rice burner.  Next you know (and we will go by the old addage that the rich get richer and the poor... well you know how that goes) GM-Ford_Chrysler cut back.  They cannot have their bottom line fall because they will lose their investors.  So one day auto industry guy gets laid off.... the pattern is easy to follow...No more house cleaning. (mom and Jane can handle it).. no more lawn service (let Johnny cut it) no more fertilizer guy..(Johnny can do that too)  Suddenly U of M and Mich State look a bit far off and 3 or 4 cars on the driveway look like a nut to big to crack.  It goes further than that... hair and nails and shop till you drop.... probably not.

That is just the impact on one auto industry family... but watch the ripples.... that housekeeper service $ are down and there will be cutbacks, the lawn and fertilizer companies..same for them.  Hair goes from monthly to 12 to 16 weeks... retail... down... less gas because can't afford to go anywhere.    Every service industry is impacted by this.   And guess what.... once that last ripple goes out it reverberates back to the center because NO one can even afford to buy the cars.

So honestly... you should try to buy American when you can... you should try to support the economy closest to your home.  If you can buy it down the street do because the neighborhood you protect (from economic plight) could be your own.

I`m bad
I just buy anything cheap
which is mostly from china
if possible I`l buy a quality item
which is mostly from japan.

[Mr_Perceptive]

Insightful dialogue, Crocat.

Perhaps a start, kimba, might be to start with one category, say, pants. Purchase US-made pants. Over time, purchase other U.S.-made items in other categories...

I purchase only Palm Beach or HART SCHAFFNER & MARX suits. First, I one day purchased just one Palm Beach suit. Over time, they have accumulated. I love suits. Makes me fee like I am still in uniform.

Perhaps your one U.S.-made item could be instead ______?

see http://thehubltd.com/category.aspx!i!4!brand!HART+SCHAFFNER+%26+MARX or
http://www.shopfords.com/better.htm