Delivering mostly double digits growth and never had a recession for the past 30 years. Where is it going? What are the ingredients's of the success? Are they going to experience a hard landing soon due to the Housing price inflation and bad loans of the state banks? A very interesting topic.
I think China has been growing so rapidly its on a shaky foundation. They're battling bad inflation, tax revenue issues, corruption, and a potentially very serious political unrest. People don't realize it because of the Western media's indifference and Chinese censorship, but there is a lot of civil unrest in some provinces, many of it violent.
I agree with the analysis that they have an immpressive but still overall shaky economic sytem. Politically they are rather stable. We do not see large scaled social unrest like Africa and Middle East incidents that occur for the past one year. There are many protest and anger directed at the corrupteness and incompetancy of the local government but the technocrats in Beijing remained popular.
the reason china has such high inflation is because they keep issueing yuans in order to buy dollars in order to keep the dollar peg. In effectm they are importing america's inflation! This is a totally foolish policy that is harming the chinese economy!
Exactly! This is why I do not understand why we must get so upset about it. If they want to buy USD with RMB to maintain at a rate of 6 instead of 4, what they are doing is subsidising American consumers with Chinese oversea purchasing power and domestic inflation. It makes no difference to the Chinese Economy it it were the government to buy up these chinese goods or american consumers, if all the Chinese interest is to boost employment. I need someone to enlighten me on that. People getting hurt within the country would likely to be manufacturer. But a Chinese currency appreciation will just bring the factories to Mexico and other cheaper countries. Even if it helps our manufacturing industry in anyway, it does our democracy no good when the mojority of us are consumers.
The bloom is off the economic rose for the entire world. How hard the Chinese fall depends on how far everyone else falls. If the Chinese Communist Party fails to provide better living conditions it will lose the Mandate of Heaven.
China is going from the early agriculture revolution, through the industrial revolution, into the late silicon revolution. China is are catching up on 500+ years. Japan, Taiwan and Korea went through an abbreviated version of the same process (they at least started the industrail revolution). They were just a bit smaller, so didn't have as much effect on the entire (but ask the US automakers how they liked it).
actually if the yuan appreciates then all of the sudden 1 billion chinese people would be able to afford what the chinese factories produce...it would be a win win for them....the only losers would be the american consumers as everything at walmart would double in price!
They are commies and their growth is obviously nothing more than mere propaganda. Do not let yourself be deceived by totalitarians such as Hu Jinato. They are all rotten to the core and so is their economy.
You made a good point, my first thought would be Great!! If the prises would double then manufacturing jobs would come back to north America Wrong : ( There are many countries that have joined the game that soon will be able to produce , well sort of quality products and there prices are completive then the Chinese and their more than happy to taking it away from the them, and the north American businessman is more than happy to subcontract out the work, because they know if he doesnt his competitors will and north Americans will consume the better priced object and complain about quality latter. Well not everybody, I try to buy quality products if I can, and prefer to by north American. When in Italy drive an Italian car. ( Concerning Parts and service, the fiat was a nice looking car but a real dump). I think right now north America is in the anger stage out of this whole mess and soon everybody will accept that America is not the king anymore in manufacturing general consumer goods anymore. But what Chinese and Japanese do lack is imagination plus innovation where all dreams in new ideas really was based in north America and Europe, but do to their education we could lose that advantage or possibly we lost it already. But we will always have lots of natural recourses.
it shall be interesting to note that several chinese manufacturers have announced a large increase in labour cost in the past year...this is the end result of china's dollar peg. The increased labour cost is squeezing profits at the manufacturers...so how long do you think it will be before those manufacturers have no choice but to pass those increased costs to walmart or else face bankruptsy? You see....dont be fooled by the low inflation rates in the US right now ( even though Berncacke is lying of the true inflation rate) most of that inflation was exported abroad by central banks hoarding dollars....but now their inflation is rising so those exporters need to raise prices or face bankruptsy.......its just taking a little longer for the inflation to hit the shores of the US thats all!
Your attempt at using trade to make macroeconomic domestic comment was worthless. Stick to defendable comment, just for the fun!
The growth have been high because of the simple reason that it was starting at a very low point, here's a simple analogy, when you make 10 bucks a month and you get a raise of 1 buck, you "grew" by 10%, but if you make 1K a month and get the same raise, you "grew" by a pathetic 0.1%. When Mao died, China was one of the poorest country in the world, so it certainly had about as low a base to grow as possible. however it also had relatively stable and effective government, and a reasonablly well educated population (compare to it's wealth) . so it wasn't hard to get a boom going once the government set it's head to it. It's actually had some recession during this time, just that the overall expansion is so fast that the recession is virtually unnoticable and completely forgotten a short time after. do you still remember the dot-com crash? probably not so much since US economy recovered very quickly after it. China has it's trouble and problems, but I don't see a hard landing comming for a wide variety of reasons.
China's labor cost is going up, just north of Hong Kong, wages were bumped 30%. Some companies are moving into western China, seking lower labor costs, but that is offset by shipping costs. Other companies are doing in China what they have done in the western world - automation. There will be a point where automation reduces labor content to where transportation costs dominate - then factories will be moved close to the customer.
A few complexities here. First, its unlikely that transportation costs will dominate. That reflects the continued importance of economies of scale. Second, we don't see factor price equalisation (so differences in labour costs will always tend to dominate). Third, even if we ignored these issues, China will be a significant market and therefore geographic analysis will tend to encourage Chinese production.
I worked for a company that built modem transformers using a steel core, that could only be bought in the US. It was cheapest to wind the transformer in China, ship to to Mexico and install the core. Transportation costs are increasing with fuel costs. As connectivity speeds increase, equipment can be monitored remotely. Local staff only repairs what can't be done remotely. Automation equipment is becoming less expensive and more flexible. Chinese production will shift to the Chinese market, wages, then prices will increase. You don't see this trend?
There's nothing here to dispute my comment. We know that trade patterns can only be understood by reference to economies of scale. We do see wages gains as an economy develops. We'd expect that, even in a static Heckscher-Ohlin framework (and specialisation according to labour abundance). We don't, however, see factor price equalisation. By focusing on transportation costs you ignored how comparative advantage distinctions continue
China's coastal factory nowadays faces strange complexities, at the same time, most are having trouble getting enough workers despite rising wages and most at the same time are facing shrinking global markets. Aside from moving factories more inland, some are also moving to SE Asia, Thailand and Vietnam are espeically two favored desitnation, as those are basically the two more stable countries in that region (aside from Malaysia, which had already grown considerablly before this). Still again, Taiwan / South Korea / Japan / Hong Kong have all gone through these phases before, and all of them did just fine (relatively) after their labor cost grew beyond the what anyone would consider cheap.
china is paying a heavy price for its dollar peg...they are importing america's inflation.....too bad you just dont understand that!
Would that be inflation in the economic sense, or the man on the street sense? And, according to which reporting agency? What percent of the US money supply can the US banks loan into existance before they reach their reserve limits?
?!? In the volumes of product produced in China, economies of scale plateau. What comparitive advantage does location provide in a fully automated factory? With internet, VoIP, collaboration software, and video conferencing most of the expertise can be anywhere on the planet. If I can't find local expertise for hands on activities, all that is required is a work visa. The cost of automation is dropping, wage differences are narrowing and transportation costs are increasing.
You're not showing any consistency. I'm not referring to the current Chinese trade (where we have standard Heckscher-Ohlin appreciation of factor prportions). I'm referring o the consequences of further development and the shift towards, for example, intra-industry trade. By definition, that can only be understood with reference to economies of scale. You've forgotten the evidence: factor price equalisation doesn't occur. We therefore have comparative advantage exhibited through differences in factor prices.
according to several publications, if you use the 1981 basket of goods and services its around 9% right now......if china and other nations would stop the dollar peg it can easily climb to 15% or more.....by pegging their currencies to the dollar they are importing america's inflation.....otherwise as their currencies increase then prices would climb in america....and this is why by now had japan, china and others not pegged their currencies things at walmart and best by would be much more.....I think even the 15% I just mentioned might be too low!
