Don’t mean to sound like a broken record – I know we’ve talked about this many times. But the situation is worsening in the US and making it even more obvious than before that we’re on the verge of a new world order as America becomes, in the words of a friend I had dinner with last night, “a banana republic with nuclear weapons.” Based on the rapidly deteriorating situation in America, this merits a healthy clip:
While the rest of the world is grappling with the global slowdown, China is figuring out ways to exploit it.
Over the past few months, China has capitalized on the financial turmoil that has paralyzed the world’s “developed” economies by stocking up on cheap commodities, weeding out competition to its largest state-run companies, and acquiring even more foreign assets.
Indeed, with China’s economic growth projected at an enviable 8% for this year, that country’s government has been able to spend less time promoting immediate growth and liquidity, and more time preparing for the economic renaissance that almost certainly seems to be the Asian giant’s destiny.
By exposing Western free-market capitalism, undermining the United States economic clout, and eviscerating commodities prices, China is using the financial crisis as the perfect opportunity to advance its domestic agenda.
That agenda begins with the recently unveiled $586 billion stimulus plan – a plan primarily focused on infrastructure.
China’s financial institutions have little or no exposure to the toxic subprime assets that spawned this current global crisis. Thus, instead of having to spend hundreds of billions of dollars to bail out its banks, China can choose to develop the stage on which it will display its future economic might.
And the first phase of that plan is key: Before its plans for a massive infrastructure overhaul can be realized, China must first load up on the raw materials crucial to its execution.
We all know the impossible problems China is facing, and that 8 percent growth (which some call a rosy prediction) is a big drop that will have painful impact. We all know it’s killing its environment and repressing those citizens who can’t fight back. And we all know that the US economy is entwined with China’s, meaning more pain is inevitable. But there are differences and there are reasons why China holds an advantage for the future. The engineers at the top of the party know what they want to do and don’t have to deal with messy thing like pluralism or individual rights, so whoever gets in their way can be quickly and (relatively) easily silenced. What they want to do now is seal deals for the future, giving China more global leverage and creating a new balance of power.
We’ve been hearing about the imminent collapse of China for ten years. I was on that bandwagon in 2003. But as all the bad news keeps accumulating and everyone finds links that guarantee China has to collapse, somehow it keeps going and in some ways even gets stronger. Like in cementing its relations with Africa and exploiting the depression to make bargain-basement acquisitions that will ensure badly needed natural resources in the future. I know, I know – China’s totally fucked. But they’re less fucked than the US and Europe. And that is what will leave them in a cozy spot after the carnage is over, perhaps years from now.
Meanwhile, I hope everyone’s watching where gold has gone since I first recommended it, when it was under $650 an ounce. Think about where’d you’d be today if your 401K money had been invested differently. The dollar simply has to fall, and as the dollar falls, gold…. Please take a look at this if you still doubt. This issue is relevant to China, which is already quietly looking for other places to invest its money.
1
By stuart
I concur that China is holding all the aces right now. But that’s not a situation that is in the long term interests of any of us. Anyone who believes that China will use its growing influence responsibly is deluding themselves.
January 31, 2009 @ 5:33 pm | Comment
2
By Richard
Stuart, I’m not making any moral assumptions here – this post is about money and power. Do you believe America used its influence responsibly the past 8 years? That’s what our fenqing friends will say (though I consider that period an anomaly). But in essence I agree with you – the idea of any nation so intrinsically built on corruption and criminality wielding massive influence over world affairs is not an attractive one.
January 31, 2009 @ 6:05 pm | Comment
3
By Raj
I hadn’t heard of the author before so I did a quick google search. Amusingly the top result was for a web programmer. Next time I will check to see if there’s an original article first.
I honestly don’t know who is right. There’s usually a prediction about everything, so eventually someone turns out to be right. Do they read the patterns correctly or just see one of many indicators? I don’t think China is going to “collapse”, depending on what people mean by that. But it is in for a rough ride. As ever I recommend the Economist (more recent articles if you click to search by China/China’s economy on the right-hand side) for a good review of the overall situation.
http://tinyurl.com/d8plt4
Richard, at least you guys have a leader who seems to be on the ball and able to make some big changes. We’re stuck with the fat, Scottish git who is at least partly responsible for this whole mess until the summer of next year!
January 31, 2009 @ 6:55 pm | Comment
4
By Richard
I honestly don’t know who is right.
No worries; I know who’s right.
And I’m afraid Obama is in over his head already. It’s not his fault exactly; he’s up against insurmountable odds. But his stimulus package is like using a thimble to keep the Titanic afloat. I don’t know if anyone could do better.
I also don’t think this is about predictions anymore, it’s about facts: China is increasing its influence as US influence ebbs. That to me is a fact.
As I said, Raj, I know all about the links you and everyone will send, and I can give you my own links from 2003 or so, when I was convinced China’s banking system was going to collapse, and I had plenty of publications backing me up. Except it never happened.
America is way up higher, and has a lot farther to fall. China is already braced for the worst; some may say America is too, but Americans have never known hunger. Most people in China have, even the white collar friends of mine here.
Nice attempt to smear the writer, by the way. Try searching intelligently and who knows what you may find.
January 31, 2009 @ 7:18 pm | Comment
5
By Raj
As I said, Raj, I know all about the links you and everyone will send, and I can give you my own links from 2003 or so, when I was convinced China’s banking system was going to collapse, and I had plenty of publications backing me up. Except it never happened.
Did you read the Economist article? It doesn’t predict China’s downfall or even that it will emerge from the global crisis in an especially bad position. In places it is optimistic/positive, such as when it talks about transport investment jumping by 70% this year and quoting Andy Rothman as saying the economy will recover by the half-way point this year (which would be quite impressive).
Nice attempt to smear the writer
Actually I was laughing at myself exactly because I hadn’t made a precise enough search. That’s why I said “Next time I will check to see if there’s an original article first”.
I thought we were past jumping to conclusions about what the other writes.
January 31, 2009 @ 7:39 pm | Comment
6
By Richard
Actually I was laughing at myself exactly because I hadn’t made a precise enough search. That’s why I said “Next time I will check to see if there’s an original article first”.
Well, the very first thing you do in your comment is plant doubt about the reporter. Do you always google reporters’ names – or do you do it when you want to find something to discredit them with. Just asking. Think about it hard, and be honest with yourself.
Reminder: I hadn’t heard of the author before so I did a quick google search. Amusingly the top result was for a web programmer.
I mean, what are you bringing to the conversation. Why even share this? The mild self-deprecation doesn’t change the fact that you just planted a negative POV about the author.
Did you read the Economist article?
No. I have a long reading list. Will try to get to it later today or tomorrow.
January 31, 2009 @ 7:57 pm | Comment
7
By Raj
Just asking. Think about it hard, and be honest with yourself.
I do it when I don’t know their names. That’s the truth.
I mean, what are you bringing to the conversation. Why even share this?
Because it was the first time anything like that happened when I was trying to find out who a commentator was.
The mild self-deprecation doesn’t change the fact that you just planted a negative POV about the author.
I didn’t think that many people would believe Money Morning’s Managing Editor would be in IT, so I thought it would be ok to have it as part of a joke at my expense.
January 31, 2009 @ 8:09 pm | Comment
8
By Richard
Cool, good joke.
January 31, 2009 @ 8:11 pm | Comment
9
By stuart
“Do you believe America used its influence responsibly the past 8 years?”
Absolutely I do not. But, as you point out, China too often justifies its actions in terms of “well, look what you did” while at the same time using smokescreen language such as ‘peaceful rise’, ‘strategic partnership’, or, more recently, the sinister sounding ‘new world order.’
If we don’t acknowledge the possibility that there are dangers inherent in a world dominated by a country with China’s current political setup; if we simply trust in the present regime’s ability to show us the way of moral responsibility; and if we just accept that the planet is in safer hands with China at the controls, then we’ll end up handing unbridled power to a handful of unelected suits in Beijing.
The responsible course is to harbour doubts, raise questions, and to recognise the potential for global catastrophy that lies in appeasing the demands of an increasingly confident nation that is beginning to throw its weight around.
Could China become the first global superpower to use such influence with compassion, tolerance, and fairness? For the moment, at least, that has to remain a very big maybe. And even if it was a very small maybe, there’s simply too much at stake not to stay on the very cautious side of alarmist.
January 31, 2009 @ 11:03 pm | Comment
10
By Bao
I think we should celebrate the rise of China. Very soon, we’ll have the equivalent of 4 times the US consuming the resources of the world at a frantic speed.
This can only be good news. Crash and burn x 100 as we say. But why not speed up the process, we don’t have much to lose anymore anyways.
The funny part is that many people tend to say that Chinese people are more responsible in terms of resource usage (Ferin for example) this is a fucking joke. Every single person here aspire to live large and big, as in the US. For me seeing where things are going right now, I’m very worried. I just don’t see what is the solution right now, US , China, whatever, it’s a lost cause for all of us.
We are all in the same boat.
February 1, 2009 @ 12:42 am | Comment
11
By Bao
Test
February 1, 2009 @ 12:44 am | Comment
12
By Serve the People
For China stocking up commodities is a much better use of its trade surplus than buying US treasury bonds. Like the large scale infrastructure building currently under way, this is also a very sensible policy.
Another place where China is investing for future is taking place in the academic world. I have learned that the United Front Department has just set up a special fund to help Chinese universities to hire world class scientists and scholars. They have created the National Professorship position, with an annual salary of 1 million Chinese yuan. Each new hire is given a research grant of at least 10 million yuan for the first five years.
By the way I don’t think Obama can control people like Pelosi, Reid, H. Clinton, or even Summers. I predict they will all go rogue. Just look at the current stimulus package which is so unprincipled that you can’t see where the priority is.
February 1, 2009 @ 2:57 am | Comment
13
By stuart
Richard,
“Do you believe America used its influence responsibly the past 8 years?”
Absolutely I do not. But, as you point out, China too often justifies its actions in terms of “well, look what you did” while at the same time using smokescreen language such as ‘peaceful rise’, ‘strategic partnership’, or, more recently, the sinister sounding ‘new world order.’
If we don’t acknowledge the possibility that there are dangers inherent in a world dominated by a country with China’s current political setup; if we simply trust in the present regime’s ability to show us the way of moral responsibility; and if we just accept that the planet is in safer hands with China at the controls, then we’ll end up handing unbridled power to a handful of unelected suits in Beijing.
The responsible course is to harbour doubts, raise questions, and to recognize the potential for global catastrophe that lies in appeasing the demands of an increasingly confident nation that is beginning to throw its weight around.
Could China become the first global superpower to use such influence with compassion, tolerance, and fairness? For the moment, at least, that has to remain a very big maybe. And even if it was a very small maybe, there’s simply too much at stake not to stay on the very cautious side of alarmist.
February 1, 2009 @ 9:42 am | Comment
14
By Serve the People
For China stocking up commodities is a much better use of its trade surplus than buying US treasury bonds. Like the large scale infrastructure building currently under way, this is also a very sensible policy.
Another place where China is investing for future is taking place in the academic world. I have learned that the United Front Department has just set up a special fund to help Chinese universities to hire world class scientists and scholars. They have created the National Professorship position, with an annual salary of 1 million Chinese yuan. Each new hire is given a research grant of at least 10 million yuan for the first five years.
The current US stimulus package on the other hand is a disappointment. It aims to lease every Democratic constituent, and in the end without priority it will achieve very little. There is this laughable Buy America provision. Once the package becomes law, foreign countries will take US to the WTO court and have this provision declared illegal. Then we will be worrying about a trade war on top of the economic crisis.
February 1, 2009 @ 9:58 am | Comment
15
By kevinnolongerinpudong
Golly, I’m packing my bags, contacting the nearest snakehead, and moving to China immediately.
February 1, 2009 @ 2:47 pm | Comment
16
By yourfriend
China too often justifies its actions in terms of “well, look what you did”
China does? China didn’t intervene with Iraq and they haven’t used the official line of “oh look what they did”. That’s America, they spent all of 2008 trying to distract from the financial crisis by demonizing the Chinese. The Chinese nationalists, on the other hand, do bring it up because American radical jingoists make it so easy.
February 1, 2009 @ 5:52 pm | Comment
17
By yourfriend
Golly, I’m packing my bags, contacting the nearest snakehead, and moving to China immediately.
Maybe you could be Dashan’s lovable sidekick.
February 1, 2009 @ 5:53 pm | Comment
18
By yourfriend
Sorry for the triple post. Missed this piece of shit comment:
Every single person here aspire to live large and big, as in the US.
You must be hanging around disgusting slobs. They seem to gravitate around you for some reason. Not even the Chinese people in America, Southeast Asia, Europe, or Japan with the means to live such a ridiculous lifestyle do so.
Do say otherwise just shows immense stupidity. Jesus Christ, just fucking give up. Just a few weeks ago you were seething and saying China would crash and burn out of your sheer hatred. Now you have bowed your head while lobbing inane insults at the Chinese people in general.
edited
February 1, 2009 @ 5:57 pm | Comment
19
By Bao
“Like a fucking douche such as yourself would know the spending habits of rural Chinese.”
You have no idea about me and my life, not a single iota. You can insult me as you want, I really don’t care and I won’t insult you back. If you think it’s fun, then keep going on.
If only you could discuss with people, it would be great. But you live in a monochromatic world. And your constant negative comments are extremely annoying and… Pointless and immature.
February 1, 2009 @ 6:32 pm | Comment
20
By bum loving scum raider
You have no idea about me and my life, not a single iota
But you know the spending habits of 1,320,000,000 Chinese.
Guess what buddy everyone is omnipotent on the internet
February 1, 2009 @ 6:37 pm | Comment
21
By bum loving scum raider
omniscient*
February 1, 2009 @ 6:37 pm | Comment
22
By Bao
“But you know the spending habits of 1,320,000,000 Chinese.”
Do you?
February 1, 2009 @ 6:42 pm | Comment
23
By another michael
I found this article to have that all too common awestruck/envious attitude towards China – as if the Chinese are somehow cannier and two steps ahead of the US and the rest of the world. This idea that China is smartly buying up resources on the cheap ignores the awkward fact that China has lost huge amounts of money in its first tentative attempts to take a serious stake in western resource stocks. And the idea that China is using the recession to its advantage by investing in infrastructure also overlooks the fact that China has already been putting massive investment [some would say needless overinvestment] into roads, railways, urban regeneration etc for the last decade.
I don’t know whether China has ‘little or no exposure to the toxic subprime assets’ but it certainly has an awful lot of exposure to those other toxic assets, the US dollar and government bonds. If the US sinks, China will will be left owning the wreck of the Titanic. And who was it said it would be cheaper to lower the Atlantic than raise the Titanic?
February 1, 2009 @ 6:46 pm | Comment
24
By bum loving scum raider
I’m not the one who said he did, Mr. I-Know-Everything.
Somehow I’m gonna guess you’re wrong when you say a lot of Chinese people want to eat themselves into a coma, roll around in McMansions, and drive overpriced European cars that all douchebags aspire to drive.
I’m gonna guess that’s because I actually have some experience with Chinese culture.
February 1, 2009 @ 6:48 pm | Comment
25
By bum loving scum raider
China has lost huge amounts of money in its first tentative attempts to take a serious stake in western resource stocks.
Win some, lose some. You’re still the bigger loser.
[some would say needless overinvestment]
Nah a few hundred billion is not too much. Infrastructure in China is horrible in the West.
the US dollar and government bonds. If the US sinks, China will will be left owning the wreck of the Titanic.
It’s better than sinking into a watery, icy grave. Crazy talk.
All the Chinese hating nutjobs are having a fucking meltdown.
February 1, 2009 @ 6:54 pm | Comment
26
By Bao
“Somehow I’m gonna guess you’re wrong when you say a lot of Chinese people want to eat themselves into a coma, roll around in McMansions, and drive overpriced European cars that all douchebags aspire to drive.”
I think you need to come back to China and get a good dose of reality. Things have changed a lot since you’ve left.
Obscene luxury display is very common here. It’s actually the new religion. I’m a white trash in China, and to be honest, I feel poor now (I live in Shanghai). I’m not saying China is wrong, or whatever, my point is that it’s not true to believe that Chinese people are more rational than our western culture is. When it comes to money, people lose their moral guidance, very quickly.
February 1, 2009 @ 6:59 pm | Comment
27
By bum loving scum raider
Obscene luxury display is very common here.
An exaggeration. I bet what you’re seeing is lots and lots of spoofs concentrated on a minority of people. You’re definitely not in the rural areas am I right? It’s going to be a long, long time before all 800,000,000 rural Chinese want to waste their lives away whoring luxury goods.
If that ever happens I hope the world explodes.
February 1, 2009 @ 7:01 pm | Comment
28
By Bao
“If that ever happens I hope the world explodes.”
That is exactly what I was trying to express.
February 1, 2009 @ 7:02 pm | Comment
29
By Twisted_Colour
Somehow I’m gonna guess you’re wrong when you say a lot of Chinese people want to eat themselves into a coma, roll around in McMansions, and drive overpriced European cars that all douchebags aspire to drive.
That’s a bad guess, they would if they could.
February 1, 2009 @ 8:16 pm | Comment
30
By Rhys
This article was in AdAge China a couple of months ago. It’s a piad site, so you can’t access it, but it underlines how much luxurfy brands are focussing on China in the next decade or so:
“There is some good news for luxury marketers in China. A fortuitous combination of local circumstances will suppress some of the effects of a pessimistic worldwide situation.
The first element is cultural. Although not readily quantifiable, a nonetheless important “X factor” that will play out in the luxury market over the next few years is the traditional Chinese cultural attachment to fortune, prosperity and money. Even in a recession, status will still be important in China.
The cultural factor has always been there, but disposable income and exposure to luxury goods have not. Young Chinese consumers, especially those between the ages of 18 and 35, are significantly more likely than their elders to not only pay attention to luxury brands, but crucially also aspire to purchase more luxury than Chinese have at any time previously.
This generation has been more exposed to international brands, is more discerning of quality, and is more ambitious in terms of purchasing than any generation China has ever seen — and there are a lot of them.
Although aspiring Chinese luxury consumers are small as a percentage of the overall population, there are millions of them, more than the entire populations of many other countries, which means China is an important market for luxury brands to focus on, especially in a global recession.
Just two years ago, around 13% of Chinese had purchased a premium-branded product at some point in their life–a very significant percentage in terms of raw numbers.
Luxury is a strong signifier of status, or “face.” As such, a significant segment of luxury consumers are not necessarily fabulously wealthy, but they are willing to skimp on other things in order to maintain a certain level of purchasing power.
Therefore, a significant number of luxury consumers are mid-level, white-collar workers in major cities who earn around 8,000 RMB ($1,165) per month, but decide to live at home in order to have the power to buy Gucci handbags.
The new China luxe-elite are under 35. At that stage of life, economic upheaval does not distract from the need to continue to strive for higher positions on the corporate and social ladders. Instead, it sheds light on new opportunities as higher-leveraged individuals falter. They still need that bag, they will still get married. Their need to feed their appetite for luxe will not easily lessen. Certainly there will be cutting back, but basic urges and desires will remain.”
February 1, 2009 @ 8:56 pm | Comment
31
By mor
@Ferin
I’m gonna guess that’s because I actually have some experience with Chinese culture.
So you bought some Kong Pao Chicken at the local Chinese take-away and that makes you think you know more about a far away country than the people who have actually been there.
February 1, 2009 @ 8:58 pm | Comment
32
By chosunking
Last year on CNBC they had a split screen of 8 “experts”
To a person they ALL predicted that oil would reach 300/barrel by the end of 2008. Guranteed, no if ands or buts. After all we are the “exeprts” aren’t we??
And yes, the same folks are at it again..recession of course perhaps a depression, perhaps the end of times (though I think we have to wait until 2012 for that)
YES things are dire…but we can see that the reality of these times has finally registered with the American people as spending has slowed and people are cutting back on the unneccesary. Netflix, for instance,is booming as people stay home and save money.
If anything, Americans are resilant, despite the best efforts of the politicians to make things worse.
I have faith that we will endure and prosper, eventually.
February 1, 2009 @ 10:07 pm | Comment
33
By Bao
I repeat, everything is FINE. Wen Jia “Bao”is right, like Jesus bringing the good news around the world. Do not worry, Hu and Bao will take care of your worries.
Why? Because, we live in a wonderful world.
Faith and trust is all we need! Sounds familiar isn’t it ?
Now you’ll excuse me, I have to go back to practice my Panda licking skills. Soon to be very useful I guess.
February 1, 2009 @ 10:26 pm | Comment
34
By Serve the People
Richard,
Please delete my comments 17 and 18. When my first comment did not show up, I revised it and posted another one, and one more. Now there are three.
Thanks.
February 2, 2009 @ 12:05 am | Comment
35
By nanheyangrouchuan
Richard, YOU don’t know hunger and neither do the other expats so what will you do? And its laughable that a marketing guy thinks he has such in-depth knowledge of international finance.
Sue the US in WTO court? BAH! Try to collect, the rest of the world is already turning its back on globalization to cover its ass.
@ Ferin, big talk for a guy living it up in the US. You have yet to move back to China and make it big.
February 2, 2009 @ 12:16 am | Comment
36
By Bao
“the rest of the world is already turning its back on globalization to cover its ass.”
This is exactly what is coming: protectionism on a very ugly scale. Why do you think the”leaders” of the world are saying the contrary right now?
Big, fucking huge, masquerade, as usual. What a joke.
I’m still taking the bet on Obabush, wait and see as we say.
Obama trying to repair is official speech about China? Wtf, this is fucking ridiculous. Don’t you think some people revise those lines, before they are spoken to the world?!?! Inauguration day? Coincidence? Of course it’s a human mistake. Of course, Jesus, people are fucking dumb. Fuck them.
Fucking… Circus… BIG BIG joke…
All planned, beautifully mastered.
Keyword: Circus
February 2, 2009 @ 1:11 am | Comment
37
By Math
China Must Guard Against the Possibility of the US Becoming A Socialist State
Why do I use “Guard”, instead of “Welcome”?
In the initial stages of Socialism, Nationalism and Chauvinism always accompany it. During Mao’s Era, this is called Socialist Imperialism. USSR was one such example, it intervenes in other countries’ internal affairs, and even may start wars.
If the day comes when the Capitalism of America can no longer deal with this crisis, it won’t “get stuck on the same tree”. It won’t sit there and see the collapse of the
country for some “principles of capitalism”. Once they realize things are not improving at all, they’ll feel free to abandon any principle of Capitalism, and add any elements of Socialism. “A live person would not be killed by not being able to find a bathroom to urinate”. And if a country whose productive force is already very advanced adopts Socialism, it may be possible to improve its productive force much more quickly.
The problem for China is that America may practice Socialist Imperialism. That is, once America announces that it has entered Socialism, it’ll try to find another way to intervene in China’s internal affairs. It’ll accuse China of not practicing true Socialism, not obeying Socialist principles, of being a traitor of Socialism. It’ll say “China! You are calling yourself Socialist but are practicing Capitalism! Your leaders are all corrupt and are all Capitalists! You need reform! You need revolution to become a true Socialist state just like us!”. You’d think once America becomes Socialist, it’ll stop nagging at China, but it’ll just find another way to nag.
And Taiwan is always pro-US. So very likely Taiwan will follow US’s footsteps and also enter Socialism. This is even a bigger problem, and may even lead the Mainland to reconsider its One Country Two Systems policy and many similar problems when dialoging with Taiwan.
This is an issue I think Chinese policy makers must take to heart and study carefully, before America becomes Socialist.
February 2, 2009 @ 3:26 am | Comment
38
By bum loving scum raider
The first element is cultural. Although not readily quantifiable, a nonetheless important “X factor” that will play out in the luxury market over the next few years
Sounds like a lot of wishful thinking. Marketers always overestimate “cultural” reasons for buying their stuff.
@ Ferin, big talk for a guy living it up in the US. You have yet to move back to China and make it big.
You mean move back to Taiwan? I spend half of my life there.
February 2, 2009 @ 5:28 am | Comment
39
By ron patterson
It seems that Britain and the E.U. are in worse shape than the U.s. If the U.s. goes under than what do you think the rest will do? China faces much bigger hurdles thatn just a slowing down in trade; it is rapidly aging and their is no social safety net for its aging population. It ranks 97th in the world in education. As for the fund to hire foreign professors i assume that will be used for banquets, singing girls and such. The party is always annoucing grandiose plans and then somehow they never get done. I live in the rural area of Hunan, there are more water buffalo on the streets of this town than cars. healthcare here is pay as you go since the hospitals have all been privatized, school is the same, schools are owned by a company headquartered in Beijing. Since the average income for this county is about 120 U.S a year, healthcare and education are a no go for most people. This is the life for about 450 million chinese people. China is a very long way from being a developed country or taking a real position as a world leader. Beijing and Shanghai and other cities on the EAst Coast are not China.
the u.S. has seen downturns before , this one is probably not as bad as the one in the early eighties, or as bad as the savings adn losn crisis, there has been a lot of panic journalism.
February 2, 2009 @ 5:50 am | Comment
40
By yourfriend
it is rapidly aging and their is no social safety net for its aging population.
This is because China is already overcrowded. It doesn’t need more people, especially not white foreigners.
February 2, 2009 @ 6:09 am | Comment
41
By mor
So that’s why you stay in the evil US of A, instead of moving to the beloved Farmer’s and Worker’s Paradise of your fantasies. You stay away from your motherland and live in a degenerated and deprived society out of pure patriotism. And now the role model for the Chinese youth has changed from Lei Feng to Fei Ling (Ferin in Chinese), which is why so many of them go to study abroad, if possible to bad, bad America, and never come back to China.
February 2, 2009 @ 6:31 am | Comment
42
By Serve the People
@ron patterson
The National Professorship program has launched a test run late last year. A small number of positions were advertised. The reception was so enthusiastic that the positions were all filled by the end of the year.
By the way Hunan is one of my favorite provinces in China. Spent two summers in Changsha lately plus a side trip to Zhangjiajie. Great scenery, little pollution. Very impressed by the highway system in the province. Every developing country should learn from Hunan about building highways.
February 2, 2009 @ 8:24 am | Comment
43
By Richard
Nanhe: Richard, YOU don’t know hunger and neither do the other expats so what will you do? And its laughable that a marketing guy thinks he has such in-depth knowledge of international finance.
I guess “marketing guy” = stupid? I mean, why believe anything said by anyone who does marketing? Morons, every one of them.
But for the record: I was a newspaper reporter, a radio news journalist, followed Congress in Washington DC as a syndicate reporter, have a master’s in journalism, edited books for two major publishing houses and watch a lot of TV and read lots of stuff. I make no claims of knowing anything at all. I am just here giving my stupid thoughts. Like my suggestion to buy gold. I know, I’m stupid. So what are you doing here? And about not knowing hunger – of course I haven’t; that’s my whole point. Most of us Americans are unfamiliar with hunger except as an abstraction.
Ron, what you say about the EU being in a terrible position is true enough. But this is nonsense:
the u.S. has seen downturns before , this one is probably not as bad as the one in the early eighties, or as bad as the savings adn losn crisis, there has been a lot of panic journalism.
Things not so bad? Panic journalism? So, Merrill, AIG, USB, BofA, Countrywide, Wells Fargo, et. al. aren’t really in deep, deep shit? So, Bear Stearns and Lehmann Bros didn’t really go under? So, we aren’t really witnessing record unemployment – the worst in 26 years? The dollar isn’t really in the crapper? Record foreclosures aren’t really destroying entire towns? CDOs, aka “toxic debt” in the trillions doesn’t pose an unprecedented threat? Oh, that awful media! I guess they made up the story that Pauslon said if the bailout wasn’t passed there was immediate danger of financial collapse? I guess Iceland didn’t really go bankrupt and ireland and England are actually going swell. Oh, that annoying media! Always makes a great scapegoat when you hear news you can’t deal with. Things are actually peachy.
February 2, 2009 @ 3:04 pm | Comment
44
By nanheyangrouchuan
Richard:
Where is the big move in gold? Shouldn’t it be around $1500 by now? And don’t think the PRC will look out for its foriegn friends in a crisis. You’ll go hungry too.
China is failing:
w.iht.com/articles/2009/02/02/business/yuan.3-421355.php
*** NEWS ***
– Hu calls for PLA loyalty as fears grow of trouble ahead
President Hu Jintao told leaders of the People’s Liberation Army to “strengthen military discipline” and make sure the army stays absolutely loyal to the Communist Party as China enters a year of harsh economic reality and sensitive anniversaries.
http://breakingnews.scmp.com/NLet/CMSNLet.asp?Dest=http%3A%2F%2Fwww%2Escmp%2Ecom%2Fportal%2Fsite%2FSCMP%2Fmenuitem%2E2af62ecb329d3d7733492d9253a0a0a0%2F%3Fvgnextoid%3D974bf25ecb23f110VgnVCM100000360a0a0aRCRD%26ss%3DChina%26s%3DNews&PF=Y&NT=china
– Far fewer migrants than expected arrive in Guangdong
Most migrant workers heading to Guangdong after the week-long Lunar New Year holiday are returning to existing jobs and just 2 per cent are looking for work, Xinhua reports.
http://breakingnews.scmp.com/NLet/CMSNLet.asp?Dest=http%3A%2F%2Fwww%2Escmp%2Ecom%2Fportal%2Fsite%2FSCMP%2Fmenuitem%2E2af62ecb329d3d7733492d9253a0a0a0%2F%3Fvgnextoid%3Deadaf25ecb23f110VgnVCM100000360a0a0aRCRD%26ss%3DChina%26s%3DNews&PF=Y&NT=china
*** COLUMNS ***
– China Briefing: Beijing plays with online fire
For the mainland’s tens of millions of netizens, the hottest topic lately has been the central government’s high-profile internet crackdown on so-called low-class content.
http://breakingnews.scmp.com/NLet/CMSNLet.asp?Dest=http%3A%2F%2Fwww%2Escmp%2Ecom%2Fportal%2Fsite%2FSCMP%2Fmenuitem%2E2af62ecb329d3d7733492d9253a0a0a0%2F%3Fvgnextoid%3D592bf25ecb23f110VgnVCM100000360a0a0aRCRD%26ss%3DChina%26s%3DNews&PF=Y&NT=china
– Frank Ching: Unfamiliar territory
http://breakingnews.scmp.com/NLet/CMSNLet.asp?Dest=http%3A%2F%2Fwww%2Escmp%2Ecom%2Fportal%2Fsite%2FSCMP%2Fmenuitem%2E2af62ecb329d3d7733492d9253a0a0a0%2F%3Fvgnextoid%3D6746dab77f71f110VgnVCM100000360a0a0aRCRD%26ss%3DChina%26s%3DNews&PF=Y&NT=china
*** BUSINESS ***
– Wen warns lenders against bad debt growth
Mainland banks should be watchful of running up further bad debts while boosting loans to help stimulate the economy, Premier Wen Jiabao told bank employees in London over the weekend.
http://breakingnews.scmp.com/NLet/CMSNLet.asp?Dest=http%3A%2F%2Fwww%2Escmp%2Ecom%2Fportal%2Fsite%2FSCMP%2Fmenuitem%2E2af62ecb329d3d7733492d9253a0a0a0%2F%3Fvgnextoid%3D1606a0cf2123f110VgnVCM100000360a0a0aRCRD%26ss%3DCompanies%26s%3DBusiness&PF=&NT=china
February 3, 2009 @ 3:29 pm | Comment
45
By tomservo
Huh? Am I missing something? Are we reading the same economic numbers coming out of China and Asia? I really don’t understand why there is still so much “new world order” talk going on. I understood why back in October, when America and Europe fell first and the situation had yet to spread to places like China, Russia, India and Brazil. But now the entire world is in the soup, and if things are bad in the US, the trends in China are even worse. Talk about China running the world at this time seems the equivalent of talking about Japan owning the world in 1990, after the bubble had burst.
For example, where exactly will the Chinese invest there money, if not in the States? At the moment, US government bonds are being treated as one of the world’s few safe havens, and it appears that a lot of private Chinese money is heading into US bonds because they are seen as a more stable location for one’s money than in China. In fact, it would be good for America if the Chinese and other investors took their money out, because it would cause the dollar to fall and thus help spur an increase in American exports. China could reinvest that money in its own country, strengthening its own domestic economy but in doing so strengthening its own currency and thus undermining the health of its export businesses. And it will take a while for the benefits of a stronger domestic economy to emerge, while the effects on a weakened export sector would be felt almost immediately.
I will admit that is a simplistic take on the current trade issues facing both China and the US. Much better to find the latest articles by Michael Pettis and Brad Setser (http://blogs.cfr.org/setser/) on the issue. Setser in particular has been looking into the numbers and finding that the US Treasury is actually becoming less reliant, not more, on investment by the Chinese government. The fact is that China is not a rising power, not at this time and not for the forseeable future. For example, with all those problems mentioned that China faces, we must also add the fact that China is a rapidly aging society, and I’m not sure what the authorities can do about it since China’s population does need to be adjusted downward.
This isn’t to say that China is going to collapse. Just that China is not strong enough to become the world’s power and likely it will be left weaker for the immediate future after this crisis. The only thing this crisis might present is a chance for internal change in China. Once the world emerges from this crisis sometime next decade, the same world order will likely still be with us.
February 3, 2009 @ 4:08 pm | Comment
46
By Richard
Yes Tom, you are missing something.
China isn’t going to replace the US as the leading superpower. China may never even be a true superpower, its own problems are so immense. What this post is about it China’s ability to weather the economic storm in comparison to America’s. The main thesis of the article I quote is the gutted financial system and the huge debt we bear. China will not exceed or replace America. But it will emerge relatively (and that’s a key word) intact, while the US is already down several notches with more to come. Which will still leave it way higher than China. But China is already using the crisis to meet its long-term goals, while the US at the moment is paralyzed.
February 3, 2009 @ 4:27 pm | Comment
47
By Richard
Nanhe,please use tinyurl for long links instead of screwing up the margins, thanks.
Since 2006 when I recommended it, gold is up from the low 600s to right around 900. So if you bought it then you’d be rich today. But even if you bought it at its peak when it crossed 1,000 last year, you’d only be down about 10 percent. Most people I know have lost between 40 – 60 percent of their 401Ks, and that is no exaggeration. You do the math. 10 percent loss at worst, nearly 80 percent leap at best. I won’t predict any big leaps because gold is terribly volatile. It went up 15 percent in the past 8 weeks and can go down just as easily. But in times of crisis and when the dollar falls, gold goes up. Period.
Also lamb chops, if you’d read my post I said anyone can go surf google news for links that say bad things about China. Easy. I can find 100-times more bad links. And I can prove that China will collapse based on these links. Really. I did it in 2003. I said based on these links and articles I saw China simply had to collapse. I can also find you lots of links saying the US is going to collapse. And others that say just the opposite. You’ve been going on for years about the fall of China. All the evidence is there. Except it doesn’t happen. For all its fuckedupedness, China keeps going.
Did you intentionally only use links from SCMP, so no one without a paid subscription can go in and fact-check? And are you really putting forward a link about China’s crackdown on smutty Internet content as proof that China is collapsing? And a link to a story about Wen encouraging bankers to avoid bad loans? Oy vey. (That’s Uigher for Holy Shit!)
February 3, 2009 @ 5:05 pm | Comment
48
By ecodelta
Most economist could not prevent the crisis.
It is possible to predict what will happen in CH? It is far more complex than any Western economy.
We can see only tendencies. In different direction at the same time.
If collapse comes, we will notice it only when it happens. And who knows what will trigger it.
I also think CH will not become “the” superpower. Maybe there will be no more superpower, but several big powers. America will still be the biggest one I think, but not so big as to be able to act so unilaterally as until know.
The vacuum left by the collapse of the east block is being filled rapidly.
Besides the easy spread of information does not longer allow great differentials in technology. Is more a question or resources.
One power that is easily forgotten, besides US, EU, Russia, India and China is the Muslim world. It may look fragmented, buy they have a strong cultural and religious unity.
February 3, 2009 @ 5:46 pm | Comment
49
By ecodelta
That is not to say that CH doesn’t face huge problems, maybe even unsurmountable.
From an humanitarian aspect, no one in his right mind wish them to collapse, no matter if they are perceived as a potential danger, or as a totalitarian regime.
Some fenqins may thing otherwise. Should we condem 1.3B people because of them.
Quite absurd thinking. 😉
February 3, 2009 @ 5:50 pm | Comment
50
By ecodelta
Wow! Duplicate comments detection works!!
February 3, 2009 @ 7:35 pm | Comment
51
By tomservo
First of all, from the articles I read, China isn’t the only Asian economic power that is taking advantage of the situation. Japan is too, and I’ve even read some stuff on South Korea’s increased investment in Africa. This despite all three being in the soup. I don’t really consider any of this evidence that China is using the crisis to achieve its long-term goals. I would expect that, based on its needs, it would be making many of these purchases even if the prices weren’t so low.
I don’t believe that, based on the rapidly deteriorating situation, that China will come out of this intact or better than the States. I do think that the US, and Europe’s, financial sector is fraked. But I also believe that Asia’s will be too. China’s attempts to prop up its economy this year will heavily expose its fragile banking system to great risk, which will probably lead to a collapse of China’s banks in 2010. I would also expect Japanese and Korean banks to start falling sometime this year. The problem for China is that its economy is primarily fueled by exports, and trade has collapsed. In such a situation, no matter how fraked importing nations appear to be, export based nations always end up getting it worse.
As for debt, there is too much importance placed on that angle. America can run itself into a gazillion dollar debt, and it won’t matter a lick to its future prosperity. Just ask yourself this question “What would happen if America defaulted on its debt?” There will never be any external pressure on America over its debt, since the consequences of a US default are so dire.
If you were to ask me who might be coming out ahead in all this, it seems that Latin America and India are better placed than the rest. Both are less dependent on exports and Latin America’s banking sector seems better able to get through this crisis relatively unscathed.
Finally, Gold does appear a good bet: http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=203EE21F-1871-E587-E1761A32CE8C8E9C
By the way, India is the world’s largest gold consumer, accounting for about 70 percent of global bullion demand (picked that fact up from a Reuters story on gold).
February 3, 2009 @ 11:45 pm | Comment
52
By Richard
Tom, let’s agree to disagree. What I feel will happen isn’t based on an emotion, but on pieces I’ve read by economists, which I’ve cited here before, as well as my personal knowledge of Americans and the Chinese. I’ve heard both arguments and this is where I am now. That may change tomorrow.
China will certainly not come out intact, only relative to the US. We have a lot more to lose. And yes, export-based nations get hurt the hardest, but those with the most cash on hand can afford to buy people off for the longest periods of time. We’ll see.
February 4, 2009 @ 1:52 am | Comment
53
By ron patterson
Well I do not see how China will gain an advantage. I think the leadership missed too many oppurtunities. Instead of Highways they should have built hospitals, and schools. A lot of china’s impressive infrastructure doesnt really translate into economic improvement. The situation in the countryside is getting worse. Superhighways that have no traffic while peasants struggle to get electricity. But plenty of Range rovers and mercedes for the party bosses. All those nice highways are toll roads and the average Hunanese cant afford the toll.
Maybe the reason I dont think things are so bad in the U.S. is that I am old. I remember the 20% interest rates of the 1970’s when no one could buy a home and the 9% unemployment rate of the early 1980’s.
The dollar is doing quite well particuraly against the Euro and pound. I dearly love the simple rural folk of hunan, they didnt get all the goodies that the Chinese economic boom brought the East coast cities, so they havent so far to fall. They will just continue on. I do agree about the strength of india and Brazil looks like it is in a very good position. There is some evidence that a lot of money is leaving China, that mailland chinese are hiding their money abroad. This is possibly due to the fears of social unrest.
February 4, 2009 @ 7:38 am | Comment
54
By Serve the People
To see whether China will come out of this crisis in better or worse shape than US, we should look at the policies that the two countries implementing now. I am very disappointed by the Buy American clause in the current US stimulus package. This will do great damage to the international trade and the world economy. The Europeans are already complaining.
http://news.bbc.co.uk/2/hi/business/7866900.stm
I do not think the Republicans have the ability to have this clause removed, and Obama has not shown the courage that he can stand up to the congressional democrats.
February 4, 2009 @ 7:49 am | Comment
55
By ecodelta
Buy only “whatever” would be to repeat the mistakes of the great depression 1928.
I believe is a temporary automatic reaction of the governments, much worried by the growing crisis, unemployment and company bankruptcies.
In the end I think a more rational behavior will prevail. I put my bets on an eventual coordination of stimulus packages, and specially transnational infrastructure projects.
February 4, 2009 @ 9:46 am | Comment
56
By yourfriend
Even though nanhe has lots of time on his hands, the only thing he could find is a crackdown on internet porn.
high-profile internet crackdown on so-called low-class content.
It probably touches a nerve with him.
February 5, 2009 @ 5:36 am | Comment