I can't believe traders are arguing about IQ, I thought them smarter than that. It's some made up statistic that has as much value as post count. Most people never achieve their potential, a person's potential is frightening. Anyway, about China, it's called competition! Asians work harder than americans, mexicans work harder than americans, swedish work harder than americans. It's not the end of the world, look at Germany. Unemployement of 10% for the last 10 years, and what are they succeeding in? Manufacturing! Biochemistry! Economists say that this benefits everyone, theoretically it should, but who knows where the money goes. The truth is that nothing has changed, at least not how I perceive it. I think it's dumb that koreans, chinese work 12 hours a day, they have no life! Why can't we all collude to work 6 hours a day and have fun, like the Europeans tried to? Oh right, communism doesn't work. It's always a battle, never forget what our grand fathers went through. Unemployment in Canada right now is at its lowest levels historically. Life doesn't owe you anything, lost your job, tough shit, I agree it sucks and life's unfair, but we created our own hell! We'll all self destruct ourselves competing against the Chinese, but you can't blame them, they have over 1 billion to feed. Will we ever achieve a higher level for the human race, where man is not guided by greed, shortsightedness, fear? Where he is not vulnerable to his own ambitions and to other's ambitions? I too can't wait for genetic manipulation, for one it can't get any worse.
China's trade deficit with the US was over $200 billion or so in 2006. You could fix a billion of that if you shipped them the high tech stuff, and the next year they would have it copied and being sold globally to our enemies. How big was the deficit with Canada? The surprise is how big the deficit is with the Euro block. GM will be bringing in Chinese made parts and vehicles in a year or two, you watch. If they don't do it on their own, the competition will force them to. I wonder how many more American jobs will dissapear in that chapter. Don't worry, they can all retire early, too.
GM probably will move more jobs to developing countries such as China in the future, but it will sell much more cars in China too. That is part of the globalization. Right now GM China can hardly meet the demand in China. In the future the job market will be even more competitive. In north america kids have to compete with kids in India and China who spend 10 hours a day working on math.
The currency manipulation accusations and all that are just political shows. Congressmen want to look good and act like they're doing something, and whenever Bush is having trouble with Iraq he tells Paulson to stir up some shit and divert attentions... The fact is that BOTH countries need each other. No one points a gun to their heads... they can yell at each other all day, and in the end stuffs are shipped from China, and US is happy to write a few IOUs. The truth is that China needs a customer to buy something so that its workforce can be put to work (80% are still farmers). On the other hand, the US is happy to play the consumer role and essentially pay nothing to enjoy all those goods. This is the ideal marriage, both matching in size and can satisfy each other. The US exports consumers and China exports workers. The US can keep printing all this money AND have a low inflation because the Chinese are essentially working for free. The Chinese needs the consumption to get its workforce to work (they don't have enough domestic consumers), and in the process slowly build a domestic economy of its own... This relationship can go on for a long time, until the Chinese is finally able to build a domestic economy and starts to have consumers within its own boundary. That's the time when China would say no to US IOUs and that's when all the fun would end... Following this logic, the last thing US wants to see is a rising domestic Chinese economy. If the Chinese have enough consumers of its own to keep the economic engine running, they would no longer need the US to play the consumer role. They would pull the plug from the relationship... Now, let's get into conspiracy theory. There are many ways to "delay" the Chinese from building their own domestic economy. Stopping it indefinitely may not be possible, but delaying it is certainly worth trying. One way to do this is to create wide spread economic crisis in China and take away the "wealth" from its citizens... think about the 97 Asian crisis; or Reminibi revaluation (think of the Japanese Yen in the 80's) ; or creating a stock market crash and burn; or while we're at conspiracy theory... how about some mysterious virus like SARS or Bird flu? How about war with Taiwan? Maybe some fancy weapon arm race where the Chinese cannot afford to spend their money on? If this can be done a few times say every 10 years or so, the Chinese will be slave for a few more decades and all they can do is to keep working for free. An added benefit is that they will have to cut their consumption (or else we'll see 1 bln people coming out from their farm lands and start driving). This will certainly help ease down price of crude oil and many other natural resources... Most importantly, it will support the US dollars because the Chinese will need it for as long as they can't get their own freaking domestic economy up and running... Well, just some random thoughts...
I have been saying the following for 2 years: The U.S. has a limited amount of time to be able to persuade China to do and not do certain things. Once U.S. consumers no longer matter as much to China, and other world citizens buy a greater proportion of Chinese exports (especially relative to the U.S.), any U.S. leverage over China will fade fast. It already has begun.
I totally agree and while I've been hesitant to bring up this point, perhaps it's time to introduce it as a discussion point. As China diversifies their monetary surplus into other currencies, economies, etc. and the yuan appreciates, that means that their surplus gets stronger and stronger and so the money they're sitting on now is an an already impressive amount which could balloon in value just due to the fact that it's currently being recognized in a form(yuan I'm guessing) that is being undervalued. Am I incorrect to wonder if their surplus could be 50% more than we know of?
I may be cynical... but country leaders can go great length to protect the interest of their countries... think of the Iraq invasion... where's the WMDs?