. March 16, 2010 SouthAmerica: Where there is smoke, there is fire. ******* âIs China's Politburo spoiling for a showdown with America?â By Ambrose Evans-Pritchard Telegraph (UK) Published: March 14, 2010 The long-simmering clash between the world's two great powers is coming to a head, with dangerous implications for the international system. China has succumbed to hubris. It has mistaken the soft diplomacy of Barack Obama for weakness, mistaken the US credit crisis for decline, and mistaken its own mercantilist bubble for ascendancy. There are echoes of Anglo-German spats before the First World War, when Wilhelmine Berlin so badly misjudged the strategic balance of power and over-played its hand. Within a month the US Treasury must rule whether China is a "currency manipulator", triggering sanctions under US law. This has been finessed before, but we are in a new world now with America's U6 unemployment at 16.8pc. It's going to be really hard for them yet again to fudge on the obvious fact that China is manipulating. Without a credible threat, we're not going to get anywhere," said Paul Krugman, this year's Nobel economist. China's premier Wen Jiabao is defiant. "I donât think the yuan is undervalued. We oppose countries pointing fingers at each other and even forcing a country to appreciate its currency," he said yesterday. Once again he demanded that the US takes "concrete steps to reassure investors" over the safety of US assets. "Some say China has got more arrogant and tough. Some put forward the theory of China's so-called 'triumphalism'. My conscience is untainted despite slanders from outside," he said Days earlier the State Council accused America of serial villainy. "In the US, civil and political rights of citizens are severely restricted and violated by the government. Workers' rights are seriously violated," it said. "The US, with its strong military power, has pursued hegemony in the world, trampling upon the sovereignty of other countries and trespassing their human rights," it said. "At a time when the world is suffering a serious human rights disaster caused by the US subprime crisis-induced global financial crisis, the US government revels in accusing other countries." And so forth. Is the Politiburo smoking weed? I let others discuss the rights and wrongs of this, itself a response to the US report card on China. Clearly, Beijing is in denial about is own part in the global imbalances behind the credit crisis, specifically by running structural trade surpluses, and driving down long rates through dollar and euro bond purchases. No doubt the West has made a hash of things, but the Chinese view of events is twisted to the point of delusional. What interests me is Beijing's willingness to up the ante. It has vowed sanctions against any US firm that takes part in a $6.4bn weapons contract for Taiwan, a threat to ban Boeing from China and a new level of escalation in the Taiwan dispute. In Copenhagen, Wen Jiabao sent an underling to negotiate with Mr Obama in what was intended to be - and taken to be - a humiliation. The US President put his foot down, saying: "I don't want to mess around with this anymore." That sums up White House feelings towards China today. We have talked ourselves into believing that China is already a hyper-power. It may become one: it is not one yet. China is ringed by states - Japan, Korea, Vietnam, India - that are American allies when push comes to shove. It faces a prickly Russia on its 4,000km border, where Chinese migrants are itching for Lebensraum across the Amur. Emerging Asia, Brazil, Egypt and Europe are all irked by China's yuan-rigged export dumping. Michael Pettis from Beijing University argues that China's reserves of $2.4 trillion - arguably $3 trillion - are a sign of weakness, not strength. Only twice before in modern history has a country amassed such a stash equal to 5pc-6pc of global GDP: the US in the 1920s, and Japan in the 1980s. Each time preceeded depression. The reserves cannot be used internally to support China's economy. They are dead weight, beyond any level needed for macro-credibility. Indeed, they are the ultimate indictment of China's dysfunctional strategy, which is to buy $30bn to $40bn of foreign bonds every month to hold down the yuan, refusing to let the economy adjust to trade realities. The result is over-investment in plant, flooding the world with goods at wafer-thin export margins. China's over-capacity in steel is now greater than Europe's output. This is catching up with China, in any case. Professor Victor Shuh from Northerwestern University warns that the 8,000 financing vehicles used by China's local governments to stretch credit limits have built up debts and commitments of $3.5 trillion, mostly linked to infrastructure. He says the banks may require a bail-out nearing half a trillion dollars. As America's creditor - owner of some $1.4 trillion of US Treasuries, agency bonds, and US instruments - China can exert leverage. But this is not what it seems. If the Politburo deploys its illusiory power, Washington can pull the plug on China's export economy instantly by shutting markets. Who holds whom to ransom? Any attempt to retaliate by triggering a US bond crisis would rebound against China, and could be stopped - in extremis - by capital controls. Roosevelt changed the rules in 1933. Such things happen. The China-US relationship is no doubt symbiotic, but a clash would not be "mutual assured destruction", as often claimed. Washington would win. Contrary to myth, the slide to protectionism after the 1930 Smoot-Hawley Tariff Act did not cause the Depression. Trade contracted more slowly in the 1930s than this time. The Smoot-Hawley lesson is that tariffs have asymmetrical effects. They devastate surplus countries: then America. Deficit Britain did well by retreating into Imperial Preference. Barack Obama has never exalted free trade. This orthodoxy is, in any case, under threat in the West. His top economic adviser Larry Summers let drop in Davos that free-trade arguments no longer hold when dealing with "mercantilist" powers. Adam Smith recognized this too, despite efforts by free-trade ultras to appropriate him for their cause. China's trasformation has been remarkable since Deng Xiaoping unleashed capitalism, but as ex-diplomat George Walden writes in China: a Wolf in the World? you cannot feel at ease with a regime that still covers up Mao's murderous nihilism. He reminds us too that China has never forgiven the humilations inflicted by the West when the two civilizations collided in the 19th Century, and intends to exact revenge. Handle with care. .
Yes there will be a war, every recession/depression of this magnitude heralds the struggle for resources amongst humanity, everyone wants to feed their children at the expense of the other, and when push comes to shove... in fact it can be very well argued that WW2 arose not as a result of national socialism or fascism, but the great depression
. March 31, 2010 SouthAmerica: In the last two weeks I have been reading article after article on the major newspapers and business magazines such as: the Financial Times (UK), The Economist, Business Week, and so forth, and according to these articles all alarms are ringing out of control â it seems to me that a major international trade war is already underway. The cover story of Business Week magazine (April 5, 2010) âThe New Protectionismâ Closing for Business? - If you connect the dots then you will realize that this BW article is describing a major international trade war that slowly is already spinning out of control. Here is an article published March 30, 2010 on the Financial Times (UK), the article written by one of the few economists that I respect his opinions â I have been reading his articles for a long time and over the years I found out that we are usually thinking in the same wavelength. And once again I agree with Stephen Roach. ****** âBlaming China will not solve America's problemâ By Stephen Roach Published: March 30, 2010 Financial Times (UK) America's fixation on the "China problem" is now boiling over. From Google to the renminbi, China is being blamed for all that ails the US. Unfortunately, this reflects a potentially lethal combination of political scapegoating and bad economics. The political pressures are grounded in the angst of American workers. After more than a decade of stagnant real compensation and, more recently, a sharp upsurge in unemployment, US labour is being squeezed as never before. Understandably, voters want answers. It is all because of the trade deficit, they are told - a visible manifestation of a major loss of production to foreign competition. With China and its so-called manipulated currency having accounted for fully 39 per cent of the US trade deficit in 2008-09, Washington maintains that American workers can only benefit if it gets tough with Beijing. However appealing this argument may seem, it is premised on bad economics. In 2008-09, the US had trade deficits with over 90 countries. That means it has a multilateral trade deficit. Yet aided and abetted by some of America's most renowned economists, Washington now advocates a bilateral fix - either a sharp revaluation of the renminbi or broad-based tariffs on Chinese imports. A bilateral remedy for a multilateral problem is like rearranging the deckchairs on the Titanic. Unless the problems that have given rise to the multilateral trade deficit are addressed, bilateral intervention would simply shift the Chinese portion of America's international imbalance to someone else. That "someone" would most likely be a higher-cost producer - in effect, squeezing the purchasing power of hard-pressed US consumers. The US would be far better served if it faced up to why it is confronted with a massive multilateral trade deficit. America's core economic problem is saving, not China. In 2009, the broadest measure of domestic US saving - the net national saving rate - fell to a record low of -2.5 per cent of national income. That means America must import surplus saving from abroad to fund its future growth - and run current account and trade deficits to attract the foreign capital. Thus, for a savings-short economy, there is no escaping large multilateral trade imbalances. Yes, China is the biggest piece of America's multilateral trade deficit. But that is because high-cost US companies are turning to China as a low-cost offshore efficiency solution. It also reflects the preferences of US consumers for low-cost and increasingly high-quality goods made in China. In other words, savings-short America is actually quite fortunate to have China as a large trading partner. No, China is hardly perfect. Like the US, it, too, has a large imbalance with the rest of the world - namely, an outsize current account surplus. Just as responsible global citizenship requires America to address its savings deficiency, the world has every reason to expect the same from China in reducing its surplus saving. But these adjustments must be framed in the multilateral context in which the imbalances exist. Just as China is one of over 90 countries with which America runs trade deficits, US-China trade now represents only 12 per cent of total Chinese trade. It is wrong to fixate on a bilateral solution between these two nations to address their multilateral imbalances. Yet some of America's most prominent economists are claiming that a revaluation of the renminbi vis-Ã -vis the dollar would not only create more than 1m jobs in the US but that it would inject new vigour into an otherwise anaemic global recovery. Economists should know better. Changes in relative prices are the ultimate zero-sum game - they re-slice the pie rather than expand or shrink it. Currency, or relative price, adjustments between any two nations are not a panacea for structural imbalances in the global economy. What is needed, instead, is a shift in the mix of global saving. Specifically, America needs deficit reduction and an increase in personal saving, while China needs to stimulate internal private consumption. Washington's scapegoating of China could take the world to the brink of a very slippery slope. It would not be the first time that political denial was premised on bad economics. But the consequences of such a blunder - trade frictions and protectionism - would make the crisis of 2008-09 look like child's play. The writer is chairman of Morgan Stanley Asia and author of The Next Asia .
. Part 1 of 2 March 31, 2010 SouthAmerica: I have a hard copy of the actual BW magazine, but here is a copy of the entire article for the people who donât know how to find the information on the web. This trade war is not only between the US and China â this is becoming an international trade war that also involves, Asia, Europe, and other countries such as Brazil. And this international trade war is already spinning out of control faster than most people has realized, and the impact of such âinternational trade warâ it will be devastating to many countries around the world. ***** Business Week magazine - Cover Story: âThe New Protectionismâ Business Week - April 5, 2010 China: Closing for Business? - Western companies are finding themselves shut out as Beijing promotes homegrown rivals By: Dexter Roberts Not so long ago in China, Western business executives traveling to the provinces could expect a hearty welcome and a banquet with endless toasts of maotai liquor. In February, however, representatives of General Electric and a dozen other U.S. companies got a taste of the way commercial relations have been changing. They were in Wuhan, a city of 9 million on the Yangtze River, for a seminar on water-treatment technology organized by the U.S. embassy. At a dinner after the meeting they were supposed to have a chance to mingle with top local officials. But at the last minute, Wuhan's mayor canceled his keynote speech and backed out of the gathering. That same day the provincial party secretary and governor begged off a separate event for American Ambassador Jon M. Huntsman Jr. One attendee, who won't be quoted by name, speculates that the Wuhan officials were responding to direct orders from the central government in Beijing not to meet the Americans. The provincial government acknowledges that the original lineup was changed but notes other officials attended the events. Nearly a decade after China's entry into the World Trade Organization, many foreign companies say the warm reception they once received has turned frosty. While China can still be highly profitable, some question how long that will last as Beijing changes the rules to give a lift to its domestic companies, especially state-owned enterprises. A new government procurement program known as "indigenous innovation" features rules favoring local firms: It could block sales worth billions of dollars a year, says Joerg Wuttke, director of the European Union Chamber of Commerce in China. Beijing has written strict standards for everything from cell phones to cars, often couching them in a way that gives an advantage to domestic producers. A recently revised patent law could force foreign companies to hand over key technologies to Chinese bureaucrats. And anti-monopoly regulations have been used to limit foreign access to sectors such as construction machinery and energy. "They have moved away from a level playing field to benefit their own companies," says Wuttke. Multinationals "are seeing the golden China opportunity become a mirage," says the China government relations chief of a major tech supplier, who would not be named for fear of reprisals. Trade associations can speak more openly. A Jan. 26 letter to the White House from the U.S. Chamber of Commerce, the Business Software Alliance, and more than a dozen other groups representing hundreds of multinationals such as Microsoft, Boeing, Motorola, Caterpillar, and United Technologies, warned of "systematic efforts by China to develop policies that build their domestic enterprises at the expense of U.S. firms." The signatories asked the Administration for its "urgent attention to policy developments in China that pose an immediate danger to U.S. companies." Why a chill now? Chinese look across the landscape of their economy today and see much that could be improved. After 30 years serving as the workshop of the world, mainly producing low-value goods for foreign brands and distant markets, they want to move up the value chain. To date they have only been able to capture a fraction of the value of a Nike shoe or Apple iPhone. And they know they have a poor record in creating global brands. Apart from telecom equipment maker Huawei, notebook giant Lenovo, appliance marketer Haier, and perhaps consumer electronics maker TCL and car companies Geely and Chery, they have few champions. Even at home, General Motors and Volkswagen vie for the top spot, while Nokia sells the most handsets of any company in China, with a 32.9% share. "People feel that foreign brands have taken too much market share," says Wang Yong, director of the Center for International Political Economy at Peking University. Although China has been able to build a $227 billion trade surplus with the U.S., its manufacturing might has brought it huge problems with pollution and energy waste. The Chinese understandably want something better. "They want sophisticated international companies and they want to give them a leg up," says Brookings Institution senior fellow Kenneth Lieberthal. The Chinese drive resembles Japan's efforts in the 1960s to become a global player, though China has opened up much more. Foreign companies have invested some $600 billion into China since 2001. Even as friction began to rise, U.S. companies increased their investment from $2.9 billion in 2008 to $3.6 billion last year. On top of all this, China has emerged from the global financial crisis largely unscathed. As a result, political analysts say, Chinese look at the rest of the world and feel a lot less awe and admiration than they once did. There is also a sense that the previous leadership of President Jiang Zemin and Premier Zhu Rongji gave away too muchâsuch as slashing tariffs on agricultural products and ending local-content requirements for foreign automakersâin their desire to enter the WTO. Now, China feels it should assert its own economic interests. If that involves throwing its weight around, so be it. Finally, China sees how other countriesânotably the U.S.âhave used standards, regulations, and buy-local policies to build their own industries. Beijing feels more than entitled to do the same. The U.S. Trade Representative's Office started 28 cases against Chinese companies last year. And "states like California have wide latitude in their procurement policies, so they can give American companies an advantage," explains Nicholas Lardy, senior fellow at the Peterson Institute for International Economics. If foreign companies complain publiclyâwhich they often don't, since Beijing has shown itself capable of using inspections, delayed approvals, and courts to make life miserable for those who speak outâChina now usually says, show us where we are violating WTO rules. China's leadership does not want the situation to spin out of control. The Commerce Ministry has assured foreign investors they are still welcome, and on Mar. 2 officials met with executives from over two dozen companies and associations to hear their concerns. At the close of the National People's Congress on Mar. 15, Premier Wen Jiabao told reporters the government would try "to level the playing field for foreign companies." Wen also met with foreign delegates at the China Development Forum on Mar. 22, saying trade and currency wars "won't help us cope with difficulties but just curb cooperation." Ambassador Huntsman declared himself "convinced that blue skies are already on the horizon" in a speech at Tsinghua University in Beijing a few days earlier. Investment keeps rolling in. Ford Motor, for example, has recently been ramping up in China. And with President Hu Jintao expected to visit the U.S. this year, both sides will no doubt extend olive branches before he arrives. Some cool-headed analysts call the current complaints overblown. Charles Freeman, a China expert at the Center for Strategic & International Studies in Washington, argues that Beijing can't shut out foreigners because it needs their intellectual property: China's technology lags Western, Japanese, and Korean efforts in many key sectors. Chinese wind turbines, for instance, are inferior to products made abroad, he says, but wind is key to Beijing's goal of weaning itself from coal power. "They won't wait for Chinese innovation," says Freeman, who served as chief China trade negotiator for the U.S. Trade Representative in the George W. Bush Administration. "They will choose American, European, or Japanese products that are cheaper." GOOGLE GLARE Those are sensible comments. Yet the frictions are mounting. The largest potential troublemaker is the fight over China's currency, the yuan. On Mar. 16, a group of U.S. senators unveiled a bill to levy tough sanctions against China for manipulating its currency to promote exports. Brooking's Lieberthal says the economics of that argument are weak: A 20% appreciation of the yuan would just cheapen China's cost of imports, like oil and iron ore, that it uses to make exports, so the final costs of U.S.-bound products would rise only slightly. The yuan is a political issue, though, and things could get ugly whatever the economic arguments. The flap over Google's exit from China over censorship rules adds heat to the U.S.-China debate, even though it has nothing to do with currency or trade protections. China, meanwhile, sees a weak U.S. economy as a threat to the value of its vast holdings of Treasury bills. And Beijing is livid over the arms sales to Taiwan, President Barack Obama's February meeting with the Dalai Lama, and a Mar. 11 State Dept. report criticizing China's human rights record. .
. Part 2 of 2 The efforts to develop homegrown technology are what's really worrying U.S. business. Beijing has crafted "very direct policies of favoritism for Chinese state industry that are hitting foreign companies," says James McGregor, author of a book on investing in the mainland and former chairman of the American Chamber of Commerce in China. "We are seeing a sea change." New rules giving preference to Chinese suppliers for government projects make it difficult for General Electric, Denmark's Vestas, and other foreign wind turbine manufacturers to win contracts in China, a market worth some $14 billion annually. Hewlett-Packard says China's consumer protection agency has criticized its handling of warranties and repairs for certain notebook computers, the first time in memory HP has had such troubles. On Mar. 16 officials in Zhejiang province impounded clothing made in Europe by Versace, Hugo Boss, and other luxury brands. A government agency said many garments failed quality or safety tests, a claim vigorously rejected by the companies. And last year international express mail carriers were barred from domestic deliveries of letters and documents. The rule "is unfair and...it's bad for China to keep the international companies out," UPS Chairman D. Scott Davis told analysts in a conference call last fall. "It seems kicking the foreigners in the teeth is in these days," says American consultant Duncan Clark, a 15-year resident of Beijing. "TONGUE LASHING" China's membership in the WTO was supposed to make things easier on foreign investors, who used to be treated like honored guests and wooed with tax breaks and free land. After President Hu Jintao and Premier Wen Jiabao took over in 2002, things started to cool. That has left multinationals far less bullish on China. While foreigners have made substantial profits on the mainland, last year confidence about future earnings took a tumble, according to separate surveys from the U.S. and European chambers of commerce. Both groups report a majority of members make money in China, but the ranks of the profitable are shrinking. Just a third of European companies now say they're optimistic about future profits, down from half the previous year. In a separate survey by the American Chamber in Shanghai, 39% of companies say revenues fell in 2009, the largest number since 1999. Tit-for-tat actions against Chinese tires and steel pipes and American chicken could flare into a full-blown trade war. Washington is mulling whether to respond to Chinese favoritism by seeking punitive measures against Beijing at the WTO and the U.S. International Trade Commission, says a senior Commerce Dept. official. "What worries me is that the Chinese-American relationship is becoming more antagonistic," says Kai-Fu Lee, a former senior executive for Microsoft and Google in China. "That is not healthy." Much of the angst stems from the indigenous innovation policy. First introduced as an ill-defined national goal several years ago, the initiative gathered speed last fall when Beijing began offering tax breaks and subsidies to Chinese companies and gave them preference in state contracts. Provincial and municipal governments across China have issued lists of everything from mobile phones to traditional herbal remedies that can be purchased by their agencies. Hardly any include goods made by foreign companies, even if they're produced in China. Shanghai, for example, released a list of over 500 approved productsâLenovo PCs, solar panels from Chaori Solar, and more. Only two items come from enterprises with foreign ties. Such policies aren't technically in violation of WTO rules, since China hasn't yet signed an agreement that covers government procurement. Although Beijing says it aims to sign this year, that may not have much meaning, since it has asked for a phase-in period of 15 years. A key issue will be whether China defines government procurement to include schools, hospitals, and state-owned enterprises. A broad definition could put billions of dollars of sales of tech goods off-limits for non-Chinese companies. "These rules in essence will keep out not just American companies over here but also [block sales by] American companies operating in China," says John Frisbie, president of the U.S.-China Business Council, a Washington lobbying group representing more than 200 multinationals such as Citigroup, IBM, and Microsoft. Beijing, he says, has "crossed a line." A patent law that took effect in October includes a rule that would force companies to file patents or trademarks in China before doing so overseas if they want to qualify for government procurement. Companies say that makes it impossible to sell any product developed overseas and would give Chinese bureaucrats access to trade secrets. The law could compel companies that use patents to "compete unfairly"âas defined by a vague 2008 measureâto release them for use by rivals. Foreigners rarely push back publicly for fear of angering the Chinese. An executive from an international express carrier says global delivery companies might win a WTO case over Beijing's rules barring them from carrying domestic letters, but he says he would never pursue a case alone; his company would almost certainly face harassment. "The Chinese are very good at smashing the nail that sticks up," he says. Many foreigners refrain from taking legal action because they feel the justice system favors domestic enterprises. "We complain but we don't sue," says Mark Cohen, an attorney at Jones Day in Beijing. That attitude was reinforced when French electronics maker Schneider Electric last April settled a three-year-old patent dispute with Chint Group, a maker of products such as transformers and circuit breakers, for $23 million. Western attorneys familiar with the case say Chint had actually lifted Schneider's technology, not the other way around. Thomas Pattloch, IP officer for the European Delegation in Beijing, says the case illustrates so-called junk patents used by the Chinese against companies whose patents they have infringed upon. "The court did everything they could to ignore the evidence Schneider presented," says Pattloch. A Schneider spokeswoman says the company disagreed with the court's initial decision and declined comment on the settlement. Chint disputed the account but declined to provide details, citing a privacy agreement. The court did not respond to requests for comment BURIED IN REGULATION Beijing's penchant for rule-making has created another big barrier. Every year, China issues more than 10,000 new standards governing industries from mobile phones to autos. That's more than the rest of the world combined, says Klaus Ziegler, the standards officer at the delegation of the European Commission to China. The rules, ostensibly to protect the health and safety of consumers and to ensure that products will work in China, are often crafted in a way that boosts Chinese companies, foreign investors say. Germany's Continental must grapple with rules mandating that all tires sold in the country be imprinted with Chinese characters and other mainland-specific information. Although there's a global standard for such specifications the Chinese insist on their own rulesâso Continental and other tire makers must make scores of special molds that cost nearly $70,000 apiece. That's not a huge problem for mass-market tires, but it can devastate profits on specialty products such as tires for industrial vehicles. Gas cooking stove makers faced similar problems. Buried in the 50 pages of regulations about gas-fired appliances is a clause that says burners must withstand temperatures above 700C. That's higher than standards elsewhere, and it means burners can't be made of aluminumâthe material most commonly used by European manufacturers. The result: Several Italian manufacturers were shut out, says EC standards officer Ziegler. "China eliminated those Italian producers," he says. Chinese software piracy is "intractable" and "deprives U.S. software companies of literally billions of dollars each year," Robert Holleyman, president of the Business Software Alliance told the House Foreign Affairs Committee on Mar. 10. In another side of the software issue, an executive familiar with German software maker SAP says Beijing offers tax breaks and other incentives to companies that buy products from local rival Kingdee International. Kingdee didn't respond to requests for comment, and SAP declined to address the issue. In services, China remains tough to crack. Insurance, for instance, was supposed to open up after Beijing joined the WTO. Yet Chubb, Liberty Mutual, and Zurich can apply to open only one new branch at a time, and it typically takes more than 18 months to win approval. "There is this mentality that they want to help the local companies," says an executive with a foreign insurer. "And the easiest way to do that is to protect them from foreign competition." Some Westerners believe all these troubles can be traced to China's negotiations to join the WTO. In the rush to gain access to the huge market, many corners were cut, and trade officials simply hoped Beijing would interpret the deal in a way outsiders would consider fair. "People were focused on the enormity of what was being accomplished just by bringing China into the WTO," says an executive with a Western bank in Shanghai, who says capital requirements and recalcitrant bureaucrats have restricted his company's expansion. "They thought they could take care of [the details] later." With Cornelius Rahn, Steve LeVine, Aaron Ricadela, Connie Guglielmo, Susanna Ray, Brian Womack, and Helen Yuan Roberts is BusinessWeek's Asia News Editor and China bureau chief. http://www.businessweek.com/magazine/content/10_14/b4172032516519.htm .
. March 31, 2010 SouthAmerica: Yesterday someone sent me an email asking me the following: âThe big question being: does China's economic dynamism come thanks or despite authoritarianism?â Here is my response to the person who sent me that email: If you read the following article you will be able to find the answer to your question regarding what is behind and at the core of the economic dynamism in China: Brazzil Magazine - March 2, 2007 Written by Ricardo C. Amaral http://www.brazzil.com/component/content/article/177-march-2007/9821.html ... I read a lot of newspapers, business magazines, books, and I watch many business programs on television all the time - and the impression that I have is that most writers and business analysts don't have a good grasp and understanding of how China has been able to develop its economy at such a fast pace in the last 20 years. Here is what most of these people are missing in their analysis of China... .
. April 7, 2010 SouthAmerica: You just donât insult your new master, and US Treasury Secretary Timothy Geithner understands that fact. The US government postponed the Department of the Treasury report due on April 15 (its bi-annual currency review) and its decision on whether to label China as a currency manipulator. The Obama administration is facing demands from Congress to label China as a currency manipulator, but at the same time the US government is afraid of creating a confrontation with China; a country that the United States depend on its generosity to keep the US economy afloat to the tune of trillions of US dollars. It would be a bad idea to offend the country that has your country by the balls. ***** From Brazilâs perspective: In a way it is good for Brazil that the old currency game of the last few years will continue until the US government has the balls to do something about China and the currency issue. .
. April 7, 2010 SouthAmerica: Reply to Thermactor Since you didnât grasp and are completely clueless about what I said on the above posting regarding Brazil. As of April 5, 2010 Brazilâs Central Bank were holding US$ 244 billion in foreign reserves â and by the end of 2010 the Brazilian Central Bank will have around US$ 300 billion dollars in foreign reserves. Here is how the current game works: 1) China buys all kinds of stuff from Brazil and keeps sending the US dollars to Brazil. 2) China keeps selling their goods to the US and gets lots of US dollars. 3) China lends a ton of US dollars to the US government to keep the US government afloat and to keep the interest rate very low in the US for Americans to continue spending money that they donât have on things that they donât really need. Moral of the story: The United States builds a Mount Everest stockpile of new debt and at the same time Brazil enjoys the ride as long it lasts all the way to the bank â a US$ 300 billion dollar ride by the end of 2010 and with the potential of continue growing as long this currency game continues on its current form. But Brazil should invest this money on infrastructure in Brazil ASAP, before their stockpile of US dollars become worthless similar to Germany around 1922. ********* On the other hand, if the US government has the balls to label China a currency manipulator in the near future then the shit will hit the fan, and it will be bad for everybody â resulting in a nasty international trade war. .
But Senhor Amaral, you always talk about how the rest of the world is so bad, and how Brasil is so good. You sound exactly like a propaganda copy writer. I've likely been to more countries in south America than you have, and I can assure you, that Brazil is 100 years behind America, and so is the rest of South America, with the possible exception of Chile.