China Daily reports that China spending its way out of economic woes.
(emphasis mine) [my comment]
Spend way out of economic woes?
By Yan Xianpu (China Daily)
Updated: 2009-06-01 16:43
While China's export and investment growth remained at a low level in the first quarter, domestic consumer spending increased rapidly, helping to offset the impact of shrinking foreign demand and weaker investment.
As the global economy continues to slow, domestic consumer spending is likely to remain strong in the coming years and has the potential to become the main driver of the Chinese economy.
According to the National Bureau of Statistics, consumption accounted for 4.3 percentage points of China's 6.1 percent GDP growth, compared with 0.2 percentage points for net exports and 2 percentage points for investment. Consumption rose to become the largest contributor to China's GDP growth over the period.
Meanwhile, retail sales expanded 15 percent in the first quarter. After being adjusted for inflation, they grew 15.6 percent year-on-year.
The performance of the auto and property sectors largely confirmed these figures. Auto sales rose 24.97 percent in April to 1.15 million units, hitting a fresh record and making the country the world's largest auto market for the fourth consecutive month, the China Association of Automobile Manufacturers reported.
Housing sales also rebounded. Industry specialists said the sector's sales volume grew more than 100 percent year-on-year in the first quarter in Beijing, Shanghai and Shenzhen. The government's efforts to promote home appliance sales also started to have an impact.
Total sales of these products reached 4 billion yuan in the first quarter, up 72 percent from the previous quarter. Home appliance sales reached 2.24 billion yuan in March alone, while sales grew 17 percent in China's countryside, outpacing urban areas for the first time.
Is this growth sustainable? [yes] How about its potential? [enormous] These questions are important to the sustainability of China's development and the pace of its growth. Consumption is likely to remain a major driving force of the nation's growth.
…
Now, a significant part of China's population is at the age of peak consumer spending. The baby-boom generation of the 1960s is now entering middle age, the period of strongest purchasing power. This means that the next decade could be a period of extremely rapid growth in China's consumer spending.
International experience shows that consumer spending peaks between the ages of 40 and 50.
The Los Angeles Times reports about soaring car sales in rural China.
In rural China, a bumper crop of new car owners
Cao Jun / Los Angeles Times
By Don Lee
May 27, 2009
Reporting from Chuzhou, China -- Like everybody else in his farming village, Zhan Changchun used to get around on a bicycle. This month, the 29-year-old walked into a local dealership, pulled out $7,300 in cash from his leather satchel and drove away with the family's first car: a seven-seat micro-minivan that's jointly produced by China's Wuling and General Motors.
The Zhans drained their life savings and borrowed from relatives, bold moves in a slowing economy.
But they couldn't resist a slew of government incentives: a 50% sales tax reduction, elimination of hundreds of dollars in road maintenance fees, plus the biggest of them all, a 10% rebate for rural residents buying vehicles with engines smaller than 1.3 liters.
It's all part of Beijing's "Send Automobiles to the Countryside" campaign, an effort to speed rural development and boost domestic consumption at a time when foreign demand for China's manufacturing exports is slumping. The government is also giving people in the countryside rebates for buying refrigerators and other appliances.
"Government policy is good these days," said Zhan, a big man with a round belly and cherubic face. He beamed as he showed off his gray van to visitors. The seats were still covered in plastic wrap. Red ribbons were tied around the side mirrors, good-luck symbols for a new vehicle.
"I never thought I could buy a car," he said.
That's a refrain heard in many Chinese villages these days as hundreds of thousands of farmers join the motor age. And it's a big reason China has overtaken the U.S. in car sales this year. While new-vehicle purchases in the U.S. plunged 37% in the first four months of this year, they jumped more than 9% in China, to 3.8 million, with record volumes in March and April.
China's surprisingly strong car sales have given companies like GM, which is tottering at home, a much-needed boost. It's prompted auto companies and makers of consumer goods to focus even more on China, particularly the vast, developing rural regions.
"Just imagine: If every farmer buys one cellphone, that would be 900 million units," said Zhu Xinkai, an agricultural economics specialist at Renmin University of China.
Zhu doesn't see China's rural car culture reaching full bloom for at least another decade. But the global financial crisis appears to be pushing the trend. Among those taking advantage of the car incentives are migrant workers who have returned home after losing factory jobs; they're breaking open piggy banks or borrowing to buy vehicles to launch delivery and other businesses.
…
China's rural residents have been prodigious savers, in part because of insecurities related to healthcare, education and pensions. But in the last couple of years, the central government has rolled out rural health cooperatives that now cover some of the costs of medical care. The burden of school costs and taxes for farmers also have been eased.
Zhu, the agricultural economist, estimates that half of the farmers in the eastern half of China can afford to buy a car, which translates to as many as 200 million people. At the end of last year, there were only 65 million automobiles on the roads in all of China.
"In the past, many automakers believed that the consumption ability in rural areas was quite low," said Jia Xinguang, an independent auto analyst in Beijing. Now "everyone is asking, 'How can we sell cars in the rural lands?' "
Changan's strategy is to saturate the countryside with dealers and service centers. It's also designing more mini-vehicles suitable for village use, says Yang Dayong, Changan's deputy director of sales.
"We're making cars with higher chassis, larger loads and more space inside to meet farmers' needs," he said. A vehicle is not just a new workhorse, he added. "It's something that brings them hope of a new life." [like American home ownership?]
China View reports that China's PMI of manufacturing sector stands at 53.1% in May.
BEIJING, June 1 (Xinhua) -- The Purchasing Managers' Index (PMI) of China's manufacturing sector stood at 53.1 percent in May, the China Federation of Logistics and Purchasing (CFLP) said Monday.
The figure was down 0.4 percentage points from a month ago.
It was the third consecutive month the PMI was above 50 percent since July 2008, when the index fell to 48.4 percent.
A reading of above 50 suggests expansion, while one below 50 indicates contraction.
China Daily reports that Chinese shares surge 3.36% to 10-month high.
Chinese shares surge 3.36% to 10-month high
(Xinhua)
Updated: 2009-06-01 16:15
Chinese shares jumped 3.36 percent Monday, the first trading day after the traditional Chinese Dragon Boat Festival that fell on Thursday, driving the benchmark Shanghai Composite Index to a nearly 10-month new high since early August last year.
The Shanghai Composite Index gained 3.36 percent, or 88.35 points, to close at 2,721.28 points Monday.
China View reports about China’s booming online sales.
According to an industry report released in February by the Shanghai-based iResearch Consulting Group, an Internet market researcher, China's online transaction volume last year rocketed 128.5 percent year on year to 128.2 billion yuan, which was 65 times more than that of 2003. That meant every Chinese spent more than 1,600 yuan last year on online purchases, 582 yuan more than the previous year.
The report said a quarter of China's nearly 300 million netizens took to online shopping last year. In 2008, Taobao had a total consumer-to-consumer transaction volume of 98 billion yuan, more than double that of 2007, outselling all retailers in China including Bailian Group and Wal-Mart.
China Daily reports that stimulus money reaching destination in China.
Since last October, the central government has spent 300 billion yuan to carry out the stimulus plan, with most of the investments focused on areas such as affordable housing, infrastructure projects and technological upgrades, Mu Hong, vice-minister of the National Development and Reform Commission, said at a press conference held in Beijing yesterday.
"Some officials spent the money on unapproved projects or failed to keep accurate records, and those who broke the rules have been punished," said Wang Wei, vice-minister of the Ministry of Supervision.
"But the overall implementation of the stimulus package is in accordance with the central government's requirements and there has been no serious illegal behavior so far."
Since last November, the central government has sent 24 teams to inspect the progress of the stimulus spending. [Governments auditing where stimulous/bailout money is going? Not at all like the American way of doing things (dump trillions of dollars into a black hole with no oversight)]
Dong Dasheng, deputy auditor general of the National Audit Office, said no funds from the stimulus package have been invested in energy-intensive and high-polluting industries, nor have they been spent to build office buildings for the government.
The officials say a major problem they found in the inspection is that some local governments are having trouble contributing their share of the stimulus package, but the central government's recent move to issue bonds for provincial governments would help them out.
Since the first bond was launched on March 20 for the western region of Xinjiang, the Ministry of Finance had sold 111.8 billion yuan worth of bonds on behalf of 23 provinces and autonomous regions.
Zhang Shaochun, vice-minister of finance, said local governments need to raise 170 billion yuan to match the central government's first two batches of investment of 230 billion yuan. But by the end of last month they had only chipped in 88 billion yuan.
"We are introducing a host of measures to boost the fiscal capacity of local governments, such as bond issuance and lower registered capital requirement," Zhang said.
China Daily reports about lack of services in China.
Lack of services
The main problem for China's coastal cities and provinces is the lack of overseas orders. But on a deeper level, the pain in adjustment comes from a prolonged imbalance between the strong manufacturing and weak services. It is only now that these regions, especially the cities, are trying to work out their own strategies to effectively boost the growth of their services industry.
In fact, although both the Yangtze and the Pearl Delta have developed so much as to be comparable to the economies of Taiwan and Hong Kong, in terms of GDP and in manufacturing diversity, the local service industry has only commanded a markedly smaller share. In most of the mainland coastal economies, services account for less than 50 percent of the GDP, much lower than in Taiwan more than 20 years ago.
In the developed countries of the world, this proportion is often more than 70 percent of the entire economy.
…
Catching up
Officials in the coastal cities have now realized that if their cities do not catch up in services, they stand to lose considerable overseas and domestic opportunities in the future.
The cities cannot expect to prosper by dispatching endless shipments of manufactured goods all over the world. They also cannot expect to prosper domestically by just re-directing to the interior provinces the manufactured goods that they cannot sell in the global market. The interior provinces are now getting ample development funds from the central government for building their own public infrastructure and soon enough, their own manufacturing capacity.
Indeed, the only way for the Chinese coastal cities to maintain growth is to develop services - for both overseas and domestic clients. [A weak currency, like the yuan, encourages manufacturing, and a strong currency, like the dollar, encourages services]
Enough evidence can be drawn from the first quarter data for this year. At the end of 2008, except Beijing, in no regional economy was the share of services larger than 60 percent of the local GDP, when the so-called tertiary industry (statisticians' term for services) accounted for only 40.1 percent of the national GDP in 2007 - even lower than 2002's record high of 41.5 percent.
In the first quarter, it was only with the difficulties for the manufacturing sector, did Shanghai see its share for services exceed 60 percent (60.2 percent to be exact) in GDP - based on an annualized sectoral growth of 13.1 percent, four times faster than that of the city's whole economy. In contrast, in industry and construction, the city only saw an annualized net decline of 8.1 percent. Many other coastal cities and provinces, like Zhejiang, Guangdong and Fujian also reported over 10 percent growth in services during the same period.
New plans
Local officials in coastal cities are now yearning for more policy leeway for their urban programs. The two cities with securities' exchanges, Shanghai and Shenzhen (sharing border with Hong Kong), have already got the nod from the central government to expand urban land and boost their service industry.
Shanghai has decided to incorporate Nanhui, a former suburban district far away from the urban center, into its Pudong development area. More urban land will allow the city to build more modern service facilities that it will need to become a financial and logistics service center in the world.
In the next couple of years, many new exchanges will be launched in the city for various commodities and securities.
Manufacturing, at the same time, will become focused - and concentrate on operations that are globally competitive, such as the building of sophisticated equipment. Industrial operations that envisage high consumption of resources or those with high emission will be entirely phased out.
A similar service-oriented development plan will also be adopted by Shenzhen - and probably by more coastal cities later this year.
Of course, all these urban development plans are only in the nascent stage. Larger urban areas and more buildings do not necessarily make cities more competitive and attractive to visiting business people. To reconfigure a city's service industry would require a lot more things to be done [dropping the dollar peg], from the government's public services to the responsiveness of the local labor market.
Cities don't compete by size. Rather they compete by creating their own unique business environment.
[The key graph is in the lower right.]
My reaction: China really doesn’t need the US anymore. Domestic consumption has already become the driving force of the nation's growth.
1) Domestic consumer spending increased rapidly, helping to offset the impact of shrinking foreign demand and weaker investment.
2) In 2008, Consumption accounted for 4.3 percentage points of China's 6.1 percent GDP growth, compared with 0.2 percentage points for net exports and 2 percentage points for investment.
3) Retail sales expanded 15 percent in the first quarter.
4) Auto sales rose 24.97 percent in April to 1.15 million units, hitting a fresh record and making the country the world's largest auto market for the fourth consecutive month
5) Sales grew 17 percent in China's countryside, with the government's efforts to promote home appliance sales also having an impact.
6) China's online transaction volume last year rocketed 128.5 percent year on year to 128.2 billion yuan, which was 65 times more than that of 2003.
7) The Purchasing Managers' Index (PMI) of China's manufacturing sector stood at 53.1 percent in May, making it the third consecutive month the PMI was above 50 percent
8) Chinese shares surge 3.36% to 10-month high
9) a significant part of China's population is at the age of peak consumer spending, which means that the next decade could be a period of extremely rapid growth in domestic consumption.
10) Half of the farmers in the eastern half of China can afford to buy a car, which translates to as many as 200 million people.
11) Since last November, the central government has sent 24 teams to inspect the progress of the stimulus spending and are pleased with how it has progressed.
12) In most of China, services account for less than 50 percent of the GDP, which is very underdeveloped compared to the 70 percent typical in most economies.
13) The only way for China to maintain its growth is to develop services.
Conclusion: It isn't like China has no alternative to financing US consumption, because they do. If I was China, I would use my 2.5 trillion dollar to buy every US hard asset not nailed to the floor (gold, silver, steel, copper, etc). I would then ship these assets home and use them, combined with borrowing, to fuel an enormous wave of government spending. It would work too. After all, isn't that the US model of economic growth? Spend your way to prosperity by buying cheap imports with borrowed money? Since GDP calculations don't differentiate between debt fueled growth and real growth, as long as a government can borrow enough, it can spend its way to any gdp number it wants. We have been doing it for years.
Dropping the dollar peg would give China a bad hangover, but would allow the nation to resume growth by expanding its service sector. However, if China does drop the dollar peg and stops exporting underpriced goods, the results would be catastrophic for the US, resulting in the disintegration of most of our service based economy.
email
The conclusion is too optimistic. Without the US consumer China is dead meat. They buy agriculture only to help their farmers.
Dear Anonymous,
How "intelligent" you have to be to make such "great" conclusion?
Eric just in same text give you all links and even put RED colour on it... but some people are just used NOT to thing with own head...
Try it once more time please, this time veeeeeeeeery sloooowly:
"...
According to the National Bureau of Statistics, consumption accounted for 4.3 percentage points of China's 6.1 percent GDP growth, compared with 0.2 percentage points for net exports and 2 percentage points for investment. Consumption rose to become the largest contributor to China's GDP growth over the period.
..."
I doubt Anonymous June 2009, 7:28 am is that stupid... It's just that people like such don't want to admit their errors or defeat...
Cheers to you Eric...
Childish thoughts of China is dead meat by not lending the U.S. money to spend is like biting the hand that feeds you. Needless to say the, pampered, spoilt, misbehaving teenager/child (U.S.) who gets his/her 'allowance'(buying bonds) cut from the "parent" (Parent), will have very little power but will justify, give excuses or delude herself/himself keep on saying to everyone else including oneself that "I can do it on my own". No surprise if he/she couldn't...
'if China does drop the dollar peg and stops exporting underpriced goods, the results would be catastrophic for the US, resulting in the disintegration of most of our service based economy.'
That means export from China would be so expensive that the US would be able to start manufacturing themselves!
Wouldn't you forecast a second phase of booming exports focused on other emerging countries?
I mean, China is entering a new phase of mass production of mid-low priced, mid-high quality and reasonably innovative goods (autos, planes, biotech, etc).
Emerging countries will drive the global demand in these sectors in the coming decades but they (still) can't afford the highest quality/highest prices from the West. That's why I think that the Chinese brands are likely to be very succesful exporting to these markets, whose overall imports are likely to register double digit growth for deceades (once the crisis is over, of course).
Therefore, even as consumption will be enough for China to recover 8-10% growth rates within 3-6 quarters and keep that speed for another decade at the very least, exports will start booming again in a mid term, adding another 1-2 points to that growth rate.
The rise of the Yuan as the new global currency would only favour Chinese exports to developing countries even more.
What do you think about this?
If every person in the other countries throws every USD back to US, what can US pay for? Nothing! The only way is to devaluate the USD to zero. However, doing this will lead to the collapse of US. No one will trust and trade with US anymore. OK, "that the US would be able to start manufacturing themselves!" seems very interesting then ---- (hyperinflation!). The free lunch will not be available forever as the table has been turned. "Our money, your problem" now becomes "Our money, our problem". Every USD existing in the world is a debt to the world. How much US owes the world in total? Inflation = stealing money from your pocket. That is the cheating game of the big bankers for many many years. Protect yourselves early before your money turns to be valueless.
There is a tendency to view the China/US question as a kind of winner take all scenario. I am biased towards the view that China is in a better position than the U.S., but only slightly and with enormous caveats.
1.) The Chinese can not have the dollar going poof just now for the simple reason that they are sitting on enormous sums of dollar denominated paper. They are trying to unload it without rocking the boat but, by almost definition doing so entails a gradual, very gradual approach. There are only do many mining concerns and drilling concerns out there that they can use their U.S. collateral on.
2.) Chinese dreams of domestic markets involve a whole host of complications. For example, the average Joe Chin will have to see his income rise substantially to make that work. Consider that right now the Chinese have used slave labor, or near slave labor to achieve their rates of growth.
3.) Eco system degradation in China can hardly be over stated. This will put enormous strains on their ability to maintain a civil society in the decades to come.
4.) The "who's the next global hegemon?" is, (China!!) quite frankly, at best outdated thinking. We are in a period of global economic and national retrenchment. Global hemegons, in any case, don't last very long at this point in history. The U.S. bestrode the world like a colossus for approximately a mere 50 years.
@Edwardo
Slave labor in China? In China an average factory worker makes $200-300 a month, based on PPP that's something like $500-750.
Check this
http://www.china-labour.org.hk/en/node/100206
Anonymous said...
That means export from China would be so expensive that the US would be able to start manufacturing themselves!
Correct. But there would be a lag between China stopping sending us stuff and the US starting to manufacture things themselves. This lag will not be pleasant...
BTW, the Chinese are laughing at the US...
The Telegraph in London was even more severe when it said, tersely, that “US Treasury Secretary Tim Geithner was laughed at by an audience of Chinese students after insisting that China’s US assets are safe…. The comment provoked loud laughter from the audience…” But the US media avoided any reporting of the laughter that greeted Mr. Geithner’s speech. None of the US television stories reported laughter; none of the US newspapers reported the laughter; none of the US magazines covering the trip reported the laughter… but the laughter was loud; it was palpable and it was very, very real. Simply put, the US fiscal circumstance has become a laughingstock, and we do not say that lightly. It is, however, true.
The strength of the dollar is related to the goods and services that it can consume. This obviously includes what is produced in the US, but because of the reserve status of the dollar, it also includes goods that are produced overseas such as oil.
The dollar was able to withstand a high level of debt for many years because it could be used to consume oil, and the world needed dollars to buy oil. There were many other reasons why the dollar was so strong. During the time of housing bubble and the related low interest rates, overseas central banks and private investors were looking for a higher return than treasuries provided during that time but needed to hold dollars because of its reserve status.
Housing securities could provide a higher interest rate and were considered safe, partly because investors saw the massive consumption binge in the US that was made possible by cheap imports because of the reserve status of the dollar. They took this to mean that the dollar must be valuable if it could consume so much.
Although it was seen that US debt was building, some of the debt was disguised. Toxic housing securities were seen as valuable US exports which strengthened the dollar and increased the consumption binge which strengthened the dollar more because obviously most people in a land of such vast consumption and prosperity would always be able to pay their mortgages and housing prices would go up forever which would allow people to continue massive withdrawals from their house ATM's.
House ATM withdrawals and cheap gas and the massive amounts of cash from the Wall Street bonuses for bundling increasingly valuable housing securities allowed increasingly prosperous companies like GM to sell large numbers of SUV's and support the lifestyles of highly paid union workers. High profit margins on valuable products such as bottled water that were increasingly consumed by increasingly affluent consumers could be made in the US where the high profit margin allowed high US wages to be paid.
Housing supported construction companies and construction workers and stores like Home Depot. Affluence supported fancy restaurants which supported the waitresses and bartenders.
Buying products overseas cheaply and selling them in fancy shopping malls at high profit margins added to GDP as retailing which strengthened the dollar even more. Stock prices rose for Citibank and AIG and other companies involved in bundling valuable housing securities and providing the insurance to make sure financial products were even more completely safe and therefore even more valuable. Companies could profit by investing in other companies as their stock prices rose, and people felt that their rapidly growing 401Ks made it safe to consume more.
Continued below
Low Cost PRC?
"China lowers 'down payment'
needed to buy houses, etc." news.
As in West, there are many
see-through (empty> new buildings.
PRC has no FDIC yet.
Part of the house prices in PRC
(now falling) was due
to speculation/investment.
Land prices are low, no change!
news: 1 cannot buy land in PRC,
its all owed by the government.
Continued from above:
The strength of the dollar forced third world countries to offer cheaply large amounts of valuable resources that backed the strength of the dollar even more. If third world countries chose to allow their own people to consume their resources by supporting their domestic economies, they would receive fewer dollars from exporting to back their currencies. Speculators could then bring down their currencies and they would be forced to sell more resources more cheaply by selling their mines to US corporations and paying their debt to US banks which provided even more funds to US consumers.
Only the low cost paid for the products that supported retailing GDP showed as imports. Even the less affluent could increase their consumption as China offered their labor and resources to provide cheap products to Wal- Mart.
Now all of this is unwinding. The value of the housing securities, massive mall retailing GDP, and SUV's is greatly reduced. We still produce large amounts of agricultural products, but the Chinese are about to raid our pantry with their sovereign wealth fund so there will be even less for people in the US to consume with their dollars as they are rapidly printed. The US took advantage of the fact that overseas investors turned to the dollar for perceived safety last fall, but it appears that this perception is rapidly changing. Now there are far more dollars available to chase after far less value and we are unable to produce much more in the US because of the previously outsourced manufacturing base and now because of the increased outsourcing of the value provided to back the dollar by the services of IT workers, engineers, accountants and other college educated professionals. As professionals are laid off, they no longer have the large amount of wealth to buy houses and SUVS and go to malls and restaurants.
Continued below
On top of this, the paper commodities market will soon collapse, which will mean that far more dollars are needed to purchase the same amount of commodities which will mean that even less real value will be backing the value of the dollar by being available for dollars to consume. Maybe we can start exporting bottled water overseas or the Chinese will be willing to buy bottled water instead of soybeans with their reserves!
The effects of the dollar collapse depend on how the US reacts to the situation that far more dollars are backed by far less real and perceived value. It can slow down printing, but if it does this the debt burden will continue to grow more as it is not inflated away so much by printing and this will eventually lead to economic collapse as increasing debt combines with the decreasing value of the assets that are backing this debt as stocks and bonds and houses and other assets lose value. The US will probably be forced by this to allow a certain amount of inflation to wipe out debt, but this is very risky and can get out of control very rapidly.
During the seventies and early eighties, stagflation was partly related to a small loss of the dollar's reserve status. Because of US involvement in Vietnam and the Yom Kippur war, there was much anti US sentiment and less willingness by the rest of the world to hold dollars. This meant that there was less wealth available for dollars to consume. This was most clearly seen when the rapidly rising price of oil meant that there was less oil available for dollars to consume. If the level of US consumption of oil were to remain at the same level, more value in other goods would have to be given in exchange. The US responded to this by increasing printing which caused the stagflation.
The consequences of even the same small loss of reserve status would be far worse today because of the higher debt, outsourcing and printing and the fact that the more of the rest of the world now has the choice of supporting their domestic economies instead of exporting real value to the US in exchange for increasingly worthless paper. As bad as things were back then, at least the dollar was still backed by far more manufacturing, professional services and goods with real value. As the growth of the Chinese domestic economy allows for them to consume a larger and larger share of the worlds wealth and as this supports consumption by there trading partners, there will be an even smaller share of the worlds resources left to back the dollar’s value.
As bad as this is for the US, at least children who used to work making Nike shoes and other goods in sweatshops to support the consumption of the US will be able to get an education in a more prosperous economy. Many people overseas will leave dirty factories and take jobs in offices of prospering high tech and engineering companies and finally receive the wealth and self esteem that they so greatly deserve.
Is everybody naive? Do you believe the numbers of China? Do you trust a communist country? Show me a success story of a communist country. Their collapse is a matter of time. Besides do you believe that the people who control the $ have no an exit strategy? And look what happened with the Chinalco deal.
Of course when the chips are down our politicians always chose inflation whatever the cost because they can print their way out.
China a "communist country"???
Last time I looked, they called it "market communism". :-)
Yes, slave labor in the form of the prison population which the Chinese authorities have no compunction about using.
Eric,
Do you have any numbers on Chinese electrical production? The last numbers I saw had something like a 3 or 4% decline, which is probably a realistic view of the actual state of things. CIA analysts have traditionally used electrical production as a stand-in for actual GDP as all governments lie about everything they can.
Agree with Eric. "None of the US television stories reported laughter; none of the US newspapers reported the laughter"-----All the press is controlled by the Bankers. That is so called freedom and democracy!
'That means export from China would be so expensive that the US would be able to start manufacturing themselves!'
I think that is exactly what is happening right now (or maybe after the Chinese reserves are all used up or so) and what actually SHOULD happen! But don't be fooled: I think there is only a choice of speed that process will get. If politicians get it right and steer it correctly, the restructuring of global economies could possibly be quite "nice" -- if politicians fail to take proper measures, the restructuring could possibly gain so much speed that we end up in global economic turmoil...
Interesting news here:
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5473491/Top-Chinese-banker-Guo-Shuqing-calls-for-wider-use-of-yuan.html
"The head of China's second-largest bank has said the United States government should start issuing bonds in yuan"
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