China tells US to 'cure its addiction to debt'

[sarsipias1234]

Overall China lost big on recent events so they are angry of course.

We effectively shifted our debt burden onto China.

But we are justified in doing so because of China's huge trade deficit with America.

 

[LegendKiller]

Heh. Dollars are easily convertible in virtually any amount. They're the world's reserve currency, remember? Dollars held by the Chinese are already in circulation, anyway. They can also hedge in the synthetic derivatives market, as well. It's not in their interests to either cause a dollar value decline or to revalue the yuan upward, anyway, and they've done what they can to provide stability. Funding US debt is part of that. If too many dollars don't come home, one way or another, their value will decline.

The Chinese economy is currently incapable of absorbing all the goods they could buy with their foreign reserves, so they're trying to change that, boost domestic consumption in a variety of ways. And the "ghost cities" are part of that- housing ready for the ongoing migration from the countryside that's occurring at the rate of 20-30M people / year. They won't be moving into shanty towns. Our own "ghost suburbs" won't be filled any time rsn, other than with immigrants, because our urban migration was over long ago. The notion that their housing surplus is worse than our own is absurd, because theirs is paid for, and because of the Chinese urban migration already mentioned.

All their fault, the Chinese, that is? Hardly. American capitalists have benefited every bit as much if not more. Our largest corporations. Our wealthiest citizens. It's not like the Chinese forced them to invest in China, or that the American public wasn't led into letting it be that way, at all. International capitalism and all that comes with it, remember? Or was there some part our leaders forgot to mention?

Of course they've bootstrapped themselves into the 21st century- it wasn't an accident, but rather the result of having leadership with vision & savvy. The notion that they'll suddenly derail & fly off the tracks of history is delusional wishful thinking, particularly considering their performance over the last 40 years.

So, uhh, anybody who wants to disparage the Chinese, engage in the usual raving and chest thumping over the internet using chinese made hardware, sitting in a chinese made chair at what's probably a chinese made desk, be my guest, fools.

i dont usually agree with mish but this is a great read as to why they are stuck.

http://globaleconomicanalysis.blogs...lysis+(Mish's+Global+Economic+Trend+Analysis)

 

[Jhhnn]

i dont usually agree with mish but this is a great read as to why they are stuck.

http://globaleconomicanalysis.blogs...lysis+(Mish's+Global+Economic+Trend+Analysis)

From the article-

US Would Welcome China Not Buying US Treasuries

Pettis makes an irrefutable mathematical analysis that shows the idea the US should fear the day foreigners especially China would stop buying US treasuries is silliness.

Let's look at this from another point of view. Congress, the president, Bernanke, and many others all want the RMB (Yaun) to rise.

If the Yuan rises in value vs. the US dollar, the other side of the mathematical equation says the US trade deficit with China will shrink and China's unemployment rate will rise.

China, fearing unrest does not rising unemployment. Thus, in spite of all the misguided huffing and puffing of numerous analysts, it is China who fears not buying US debt. Otherwise, they would not buy it!

Curse of Global Reserve Currency

The benefit (if one can call it a benefit) to having the world's reserve currency is the ability to finance endless wars and live beyond one's means. The mathematical counterpart is being at the mercy of foreigners on trade wars, outsourcing, and unemployment.

Which all sounds peachy, except that American capitalists like it the way it is, with the US being at the mercy of others wrt trade wars, outsourcing, & unemployment. *Global Capitalism*, remember? Whatever makes them the biggest profit, nations be damned.

I think you may have misinterpreted my remarks, anyway. I offered that the Chinese can mitigate, not eliminate their need to buy treasuries or other US assets via conversion to other currencies, & that they can hedge against sudden dollar devaluations with derivatives. they can also stockpile raw materials, establish options to buy using us dollars as well.

I've also noted that they do understand what's going on, and are taking steps to create greater domestic demand, put themselves in a better position to be less dependent on the whole trade flow with the US. As you noted, they've bootstrapped themselves into the 21st century, taking themselves from a nation oppressed by foreign domination & colonial action, lousy KMT governance, unbelievable corruption & grinding poverty of the previous 150 years to an economic contender, much like the US of 100 years ago.

They are the oldest continuous civilization on the planet, going back 5000 years, and understand the ebb & flow of history & national fortune in ways we can barely appreciate at all. They see their current govt as "strong emperors", their star as rising, and that govt hasn't failed them so far. They've made all the right moves, and indicate that they know what the right moves are down the road, too. I think it's a mistake to bet against them, or to think that they don't know what they're doing.

Time will tell, of course. Our resident raving chest thumpers, however, don't have the vaguest idea what they're looking at or talking about, however, and it's our own Capitalist leadership who wants too keep it that way- it's the political equivalent of barefoot & pregnant.

 

[Phokus]

I don't get why people are mad at China. Be mad at your own government for letting China do what they do. The Chinese government is rationally looking after the interests of their entire economy, our government ONLY looks after the interests of the rich (which intersect the interests of China).

 

[rudder]

I wonder what China's real debt is? They build cities that sit empty. What is the ratio of the debt to gdp?.... and not the official Chinese government figure... the real figure.

China's bubble will burst.

 

[Phokus]

I wonder what China's real debt is? They build cities that sit empty. What is the ratio of the debt to gdp?.... and not the official Chinese government figure... the real figure.

China's bubble will burst.

IIRC, they don't use debt to build houses like we do, they do it with cash, so it'll be a lot of lost equity, but it won't be a debt bubble.

 

[e-drood]

From the article-






I've also noted that they do understand what's going on, and are taking steps to create greater domestic demand, put themselves in a better position to be less dependent on the whole trade flow with the US. As you noted, they've bootstrapped themselves into the 21st century, taking themselves from a nation oppressed by foreign domination & colonial action, lousy KMT governance, unbelievable corruption & grinding poverty of the previous 150 years to an economic contender, much like the US of 100 years ago.

They are the oldest continuous civilization on the planet, going back 5000 years, and understand the ebb & flow of history & national fortune in ways we can barely appreciate at all. They see their current govt as "strong emperors", their star as rising, and that govt hasn't failed them so far. They've made all the right moves, and indicate that they know what the right moves are down the road, too. I think it's a mistake to bet against them.

re: creating domestic consumer demand - presently in prc personal loans + mortgages are very difficult due to greatly tighened application review.

the policy of readily available personal credit has stopped.

Re: they are the oldest continuous civ on planet - chinese history has a number of periods / dynasties / ethnic leadship --- only 1/3 of 4000yrs of recorded history dominated by han peoples... continuously populated lands/land area - yes / single continuously dominate population group (today's han) - no...

re: traditional cultural values - corner stone of 4000yrs recorded history - the additional 1000yrs to which you refer, have examples of crude pictograms, are not character (radical + modifier) precursors... snd the nine years of hell of the mao's cultural revolution embraced those same traditional values.

the chinese curse "you will live in interesting times" has more truth in it, than you will ever realize.

the great chinese disease is hubris. chinese face breeds hubris and hubris blinds. and the dynasties fell. throughout all of recorded chinese history and even today.

 

[JS80]

You guys fear what you don't understand. China is willingly being our slave labor - it can only benefit us. When they realize they need to reverse what they've done, their only choice is to reciprocate trade, which will be a boon for our economy. Or they can shoot themselves in the foot and dump dollars on the open market for euros. Either way dollar devalues and our imports will sky rocket, again being a boon for our economy.

It can only result in a win/win situation for us in the end. If anything this will be what causes high inflation (and the good kind of inflation at that).