A little Trouble in Big China

Discussion in 'Miscellaneous' started by pettyfog, Nov 11, 2009.

  1. pettyfog

    pettyfog Well-Known Member

    Jan 4, 2005
    China headed toward collapse?

    So.. once this expansion starts winding down, who's gonna buy the oil?
    Added: aww shit, I got sidetracked a little. Here's my totally uneducated view:
    China holds hundreds of billions of dollar debt. which they accumulated, in part, by holding their exchange rate artificially low. If they had let their currency float, china goods would not have such a large cost advantage.
    - They are buying gold, lately, but they can only buy so much of it because every bar acquired is driving down the value of their remaining dollar holdings.
    - China is highly pissed at the US for just printing money which also drives down the dollar.
    - Dumping dollars also would result in an INCREASE in the cost of oil, not directly but indirectly, because the Oil Producers might then insist on being paid in Euros.. or even the Yuan.

    - One good use of the junk dollar is to build 'infrastructure', needed or not, as a hedge for the future. The problem is they are not going just on public demand, they are basing their planning on visible results.. 'National Bling'. Accounting for these showcase supercenters. Typical Central Planning Result {See 'Kelo'}

    - There's undoubtedly going to be a Chinese GDP contraction, but I dont think it will be all that drastic, they DO have economic experts there who know how to relate productivity to wealth and holdings.. probably much better than the guys in the US admin.

    Now the Chinese are going to be faced with the very real prospect of letting the Yuan float or trying to modulate it over time to a float. Which will increase its value and decrease exports, especially to the US.

    Buying hard goods from the US will be cheap of course but there's no advantage to the Chinese common consumer because all the quality inexpensive stuff is already made in China. Except for food basics. That's grown here. North America can supply all the food they need, providing we aint using it for fuel or some other dumb shit quasi-green technology.

    But if they do nothing and more or less abandon the dollar there's a new location waiting in the wings, that would be India.

    So... I'm thinking the only answer is increase the dollar value of the Yuan, giving the chinese consumer more disposable income/buying power, which will in turn increase imports, and decrease exports, long term but which will increase sustainable domestic consumption.

    That worked for Japan... till the japs got the stupid notion it would last forever. They'll probably follow the example of South Korea, instead.
    - - - - - - - - -

    Summat interesting, are the China Walmarts {still} suffering?
    Here's a site with some eye-opener stuff.

    but..I wouldnt count Walmart out, just yet.
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