What Is The PRC's True Agenda?

[rubato]

It was a major problem after the 'Asian financial crisis" of the 1990s. Many S. Asian countries practiced what was called a 'beggar your neighbor" policy of devaluation. In the end it was harmful to everyone.

yrs,
rubato

[Gob]

I hope you are all learning Mandarin...

US trade deficit widened by 33% in 2010

Imports from China far outstripped US goods going the other way


The US trade deficit ballooned in 2010 by the largest amount seen in a decade, Commerce Department figures have shown.

The trade deficit - the difference between imports and exports - hit $497.8bn (£311bn) last year, up 32.8% on the year before, the biggest annual percentage gain since 2000.

Imports from China hit record levels, totalling $364.9bn for the year.

For the month of December, the deficit widened by 5.9% to $40.6bn, after a rise in the price for imported oil.

This rise was also a factor in the widening annual deficit, with the average price of imported oil increasing from $56.93 a barrel in 2009 to $74.66 in 2010.
China imbalance

In 2009, the deficit had fallen to an eight-year low after a drop in imports.

But that was reversed in 2010, as overall US imports of goods and services grew 19.7% to $2.33 trillion, indicating that US consumers and businesses spent more as the economy picked up.

Exports increased by 16.6% to $1.83tn for the year. If the US can maintain this rate of growth in exports, it will reach President Obama's goal of doubling exports between 2010 and 2015.

The closely-watched trade deficit with China rose by 20.4% to an all-time high of $273.1bn, the largest imbalance the US has recorded with a single country.

Chinese imports far outweighed the $91.9bn worth of US exports going the other way.

Critics in the US have accused Beijing of manipulating its currency to gain unfair trade advantages and of creating barriers to keep US goods out.

http://www.bbc.co.uk/news/business-12431066

[rubato]

http://www.pickensplan.com/oilimports/
We imported 32.6 Billion in oil in just January of 2011. Annualized that is 391.2Billion dollars.

Our trade balance with China was negative by $273Billion for 2010
http://www.census.gov/foreign-trade/bal ... .html#2010

We hear people whine like babies about China and do nothing about the larger problem.


yrs,
rubato

[Scooter]

People should not have helped along the last year's recovery by buying those goods. Clearly those in the retail sector whose jobs depend on those imports should have been forced to remain unemployed.

[Andrew D]

We should have a rational economic policy such that our retail-sector jobs do not depend on imports from China.

[Scooter]

No one is stopping you from proposing one.

Of course, whether or not it is economically feasible is another question...

[rubato]

The Chinese economy is actually very fragile in many ways.

One aspect is that they have reacted to cheap labor they way US rednecks reacted to cheap gas and made themselves much more vulnerable to change. When gas was cheap idiots went out and bought SUVs which get 12mpg. They were victims of that unwitting behavior when gas spiked to 4$/gallon. Today, when a plant opens up in China to screen print electronics or solar cells they buy 100s of small machines each of which has to be run by one person because "labor is so cheap" but the era of cheap labor in China is going away just as it did in Korea and Taiwan and when it does they will be stuck with an installed base of factories which cannot adjust and which are no longer competitive.

When a factory opens up in the US, Japan, Germany, Taiwan &c they know that labor is a significant cost so it is designed from the ground up to use as little labor as possible. When labor costs go up they are far less vulnerable, just like the person who bought a 32mpg car was less vulnerable than a twit who bought a 16mpg car.

The areas of trade with China which acutely need more effective regulation are IP theft, product counterfeiting, Poisonous products. Being able to buy cheap shoes and t-shirts is only an advantage to the US consumer.

yrs,
rubato (we make electronic materials which are applied by different methods, screen printing is one).

[rubato]

I've published this before but apparently some people just don't 'get' it. When goods are manufactured in China most of the money goes to us.:

http://people.hofstra.edu/geotrans/eng/ ... _China.gif

http://people.hofstra.edu/geotrans/eng/ ... China.html
" ...
Costs of a Shoe Sold $100 in the United States and Made in China

The cost structure of the shoe manufacturing and retailing industry is very revealing. The �China effect� is quite clear as the total manufacturing costs (wages, materiel, other production costs such as energy, and the manufacturer's profit) account for about 12% of the retail costs. This is roughly equivalent to the research (design) costs of the shoe product. ... "

I've paid almost exactly the same amount of money for the same model Reeboks since 1986, 25 years, because they were made in Singapore, Costa Rica, Mexico, and China.

Free trade is the solution. And that is why it was promoted by J.S. Mill.


yrs,
rubato

[Gob]

China overtakes Japan as world's second-biggest economy
Chinese manufacturing has been driving growth and providing better-paying jobs

Japan's economy was worth $5.474 trillion (£3.414 trillion) at the end of 2010, figures from Tokyo have shown. China's economy was closer to $5.8 trillion in the same period.

Japan has been hit by a drop in exports and consumer demand, while China has enjoyed a manufacturing boom.

At its current rate of growth, analysts see China replacing the US as the world's top economy in about a decade.

"It's realistic to say that within 10 years China will be roughly the same size as the US economy," said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy.

http://www.bbc.co.uk/news/business-12427321

[rubato]

http://www.fidelity.com.au/insights-cen ... ir-rights/

Average wage in China since 2000, Yuan.



An interesting detail:

"...
Part of the high demand for labour is obviously China’s economic success– 10.3% GDP growth p.a. on average since 1992.4 But another aspect is demographic. China’s strict family-planning policies – typical limiting couples to one child – are aging China’s population fast. The supply of workers aged 16 to 24 has peaked in percentage terms and is forecast to drop by one-third in the next 12 years.
... "



yrs,
rubato

[Andrew D]

I've published this before but apparently some people just don't 'get' it. When goods are manufactured in China most of the money goes to us.:

http://people.hofstra.edu/geotrans/eng/ ... _China.gif

http://people.hofstra.edu/geotrans/eng/ ... China.html
" ...
Costs of a Shoe Sold $100 in the United States and Made in China

The cost structure of the shoe manufacturing and retailing industry is very revealing. The �China effect� is quite clear as the total manufacturing costs (wages, materiel, other production costs such as energy, and the manufacturer's profit) account for about 12% of the retail costs. This is roughly equivalent to the research (design) costs of the shoe product. ... "

I've paid almost exactly the same amount of money for the same model Reeboks since 1986, 25 years, because they were made in Singapore, Costa Rica, Mexico, and China.

Free trade is the solution. And that is why it was promoted by J.S. Mill.

Profit is shown as accounting for 13.5%, materiel as accounting for 8.0%, and other production costs as accounting for 1.6%. Those add up to 23.1%, so it is difficult to see how they "account for about 12% of the retail costs."

Research is shown as accounting for 11%. Others may not have this problem, but I find it difficult to see how 23.1% is " is roughly equivalent to" 11%.

Anyway, how much better off would Americans be if the entire 100% went to Americans?

[Scooter]

The profit of 13.5% is the profit that is being earned by the wholesaler/distributor in the U.S. The "about 12%" is accounted for by the 0.4% in materials, the 8% in labour, the 1.6% in labour and the 2% in profit that are all accruing to overseas operations (in the top right quadrant of the circle)

For the "entire 100%" to go to Americans, production costs, and therefore price, would be substantially higher. Non-essential goods such as athletic shoes (and TVs and DVD players, etc.) are price elastic, i.e. the slope of their demand curves is steeper than -1, which means that total revenues decrease as prices increase. So the 100% would be 100% of a pie that is smaller than the current 88%, so Americans would not end up better off.

[rubato]

If Americans spent $110 or $120 on shoes they would have $10-20 less to spend elsewhere, on DVDs, dinners out &c. The jobs created would be minimum-wage which means that they are subsidized by the rest of society via the earned-income credit, Medi-cal, section 8 housing, and the tax they would pay would not cover there 'share' of social services used in common like police, fire &C. Now you could say that all of those subsidies are really ways of subsidizing the employers, who would otherwise have to pay enough to cover those costs, we should just raise the minimum wage, and I am very sympathetic to that idea. But then the shoes would cost much more which would still come out of the economy elsewhere.

Sounds like a bad deal to me.

yrs,
rubato

[rubato]

'... (wages, materiel, other production costs such as energy, and the manufacturer's profit) account for about 12% of the retail costs. ... "

The 2% profit goes to the manufacturer, the 13.5% profit goes to the shoe company who hired them (Nike, Reebok &c).

yrs,
rubato