Chinese Economics Thread

[Anlsvrthng]

This assertion is absurd. The US trade deficit increase has nothing to do with world's love or hate to the US dollar. Contrary to your statement, de-dollarization has gained traction in recent years. Many trades in the world are now conducted in the currencies other than the dollar, and they are never reported to a third party.



Another absurd assertion. China's dollar-dominated assets holding is actually decreasing in comparison with China's total foreign assets holding increase. Just remember Chins is in fact the largest economy in the world in real economic output, and it is in the process to accumulate national wealth at an unbelievably high speed. The total amount of China's foreign assets holding is HUGE. Do you know, for instance, China is a significant share-holder of Saudi's largest state-owned oil producer Aramco?

Every trade needs a widely available money.

If I have the money in my pocket to shop then the opposite side of the ledger ( central bank) can count that money as pure profit (minus cost of issuing), and I pay that price for the opportunity to use that coinage for my transactions.

The monetary authority usually part/in close relationship with the government, and the later control the amount of money AND the value of money in circulation with taxation.



Now, the trade BETWEEN governments is a different animal.

Before the USA $ de-goldisation the trade was tightly controlled and small, but Nixon created an opportunity for the FED and for the Capitol to work as a de-facto central monetary authority of the world, and at the same time as the in a limited capability as the central government of the world.


So , it is ending now.

The increasing world trade makes a need for the USA dollar, that makes it possible to run a trade deficit, and to be the centre of the world financial/trade transactions.

but there is no real backing of the USA dollar apart from its military, as soon as the increase of need stop, the dollar will start to loose its value, and that will tank the dollar AND the world trade.

So, the increase strength of China will make the USA military irrelevant ,ant that in turn will kill the global trade.


Back to the 60s.

 

[james smith esq]

Does anyone else think that China might be seeking to retaliate against the U. S. by precipitating the dreaded "race to the bottom" currency battle? Although this strategy could, very well, result in a Pyrric victory for China, it would probably be even more devastating to the U. S. as it would likely topple the "house of cards" that is the U. S. economy.

 

[Anlsvrthng]

Does anyone else think that China may be seeking to retaliate against the U. S. by precipitating the dreaded "race to the bottom" currency battle? Although this strategy could, very well, result in a Pyrric victory for China, it would probably be even more devastating to the U. S. as it would likely topple the "house of cards" that is the U. S. economy.

You mean there will be high demand for workers in the USA economy, and the good old 50s will came back?

It won't be good for the corporate elite / owners / Capitol of course.

 

[james smith esq]

You mean there will be high demand for workers in the USA economy, and the good old 50s will came back?

It won't be good for the corporate elite / owners / Capitol of course.

The segregated old '50's ain't never comin' back, no matter how hard Nixon and Reagan (both now explicitly revealed as bigots) tried, or Trump tries!

More like massive capital flight from the debt-ridden U. S. economy, which unlike in the '50s, cannot survive without foreign investores to supplement domestic investment.

 

[Anlsvrthng]

The segregated old '50's ain't never comin' back, no matter how hard Nixon and Reagan (both now explicitly revealed as bigots) tried, or Trump tries!

More like massive capital flight from the debt-ridden U. S. economy, which unlike in the '50s, cannot survive without foreign investores to supplement domestic investment.

?
Interesting, the biggest issue in the West is to found profitable investment opportunities.

Seriously, I found pile of business loan offers in my mail every day.
There is a huge pool of workers waiting for productive jobs beyond waiting tables.

So, there is no sign of lack of capacity and lack of capital to replace whatever it needs.

And how the capital flight will happens ?

The foreign investors will sell they houses /apple shares/ lands on fire sales, receiving fraction of the original money that they invested into them in they own currency?
I think it is better to call it as "biggest transport of wealth to the USA citizens in the history " : )

 

[localizer]

?
Interesting, the biggest issue in the West is to found profitable investment opportunities.

Seriously, I found pile of business loan offers in my mail every day.
There is a huge pool of workers waiting for productive jobs beyond waiting tables.

So, there is no sign of lack of capacity and lack of capital to replace whatever it needs.

And how the capital flight will happens ?

The foreign investors will sell they houses /apple shares/ lands on fire sales, receiving fraction of the original money that they invested into them in they own currency?
I think it is better to call it as "biggest transport of wealth to the USA citizens in the history " : )

Well if you know anything about investing you would see the recent shift from stocks to bonds and other more stable investments such as gold.

 

[james smith esq]

?
Interesting, the biggest issue in the West is to found profitable investment opportunities.

Seriously, I found pile of business loan offers in my mail every day.
There is a huge pool of workers waiting for productive jobs beyond waiting tables.

So, there is no sign of lack of capacity and lack of capital to replace whatever it needs.

And how the capital flight will happens ?

The foreign investors will sell they houses /apple shares/ lands on fire sales, receiving fraction of the original money that they invested into them in they own currency?
I think it is better to call it as "biggest transport of wealth to the USA citizens in the history " : )

Some of us apprehend the inherent dangers of massive deficit spending.
Borrowing borrowed money to invest in the hopes that borrowing can expand perpetually sure is mathematically logical!
The capital flight will happen, first in the cessation of investment. As this has its effects, and U. S. holdings begin to bleed value, the selling of U. S. holdings may take place.

And, btw, the biggest transfer of wealth FROM U. S. citizens to private holdings occurred in the wake of the 2008 financial crisis that was brought on by Western "house of cards" financial practices.

But hey, myths don't fail 'til they fail!

 

[manqiangrexue]

Does anyone else think that China might be seeking to retaliate against the U. S. by precipitating the dreaded "race to the bottom" currency battle? Although this strategy could, very well, result in a Pyrric victory for China, it would probably be even more devastating to the U. S. as it would likely topple the "house of cards" that is the U. S. economy.

No. What you are suggesting resembles an American strategy, to try to attack and depress the rival aggressively even if it means sustaining great self-harm. This is a kamikaze-style tactic borne out of desperation from a relatively stagnant US economy and a growing Chinese economy. That is not what China does because China has such growth buoyancy that no one else has. China's style is to make moves to benefit itself and to keep itself growing. If those moves upset the US, that's OK and if they make the US feel happy, that's OK too, because China's not about keeping the US down; it's about lifting China up.

It's incredibly ironic because at the start of the conflict, American economists said that China's economy is likely weaker and would sustain greater harm, but its strength would come from the CCP not caring about the Chinese people's suffering. Now, we see the CCP very carefully threading strategies to prevent any harm from coming to its people or economy, nurturing them even if it means not appearing as tough as one can in the face of threats. Meanwhile the US mercilessly tariffs its own citizens and destroys its own industries by bans, sustained counter-tariffs, becoming aggressive exactly at the right to disrupt goodwill sales, etc... all in hopes of dealing damage to China. And so far, we've seen the US take the brunt of the damage despite all these American efforts.

In essence, China's strategy is to keep China growing and America's strategy is to stop China from growing; everyone is all about China because China truly is the Middle Kingdom.

 

[Jura The idiot]

now I read
Economic Watch: China mild inflation provides leeway for economic restructuring
Xinhua| 2019-08-09 17:36:53

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China's consumer prices stayed elevated in July, fueled by higher fruit and pork prices, while factory price inflation dropped year on year, showing that overall inflationary pressures remain under control.

The country's consumer price index (CPI), a main gauge of inflation, rose 2.8 percent year on year in July, up from 2.7 percent in June, the National Bureau of Statistics (NBS) said Friday.

The reading beat market expectations of 2.7 percent. On a month-on-month basis, consumer prices edged up 0.4 percent last month.

"July's CPI is probably the year's high," said Li Chao, an analyst with Huatai Securities.

Food prices grew 9.1 percent year on year last month, up from 8.3 percent in June, while non-food prices gained 1.3 percent, 0.1 percentage points lower than that of June.

Pricey fruits and pork continued to be the major factors behind the higher inflation rate, said NBS official Dong Yaxiu.

Prices of fruits surged 39.1 percent year on year, contributing 0.63 percentage points to July's CPI.

Pork prices continued the upward trend last month due to tight supplies, jumping 27 percent year on year and 7.8 percent month on month.

The CPI in urban and rural areas registered a year-on-year growth of 2.7 percent and 2.9 percent, respectively.

In the first seven months, consumer prices rose 2.3 percent from a year earlier on average, the NBS said. China set the CPI target for 2019 at 3 percent.

Friday's data also showed that China's producer price index (PPI), which measures costs for goods at the factory gate, fell 0.3 percent year on year in July.

The petroleum and natural gas mining sector led the drop, while a contraction in petroleum, coal and other fuel processing also widened, Dong said.

China International Capital Corporation Limited (CICC) projected that CPI may hold flat or edge down in the third quarter, while the year-on-year decline of PPI may widen.

"As the low base effect passes, the upside risk of CPI may lessen in the third quarter," CICC said in a research note.

However, CICC said industrial enterprise profit growth may remain under pressure in the second half as domestic and external uncertainties rise. A higher comparison base last year may also put further downward pressure on PPI, leading to a wider decline in PPI in the upcoming months.

Zhang Jun, a chief economist with China Fortune Securities, said that mild inflationary pressures will not be a constraint on the country's monetary policy.

The mild pressures will give the government more leeway to use multiple monetary policy tools to adjust the economic structure and improve the financing environment for micro- and small-sized companies, Zhang noted.

 

[Anlsvrthng]

Some of us apprehend the inherent dangers of massive deficit spending.
Borrowing borrowed money to invest in the hopes that borrowing can expand perpetually sure is mathematically logical!
The capital flight will happen, first in the cessation of investment. As this has its effects, and U. S. holdings begin to bleed value, the selling of U. S. holdings may take place.

And, btw, the biggest transfer of wealth FROM U. S. citizens to private holdings occurred in the wake of the 2008 financial crisis that was brought on by Western "house of cards" financial practices.

But hey, myths don't fail 'til they fail!

Math is a tool.

And generally, the debt of one person is the wealth of another.

And more generally, the supply of dollars infinite, it is even not constrained by the available supply of paper. It is fully digital now, so the debt can be inflated away.


We don't live any more in the commodity money age, like the shell/gold/silver/bitcoin.