Chinese Economics Thread

[KingLouis]

I think eventually all the manufacturing will move to India because is not good for your countries eco-system. The whole workshop is only good for the beginning country need to move away from it sooner or later.

In fact before china did the reform most manufacturing was done in South Korea.

 

[bladerunner]

$40/hr is a pittance? Factory workers in China probably get less than 1/10 of that. Ironic that without the trade with China, the buying power of the $40 will be considerably less, with the New Zealand blue collar workers having now to sweat for it for the benefit of the rest of country's populace. Good thing that China now have a policy of raising wages.

Supposedly for a skilled tradesmen yes.. I paid $32 hourlyfor a master builder 25yrs ago.If you gave him a 2% increase every year , what would it be now $51-2 an hour ?. Actually I thnk the current rate is a bit more than that in Akld.

Heres somrthing that might interest you;
The CEO of "Fetchers construction" charged with overseeing the rebuilding of Christchurch by The Govt. ( NZ second biggest coroprate) is a Chinese "Jonathon Ling. He has a very strong ASia interests and experience./contacts etc.(of course that means China)

One of the bidding companies has secured funding from the "China Development bank" which has been looking for opportunities to fund infrastructure projects in NZ. The proposal is to ship mass produced temporary housing from China to Christchurch and have them errected by local tradesmen. No problem with that if its up to scratch.

Heres the kicker. NZs free trade agreement with China allows China to send workers to NZ to meet any shortfalls etc and the "CDC" sometimes have clauses in their loans to allow Chinese workers to participate in the project.. Perhaps thats whythe offer by Fletchers of only $40 an hour, knowing full well their wont be too many takers. Man if the bidding sub contractor wins it and pays the workers $40 a hour as per offered rate, the chinese workers will think that all their Christmases have come at once.(chuckle).

Watch this space because if CDC score big,the news will no doubt make this thread.
However theres a couple of big ifs

1/There has been widespread opposition into allowing Chinese workers

2/ and its Its Election Year over here

3/ the recent herald poll showng what 60% + NZders negative on China

4/On the otherhand its an awful tempting bid for the finance minister to dismiss out of hand

5/ The Finance minster is going to China in a few weeks, arggh you can almost feel the squeeze comming on him now.

 

[bladerunner]

Re: Globalization ignores biased New Zealand dinosaurs

I advise everyone to ignore hatemongers. Globalization cannot be reversed. Multinational corporations in every country have achieved unparalleled scale, lowest labor cost, and unprecedented profits.

U.S. multinationals are reaping enormous overseas profits (e.g. KFCs, Coca Cola, GM cars, forthcoming Walt Disney theme park in Shanghai, etc.) from China. Conversely, China is also benefiting from the international business division of labor and experiencing high employment.

In conclusion, the biased dinosaur from New Zealand is welcome to withdraw from the WTO whenever his country desires. No one is compelling New Zealand's participation in world trade. At an individual level, the dinosaur from New Zealand is free to boycott any "Made in China" product and purchase a more expensive substitute from a country of his choice.

Garth George might also be a forward thinking revisionist

 

[KingLouis]

WoW $40 and hour that is like one month worth of salary in one day.

 

[pla101prc]

India? this country needs to get some infrastructure and serious economic and social reforms in place before it can even think about competing with China in manufacturing. the gap between India and China is even bigger than the gap between China and the U.S. and Europe and Japan...which is still pretty huge

 

[Martian]

Chart of the Week: China's Growth

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"Chart of the Week: China's Growth
By Charles Hugh Smith
April 16, 2011 2:04 PM

If China's remarkable growth rate follows the typical pattern of industrializing nations, it may be due for a decline.
...
Here is a chart of the GDP of Japan and China. The take-away is that developing/industrializing countries experience an extremely rapid growth rate that plateaus or even declines after the "low hanging fruit" of growth has been picked. There is no hard and fast rule, of course, but it looks like the first ramp-up stage takes about 15 years, and the second fast-growth phase lasts about a decade.

If we date China's growth as starting around the mid-1980s, then it may be approaching the point of diminishing returns on investment. Indeed, the housing/real estate bubble in China suggests just such an exhaustion of high-return investment.

Clearly, China's asymptotic growth rate cannot continue forever. As the oval highlights, Japan's period of seemingly never-ending fast growth ended with a decline. This is not guaranteed, of course, but it does suggest that a decline following rapid sustained growth may be a pattern that typifies industrialization and the inevitable transition from high-yield investment to misallocation of capital and low-yield investments.

This chart poses an important question: what will happen to the commodities boom and the global economy if China's economy takes a natural/typical course after two decades of blistering growth and turns down for a few years?

It's a question worth pondering, if for no other reason than to consider hedges against the possible answers.

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My post in the comment section (with China Lee pseudonym):

The mindless examination of a graph can lead to erroneous conclusions.

In 1995, the "circled peak" on the graph, Japan's nominal per-capita income equaled the United States. In 2010, at the current peak in China's graph, China's nominal per-capita income is 1/10 of the United States.

To match the 1995 Japanese peak/per-capita income, China's GDP needs to reach $60 trillion. That will require many decades of continued growth! China's GDP will not plateau until about 2050.

 

[Martian]

Did India really outgrow China in 2010?

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"India outpaced China: Economist
HindustanTimes.com
New Delhi, April 16, 2011

The Indian economy may have outpaced China's growth rate in 2010, even if by a hair's breadth, according to the Economist. The article explains citing Central Statistical Organisation and IMF's World Economic Outlook data, released earlier this week, that after adjusting India's GDP for subsidies and taxes its growth rate edges 0.06 percentage points higher than China's for the calendar year 2010.

Official Indian growth estimates are calibrated by the fiscal year running Mar 31 to Apr 1, not the calendar year running from Jan 1 to Dec 31.

This combined with the fact that India relies on counting costs for measuring GDP rather than expenditure like China means that the tax component of India's growth is underestimated if the two economic giants' GDP is compared, argues the blog post.

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My post in the comment section (with China Lee pseudonym):

There are four things to remember:

1) In 2010, China's economy outgrew the Indian economy. The IMF data is misleading, because it incorporates currency fluctuations. India's currency appreciated more than China's in 2010, but India's economy did not grow as fast as China's economy.

2) Even with the misleading IMF numbers, which mixes economic growth and currency fluctuation, China will most likely come out on top when they announce revised GDP numbers for 2010. During the last few years, China has always revised her economic growth upwards. India's razor-thin margin of 0.1% will be overwhelmed by China's revision(s) upwards later this year.

3) In absolute terms, China's economic growth eclipses Indian growth. 10% growth in China's US$5 trillion economy equals $500 billion-dollar economic expansion. 10% growth in India's US$1.3 trillion economy equals $130 billion-dollar economic expansion. At a comparable 10% growth for China and India, China forged ahead by an extra US$370 billion.

4) If you visit the IMF's website, you will notice that the IMF is projecting 9.5% growth in China from 2011-2015 for GDP growth at constant prices (e.g. strips out currency fluctuation and measures real economic growth). In contrast, the IMF projects 8.2% growth in India from 2011-2015 for GDP growth at constant prices.

In fact, for 2010, the IMF data shows that China's real economic growth was 10.456% and India's was 9.668% at constant prices (e.g. ignore currency traders that distort China's and India's currency values from year-to-year).

In conclusion, it is too early for India to celebrate. We have not reached the inflection point yet. According to the IMF, for the next five years, China will continue to expand its economy at a faster pace than India. If you want to beat China in real economic growth, Indians will have to work much harder! I wish you the best of luck.

 

[pla101prc]

one has gotta be pretty slow to not notice the huge difference between China and Japan after their respective 30 years of surge lol

 

[Martian]

China is rebalancing her economy from exports to domestic demand

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"China Economy: Trade, Rebalancing, Exchange Rate, And Bubble Warning
Zarathustra W., Also Sprach Analyst | Apr. 11, 2011, 8:24 PM

This is something that I don’t fully understand: as China reported the first quarterly trade deficit on Sunday, some interpreted that as a sign of rebalancing of the economy. The reality is that the March trade balance was actually a surplus, rather than a deficit as market expected previously. Rebalancing? I still think we would need some more time to judge, and political pressure to allow Chinese Yuan to appreciate will continue to be high. (article continues)"

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My post in the comment section (with China Lee pseudonym):

"This is something that I don’t fully understand: as China reported the first quarterly trade deficit on Sunday, some interpreted that as a sign of rebalancing of the economy. The reality is that the March trade balance was actually a surplus, rather than a deficit as market expected previously. Rebalancing?"

China's economy is clearly being rebalanced, because the trade surplus as a percentage of China's economy has dropped significantly. In 2010, China's current account balance was $272.5 billion surplus (see

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). This represents a mere 4.63% trade surplus in China's US$5.88 trillion economy.

In contrast, China had a trade surplus of $290 billion in 2008 (see

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). In 2008, China's GDP was US$4.52 trillion (see

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). This represented, in 2008, a whopping 6.42% trade surplus.

In conclusion, from 2008 to 2010, China's trade surplus as a percentage of its economy has shrunk from 6.42% to 4.63%. This is undeniable proof that the Chinese economy is moving away from exports and becoming more reliant on domestic demand.

 

[Quickie]

Re: Chart of the Week: China's Growth

My post in the comment section (with China Lee pseudonym):


In 1995, the "circled peak" on the graph, Japan's nominal per-capita income equaled the United States. In 2010, at the current peak in China's graph, China's nominal per-capita income is 1/10 of the United States.

To match the 1995 Japanese peak/per-capita income, China's GDP needs to reach $60 trillion. That will require many decades of continued growth! China's GDP will not plateau until about 2050.

That's what pop up in my mind what I read the news bit. Another thing is I always think a country's currency purchasing parity is the better measure than just defaulting to using the US dollar in this kind of discusion.