Question is not the NUMBER of entities on the other side, but WHO is on the other side of transaction?
Whom can China sell the huge pile of bonds, and for WHAT currency?
Trade War with China
- Thread starter Ultra
- Start date
- Status
Whom can China sell the huge pile of bonds, and for WHAT currency?
Doesn't sounds well.
Looks like the customers have affordability issues with the pork too, not only with the cars.
Maybe the Chinese customer become frugal, and decided to save instead of going deeply into debt.
Anyway, interestingly the US soybean with 25% tariff cost the same like the Brazilian.
manqiangrexue
Brigadier
If it is affordability issues with pork, then beef consumption should not be rising; it should drop more because it is more expensive. That beef is rising at the expense of pork shows Chinese consumers shifting up to prefer more expensive better product.
Same with cars. If affordability is the issue, then the more expensive alternate energy vehicle sales should be hit worse than regular vehicles. But EV sales are skyrocketing while regular car sales decline, once again, showing Chinese consumers prefer to spend more for superior product. It is the opposite of affordability issue.
Moral of the story: just because someone does buy something doesn't mean you can assume he can't afford to.
The article talked about the falling soybean demand because of the decrease pork consumption.
If the switch is over to beef the the soybean consumption will stay on level, but not this happened, so the OVERALL meal consumption decreased , NOT a switch to other meals observed.
Pork consumption : 34kg/person, beef: 6kg/person.
Beef represents 11% of the meals sold.
China car market was always heavy on bigger cars, in Europe there is more small cars sold than in China.
The D segment drop LESS than the others, but the A/B/C/E decreased by the same amount.
So, there is no class of cars that is not decreased.
And the truck market took the biggest hit.
It might not be currency. If the treasuries are ending up in the hands of the Saudis then they might just be swapping treasuries for oil. As for the Saudis they use USD for their weapon purchases and oil rig equipment so holding dollars or dollar equivalents makes sense for them I guess.
This is likely because of transportation costs. AFAIK the Brazilian soybeans have to be transported quite some distance from the interior of the nation to harbors in the coast. This is often done with trucks. But as their industry grows then Brazil eventually will build railroads to transport the beans. Then there is the other factor, you need to either cross the Panama canal or the use the Cape route to get to those harbors. But I am not 100% certain of this.
Besides it is not like hogs *need* to eat soybeans. They are omnivorous. In Europe there is no tradition of using soybeans for hog meal.
In the USA it is common to use soybeans for feed because in the USA it is common to grow a crop rotation of GMO Corn/Soybeans. To a large degree this is because of subsidies, but it is also because it efficiently uses space. But for example in Europe or Canada we do other kinds of crop rotations. Here we plant canola in the Winter and use it for most of the cooking oil requirements for example. Pig feed can contain potatoes, corn, and beans other than soy.
I suppose the soy consumption is a matter of habit. To a degree AFAIK Chinese farms are also rather inefficient. Some claim this is due to pollution but I also think it has to do with a lack of irrigation in most of land mass of China other than the areas already traditionally used for farming and lack of farmer capital to use more modern production methods. I think in due time as more people move to the city the fields will eventually be taken over by larger corporate farms and growth efficiency will increase.
In the USA it is common to use soybeans for feed because in the USA it is common to grow a crop rotation of GMO Corn/Soybeans. To a large degree this is because of subsidies, but it is also because it efficiently uses space. But for example in Europe or Canada we do other kinds of crop rotations. Here we plant canola in the Winter and use it for most of the cooking oil requirements for example. Pig feed can contain potatoes, corn, and beans other than soy.
I suppose the soy consumption is a matter of habit. To a degree AFAIK Chinese farms are also rather inefficient. Some claim this is due to pollution but I also think it has to do with a lack of irrigation in most of land mass of China other than the areas already traditionally used for farming and lack of farmer capital to use more modern production methods. I think in due time as more people move to the city the fields will eventually be taken over by larger corporate farms and growth efficiency will increase.
manqiangrexue
Brigadier
There is no "if"; it is a fact that Chinese people are consuming more beef and less pork than before even if consumption of beef is still far less than pork. You are making another bad mistake by guessing at China's meat consumption by looking at soy. Firstly, soy is used for much more than animal feed; if reduced usage in other areas, overall will be reduced independently of animal feed. Secondly, you don't need to grow more beef to eat more beef; it can be purchased from many other countries if China decides it's better to dedicate its cattle-raising resources to other endeavors. This is the mark of an evolving economy; if you can build a supercomputer lab on a plot of land, would you use it to raise cows instead?
And this is all under the false assumption that consumption of traditional meats alone reflects wealth. What about lobster? King crab? Abalone? Fish? Prawns? Etc...? You wouldn't believe how expensive some large fruits are in China! Luxury food items are all on the increase in China (although Xi's anti-corruption drive put a big dent in it for a bit...). And here you are always talking about pork as if that's the only thing Chinese people eat other than rice LOL
ABCD doesn't matter. China is selling fewer cheap conventional cars and more expensive high-tech cars. That does not point to declining ability to afford things. If it was like Europe and we start seeing Chinese people buy more small cheap cars, maybe we can conclude that.
Trucks took the biggest hit, yes. For many reasons:
1. China's economy is shifting away from producing tons of cheap goods to streamlined high tech goods. That's reduced shipping volume.
2. China's economy is shifting towards the services sector, to further reduce the shipping requirement.
3. China's high speed rails have left many older trains that take 16 hours to go from Shanghai to Nanjing without passengers so they have become cargo trains. Although trucks still have to load and unload them from their origin and destination, that means these trucks are driving 15 miles instead of 500 miles. That increased their longevity significantly.
Last edited:
- Status