US Financial Crisis/Bailout, China's Role

FriedRiceNSpice said:

Furthermore, European and American financial markets are very closely tied together... collapse of one and the other will be impacted.

Click to expand...

I already said CHina is putting more money into Europe.
Since like you say Europe and US are very close. Does it matter where China is putting its money into Europe or US??? Should have the same effect ,right???
anyway, you should lobby US government not to restrict CHina's investment and acquisitions, not allowing to buy this and that. Unocal, 3com ...etc.

anyway.
=========================================================
S&P -- China has the muscles to push short-term domestic growth, but Japan and South Korea will continue to grapple with various difficulties in trying to rev up their sluggish economic engines into higher gear, said Standard & Poor's Ratings Services here on Tuesday.

In recent separate reports on the three countries, S&P said China will steer its economic policy toward supporting growth, despite some anticipated hurdles, while Japan and South Korea both face political stalemates, high oil and food prices, decelerating growth, among other issues.

The report said China is counting on its strong domestic demand to pull its economy ahead this year and next, "We expect tight labor market conditions, together with the implementation of the new Labor Contract law this year, to keep wage growth strong and lower uncertainties faced by employees."

Japan, caught in its web of political stalemate and sputtering growth, has little potential for economic improvement in the near term, said S&P.

The report said Japan, the second-largest economy in the world, will have weak overall growth prospects in 2008. Japan's GDP growth for fiscal 2008 ending March 31, 2009, is expected to be 0.7 percent, which is lower than earlier forecast of 1.2 percent.

South Korea's growth is expected to be slower at 4.3 percent for 2008, from 5.0 percent in 2007, another report on the country by S&P said.

This thread is hopelessly lost; may those who hold USD perish with them.

SELL THAT USD, BUY SILVER AND GOLD (if you can even find any for sale at this point in the game, hahaha...).

FriedRiceNSpice said:

Major economies across the Eurozone are

In the current situation, foreign direct investment is decreasing too. Domestic consumption cannot singlehandedly drive growth at this point in time.

Click to expand...

Here you are wrong contrary to popular believe most of capital investment is not driven by foreign sources. Road and railway , power plant, waste reprocessing has no foreign participation whatsoever

Most of foreign investment are in building plant for export using China low labor cost Those plant will close down anyway Because in recent year they are having trouble recruitng worker due to improvement in agriculture subsidy I say good riddance to assembly job Plus reduced FDI is blessing for China because it reduce the money circulation and slow down useless investment in real estate

With the tresasury bulging with trade surplus China has flexibility

The US and Chinese economies are dependent on each other to a very significant degree. Just as the US economy was able to thrive in the 90's partially because of cheap imports from China purchased on credit; a large part of Chinese economic growth has been driven by American consumption. Such a relationship has had negative long-term ramifications for both economies: in the case of China, it is over-reliance on the export-driven model of growth; in the case of the US, it is a huge trade deficit as well as loss of competitiveness in the manufacturing sector.

Click to expand...

NO I say when push come to shove China can just devote large resource to make work scheme like FDR did during the depression The west need all kind of infrastructure from railway to pipeline open mine etc

I already said CHina is putting more money into Europe.
Since like you say Europe and US are very close. Does it matter where China is putting its money into Europe or US??? Should have the same effect ,right???

Click to expand...

I just meant to say if it is sound for China for put money into Europe, then it is also sound for it to put money into the US. By diversifying investments China could hope to reap the benefits in the event of an economic upswing in either zone.

delete

In your opinion, should China be a creditor to finance this leveraged buyout of Wall Street by the government, or should China take a direct equity stake in this thing?

Click to expand...

I think in the long term, the potential benefits are greater if China is able to establish direct equity in one or several of the large Wall Street investment banks. China has already been a major creditor to the US for many years, it is time to take a more active role in the global (as Wall Street is) financial market.

delete.

FugitiveVisions said:

Again, you have to look at cause and effect. You point out the government's role in making infrastructural investments, but do you know why they are making those investments? They are making those investment precisely so that it's easier to set up factories and facilities further inland, rather than just on the coast. Factories need adequate power to be fully utilized, and the movement of goods rely on a robust transportation system. But all these efforts still haven't enticed foreign capital to move inland, because there's still the issue of distance, but imo a big issue involving the contract cost. To make a big fixed investment, you need to trust that local and provincial officials to keep their word about taxes, fees, costs, etc. But I digress.

But the issue is still this, you can't just have infrastructural investments. With foreign capital sitting on the sidelines, domestic investments hasn't done a whole lot to spur western development. The Chinese capital markets are still underdeveloped and must be fixed so that private foreign capital can help spur the growth of domestic chinese industries.

Click to expand...

Why should the infrastructure serve the Foreign investment? In next decade China has to move 400 million of surplus labor in the country side

And those folks need housing, school, waste water plant, transportation and electricy , road and railways It will be works for decades to come

You can look at Zhongging as the prototype of megacity Right now Zhonggin has planned to move surrounding country folks into the city and They built blocks and blocks of apartments And those building activities will in turn need steels. glass, furnitures and appliances In other words create economics activities with minimum requirement of Foreign investment or THE NEED FOR FOREIGN MARKET!

Anyway trade will not screech to complete stops Infact during recession people will flock to the like of Walmarts and Target and Beside there are new market to developed Middle East, Latin America, Asia Reduced trade maybe

No I say China will survive quite well And good chance to bring home the hoard of trade surplus. Because right now China cannot bring it home without igniting inflation

The reason they invest in US T bill is because those mandarin are lazy and lack imaginations They should copy Singapore Temasek and other GLIC who generate better return than T bill

Anyway trade will not screech to complete stops Infact during recession people will flock to the like of Walmarts and Target and Beside there are new market to developed Middle East, Latin America, Asia Reduced trade maybe

Click to expand...

You could export to those other regions, but demand will be very low since those regions do not possess developed, consumption-based economies nor high incomes. The rest of the world combined has far less purchasing power and demand for Chinese goods than the US + Europe.

Btw its Chongqing

delete.