China Economy Forum

[eachus]

Plaza accord was not as bad for Japan as you think. The biggest immediate effect of the accords was to raise the yen from 200+ to about 120+ yen.

This was actually beneficial for Japan, because one of the supposed "bad" effects of currency appreciation was that you lose your export business. Yet, the years after the Yen appreciation saw that the Japanese trade surplus CONTINUED.
And Right now, China's the only game in town.

great! "the Plaza Accord" was an award to japan!
and that was the key for US and Western counties wash Japanese wealth home.
ask Japanese how do they like the "lost of 10 years".

 

[Chinese-Dragon]

what about the Chinese economic? "The command economy results in misallocation of resources. " is completely BS. go search in internet, which one said China is command economy? you have no clue what command economy is. China is planned market economic. it is planned, not messy, it is market oriental, it is compatible and efficient. can you find another single country out there more efficient than China?

Why does "doidoi2" think that China is a command economy?

We had market reforms over THIRTY years ago. Even outsiders know that our system is now called "Socialism with Chinese characteristics".

Plaza accord was not as bad for Japan as you think.

There is NEVER anything good about having foreigners controlling your destiny. How much blood did we sacrifice just to be independent from foreign control?

 

[eachus]

I don't think privatization is a good idea. I've seen a state owned railway company turned into a private one and their service not only dropped but also robbing travelers by increasing the fee all the time. China's state banks also performed better than the western private ones so privatization isn't always a good idea.

you got the point, much better than those "experts".

 

[Obambam]

And Right now, China's the only game in town.

Hence the importance to preserve our lead by not appreciating our currency too much and too soon.

 

[kawaraj]

you guys are more rational that those braggart Indian Economy posters.

one question, does China have Fair Trade Commission in Gov branches? I guess that solves those issues of insufficient competition raised above.

 

[shuttler]

you guys are more rational that those braggart Indian Economy posters.

one question, does China have Fair Trade Commission in Gov branches? I guess that solves those issues of insufficient competition raised above.

there is WTO tribunal, the Ministry of Commerce China, the Antitrust Bureau of the National Development and Reform Commission and the State Administration for Industry and Commerce to deal with all these unfair competition issues!

 

[shuttler]

I can not agree with you anymore. that logic is laughable. you think in the same way Russian did in the 1990s. sell all state enterprises to private will jump start the industry efficient and become develop country overnight. Guess what, they crash. GM was a private company, bankrupted. number of large US banks were all private companies, they were already bankrupted without bailout. Do you know how bailout works, at the time AIG was dropped to $2 billion in market cap, the Federal use $200 billion to buy 35% of its shares, then own 35% of the company sell it out for less later. GM was the same story, spend tens billion to buy 20% of GM company worth almost nothing. That was giving the money away. Give the money to who? ----- the banks!

GM borrowed 100 billions of money from the banks, if GM bankrupts, then banks will lose all. If the Federal give the money to GM, then banks are going to share the money. AIG was too big to fall, if it fall, the banks are big loser. if the Fed give tons of cash to AIG, then AIG safe, the banks will not lose. why Fed give the money to AIG, to the banks? since the banks owns the Fed. anyway, you dont understand the economics, or you dont want to.


what about the Chinese economic? "The command economy results in misallocation of resources. " is completely BS. go search in internet, which one said China is command economy? you have no clue what command economy is. China is planned market economic. it is planned, not messy, it is market oriental, it is compatible and efficient. can you find another single country out there more efficient than China?

GM is already better. Crysler is the worse performing auto company in the states. if it is not for the governments bail-outs, it should have been folded multiple times! and talking about bail-out, I dont understanding why people tend to forget this while it is still hot:

bush-asking-for-700-billionl

Bailed-out banks still struggling to repay US government

Exchange rate is a double edged sword. A currency inflation works poorly for an export oriented economy like Japan and China but good for india.

And by and large I agree to most Chinsese members above that the government needs to carefully review the situation of privatization. Foreign investments are not in China to do charity works!

 

[eachus]

GM is already better. Crysler is the worse performing auto company in the states. if it is not for the governments bail-outs, it should have been folded multiple times! and talking about bail-out, I dont understanding why people tend to forget this while it is still hot:

Exchange rate is a double edged sword. A currency inflation works poorly for an export oriented economy like Japan and China but good for india.

And by and large I agree to most Chinsese members above that the government needs to carefully review the situation of privatization. Foreign investments are not in China to do charity works!

privatization is not a solution for everything. everyone in on Earth knows public transportation in all major cities owned by states. NewYork, DC, LA,,,HongKong,,, some Indian members can add more Indians cities on list. how inefficient they are? NY for example, there ten of golden geese(number of large bridges, tunnels, highway) tolls all go to NYT, those are billions cash float cost for nothing, yet, NYT still lose big. plz go convince the US to privatize the NYT, and privatize all inefficient public transportation in US. Economic 101 and 102 already explained well, some sector must stay out of competition, city utilities are included, think if there are 10 power wires, 10 water lines, 10 gas lines, 10 cable lines,,, in front of your home/house offer you a discount prices, they waste more resources than one company monopoly.


GM looks better is not already better. if you open a restaurant with bank loan of $1 million, finally your profit can not even pay interest alone. the bank come over said, I dont run restaurant lets make a deal, the restaurant worth 0.5M now, I only take 40% of share of the restaurant, I inject $300K more cash to you, you still own 60%, the $1M loan write out.

then you continue to run the restaurant and own 60%, no more interest to pay, all profit is profit. you look shiny but the bank $1.3M became 0.8M x 40% = 0.32M, lost $1.0M. great, you are GM now, looks better than ever. loan free, interest free.


Some Yahoo members calculated the Fed need to sell all GM shares at $300+ to get back what they invested, the GM stock price is $25 up and down in NYSE.

 

[sweetgrape]

Chery Heavy Industry enters Africa with agricultural machinery
Chery Heavy Industry enters Africa with agricultural machinery | China's Great Science and Technology

2012-07-25 — Chery Heavy Industry Co., Ltd. announces the launch of “Enter Africa” strategy, plans to invest $ 260 million in seven countries in Africa with the establishment of a modern agricultural machinery operations center.

According to the relevant person who in charge of the project, Chery Heavy Industry will carry the “Enter Africa” strategic plan in three phases with investing $ 260 million to strengthen Sino-African cooperation in the field of agricultural equipment.

Seven countries, including Egypt, Ethiopia, Nigeria, Zimbabwe, Kenya, Algeria, Libya, will cooperate with Chery Heavy Industry to construct an operations center in Africa, more than three regional operations centers, about 30 modern agricultural machinery demonstration operations center. These operations center in addition to the actual local situation, to adapt to the special needs of the local agricultural equipment product portfolio, will provide a “package” solution for local agricultural development.

Established in 2010, Chery Heavy Industry Co., Ltd. is a large modern enterprise integrating the R&D, manufacturing, sales and services of marine equipment, construction machinery, special vehicle, agricultural equipment and the powertrain assembly and key parts. The company has three manufacturing bases respectively in Wuhu, Nanling and Kaifeng with the headquarters in Wuhu.

Chery Heavy Industry adheres to the management tenet of “apply people-oriented strategy, create a modernized corporation; keep innovating, building a world-famous brand”. The company aims to promote the modernization of global cities and countrysides.

 

[no_name]

And by and large I agree to most Chinsese members above that the government needs to carefully review the situation of privatization. Foreign investments are not in China to do charity works!

Of course they are out to make a buck. That itself is not the problem, except for how they go about doing it.

If banks in America can rip Americans off without losing sleep, are we expecting special treatment when they are operating in China?

More over, if something goes wrong, you have no one to blame but yourself.

 

[shuttler]

privatization is not a solution for everything. everyone in on Earth knows public transportation in all major cities owned by states. NewYork, DC, LA,,,HongKong,,, some Indian members can add more Indians cities on list. how inefficient they are? NY for example, there ten of golden geese(number of large bridges, tunnels, highway) tolls all go to NYT, those are billions cash float cost for nothing, yet, NYT still lose big. plz go convince the US to privatize the NYT, and privatize all inefficient public transportation in US. Economic 101 and 102 already explained well, some sector must stay out of competition, city utilities are included, think if there are 10 power wires, 10 water lines, 10 gas lines, 10 cable lines,,, in front of your home/house offer you a discount prices, they waste more resources than one company monopoly.


GM looks better is not already better. if you open a restaurant with bank loan of $1 million, finally your profit can not even pay interest alone. the bank come over said, I dont run restaurant lets make a deal, the restaurant worth 0.5M now, I only take 40% of share of the restaurant, I inject $300K more cash to you, you still own 60%, the $1M loan write out.

then you continue to run the restaurant and own 60%, no more interest to pay, all profit is profit. you look shiny but the bank $1.3M became 0.8M x 40% = 0.32M, lost $1.0M. great, you are GM now, looks better than ever. loan free, interest free.


Some Yahoo members calculated the Fed need to sell all GM shares at $300+ to get back what they invested, the GM stock price is $25 up and down in NYSE.

Hmm I think HK's public transportation is rather privatized except the railway system in which the HK government has a share. You are quoting running a restuarant as an example. But bankers nowadays are much much cautious in lending $ to SMEs nowadays. So that is why one QE after another, neither the US employment rate nor economic growth cannot be jump-started.

GM, Chrysler and Ford are as they say "too big to fail" - but that is another form of government protectionism against a free economy which the US has been trumpeting.

 

[shuttler]

Of course they are out to make a buck. That itself is not the problem, except for how they go about doing it.

If banks in America can rip Americans off without losing sleep, are we expecting special treatment when they are operating in China?

More over, if something goes wrong, you have no one to blame but yourself.

one of the most wicked thing about FOEs (foreign owned enterprises) is they will use their international brand awareness and financial strength to take over the local company, rebundle or even cannibalize it until a culture and a distinct corporate life is partially or wholly wiped out from face of the earth, forever!

 

[eachus]

GM, Chrysler and Ford are as they say "too big to fail" - but that is another form of government protectionism against a free economy which the US has been trumpeting.

"too big to fail" was an excuse, GM and AIG had their asserts felt short far below their loans, they should bankrupts number of times. In EU and other countries, they should be taking over completely by government. but in US, GM for example the Fed injected around $20 billion to buy and own 20% of GM shares which at the time valued less than $200 million.

can anyone out there tell me what is the point to buy $200M value with $20 billion cash?
"too big to fail" was an excuse, the Fed gave away the money is true. that is call 99% of Americans lost, 1% big guys win in the deal.


In China, such deal is pure "corruption". they are wasting government money for small group of ppl. they should go to jail.

 

[Martian2]

"too big to fail" was an excuse, GM and AIG had their asserts felt short far below their loans, they should bankrupts number of times. In EU and other countries, they should be taking over completely by government. but in US, GM for example the Fed injected around $20 billion to buy and own 20% of GM shares which at the time valued less than $200 million.

can anyone out there tell me what is the point to buy $200M value with $20 billion cash?
"too big to fail" was an excuse, the Fed gave away the money is true. that is call 99% of Americans lost, 1% big guys win in the deal.


In China, such deal is pure "corruption". they are wasting government money for small group of ppl. they should go to jail.

To preserve hundreds of thousands of American high-paying jobs.

In other words, social consideration trumped pure short-term economic consideration. The high-paying jobs in the American automobile sector pump a lot of revenue into many local communities.

The United States and China are more alike than American politicians are willing to admit.

 

[doidoi2]

I can not agree with you anymore. that logic is laughable.
...
Guess what, they crash. GM was a private company, bankrupted. number of large US banks were all private companies, they were already bankrupted without bailout.
...
what about the Chinese economic? "The command economy results in misallocation of resources. " is completely BS.

It's been a long time since I've been accused of not knowing anything about economics, but I'm glad you guys pointed things out that does not make sense to you.

First of all, the ideas I have written are not new. It was first proposed in the 1940's - 50's, by a guy named Friedriche Hayek (you might have heard of him, he has a Nobel Prize in Economics.) (some might argue that Von Mises was the progenitor of this particular school of economic thought, but I give Hayek credit because he was the first to revise and give the theory credence).

Putting it simply, His idea was that excessive planned economy is inefficient and results in misallocation of resources.

Here's the wikipedia for it in case you're unfamiliar with the concept:
Malinvestment - Wikipedia, the free encyclopedia

The more the state "plans" the more difficult planning becomes for the individual.
- Friedrich Hayek, 1948

Now, Hayek et al. didn't say that central planning was bad per se. All he said was that the role of the central authority should be for rules and arbitration ONLY. The rest should be led by private investment, with a limited government role. Central banks play a role, but easy monetary policy often allows for excessive waste because of the inefficiency of government spending.

Now lets dissect your argument.

You said:

which one said China is command economy? you have no clue what command economy is. China is planned market economic. it is planned, not messy, it is market oriental, it is compatible and efficient. can you find another single country out there more efficient than China?

Couple things here: first. About countries that are more efficient than China:
Can you say United States? I knew you could.

'Made in China' Is Starting to Get Too Expensive - DailyFinance

Go look up productivity rankings. China is not only not the most efficient country, but it's squarely in the middle of the pack as far as productivity is concerned:
List of countries by GDP (PPP) per hour worked - Wikipedia, the free encyclopedia

Another point here. You're arguing that China is not a command economy, yet in the next sentence you're saying that China is a Planned economy. In case you didn't realize, Command economy is essentially another name for a planned economy (albeit a stricter version). You might want to play semantics and argue that China isn't exactly a command economy anymore, to which I would partially agree with, but IMO China has a long, long ways to go before shedding completely the shells of a former Command economy.

In any case, the name is not important. The important part is the CONCEPT of Government investment vs Private Investment.

The news isn't all bad though about Chinese productivity. I agree that Chinese productivity has achieved great strides in the past decade. Regarding the topic of Chinese productivity, one paper that I thought was pretty good was:
http://www.unido.org/fileadmin/user...ree/Productivity_performance_in_DCs_China.pdf

From the paper:

In addition, the problems in the planned economy where there is extensive government
investment has not been sufficiently addressed. Since the reform started, fundamental
changes have been made to decrease the government’s regulation and control of economic
activities, but its role in investment and management has not been effectively altered.

The paper also addresses the fact that there are indeed big achievements in the Chinese economic system, but much more needs to be done in order to ensure the continual advancement of China's economy.

What you, and apparently the rest of the Chinese folks here, are arguing for is essentially the opposite. You're poo-pooing private investment and arguing for government planning. Essentially the opposite of virtually every recommendation by policy experts.

In fact, It's funny you bring up GM, because Hayek had that exact reference in one of his books:

Is it really likely that a National Planning Officer would have a better judgement of 'the number of cars, the number of generators, and the quantities of frozen foods we are likely to require in, say, five years,' than Ford or General Motors etc., and, even more important, would it even be desirable that various companies in an industry all act on the same guess?

Hayek asks a rhetorical question. The answer, of course, is that no, the national planning officer cannot have better judgement than the corporations that depend on financial results for their own livelihood.

In conclusion, Allow me to quote myself:

it's actually better that the workers are laid off, because it allows the resourceful workers to eventually find jobs that generate more value and benefit society as a whole even more. That's the idea of 'creative destruction'.

Creative destruction - Wikipedia, the free encyclopedia

This is perhaps the most important point. Competition is a prerequisite for a competitive economy. China should not be afraid of a few corporations going under, for the ones that are left behind will be stronger, faster, and more representative of a rising China. China does not want to make shoes and clothing forever, China needs to transform itself to become the makers of luxury goods and sophisticated technology and service.

This is getting too long, so I'll address the posts about Japan's Plaza Accord later if I have time. In the mean time, For those interested, check out the China's 国务院发展研究中心. They have excellent ideas on how to bring China forward economically.