China warnings to the US: Pakistan & public debt

[jdme]

I guess falling commodities only helps India?? Lucky you.

Oh, we were discussing China now? I didn't know that.

 

[Aramsogo]

Oh, we were discussing China now? I didn't know that.

Indian doom and gloom about China is just hilarious. On every single metric known to man it's a laughable comparison. It's as funny as some Somali posting doom and gloom about India.

 

[Guest01]

You fail to address any of my core points. China is about done riding the US coattails. The factor productivity is now in China. The capital is now in China. The human capital is now in China. India is just getting started but the ride is over. China took 30 years to do it, but India only had 10 and the ride is over. Will China invest in India like US did in China?? I doubt it. Africa and SA are much more attractive markets.

No one cares about the RBI. It's such an insignificant little ant in the global economy. Just like no one cares about the Reserve Bank of Somalia.

I did address all your "core" points including somalian comments. But now that you have new core points, let us not keep you waiting and get to it immediatley.

First, China is nowhere close to being done riding the US consumer. If you look closely in the export log books then you will find that over 50% of the Chinese exports are to US. That kind of dependence means that they own you rather than you owning them. To paraphrase, imagine that one customer pays you 50 RMB and 50 other customers pay you 50 RMB put together. Do you think that you can leave that 1 supreme customer? Now further imagine that this single 50 RMB customer has not paid you for 6 months and owes you 300 RMB. Now again think, will you ever be able to leave that customer?

Now about factor productivity. Smart term by the way. Nice to drop it here and there. So what does this actually mean. It actually works against China here. Considering that US is miles ahead in technological developments and the only reason why they are outsourcing the manufacturing to China is the lesser cost of manufacturing, any depreciation in USD in this crisis will immediately lead to better Total Factor Productivity for US economy. The only thing that keeps China's boat sailing currently is "Cheaper". TFP should be a scary word for China. Please use it cautiously.

China has money? I already addressed that above and I think you would already know now where the money is.

Now where will China or for that matter anyone invest? My friend, the money is where the market is. The market is where the consumer is. Ideal consumer market is a combination of dispensable income + population. Both these things are going for India. Why do you think that US even when it did not want and even when it knew that its technologies will be unscruplously copied in China, still invested there? So going by that, you would understand why I say that I will rather be happy that China does not invest in India.

Now about your comments about RBI etc. I will just assume that it was another one of your attempts to hide your sheer incompetence on the subject by throwing around the sass but it is less this time so I am glad that we are slowly communicating and you ARE getting the message here.

Again waiting for more extending more help you you. And guess what, all this is free!!



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[jdme]

Indian doom and gloom about China is just hilarious. On every single metric known to man it's a laughable comparison. It's as funny as some Somali posting doom and gloom about India.

Somalia has 400 billion USD GDP? Things you reveal here.

 

[Obambam]

You are right my friend. Indian IT firms are exposed to higher tilt on the customer portfolio in the west. That is why the IT firms took a lot of hit on the bourses today. However, considering that this is a small percentile of the gross product (you know India is anyway no great shakes at exports) the insulation from external impacts is relatively stronger compared to China. That is what we were trying to explain to our other belligerant friend but he is more interested in talking about Somalian starvation.
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The point isn't about harder or softer impact. The point is no one country with heavy linkage of foreign trades will be shielded by the potential collapse of the American economy, India included. Impacts will be felt harder in specific areas of the economy and less elsewhere but no one is safe.
The fact of the matter that India is the third largest Asian economy after China and Japan means they too will be hit hard respectively. Our countries got to where we are on the international stage by foreign trades (still in dollars), not by domestic consumption.

 

[Guest01]

@Guest01 Any idea of the steel market in the coming months in India

Sorry missed this. Local volume will continue to rise at least in the short to medium term. Cannot say that prices will continue to be as firm so look for some erosion there. However, demand from middle east will definitely decrease if US downturn continues. Some negative impact could be seen from other south/east asian economies too (except Vietnam, they were not gaining anything from exports that they risk to lose today).

That could be some pressure on the prices from imports too if you are speaking from exclusively local Indian perspective. However, that is certainly NOT a worry in the short term.

Hope that I have been helpful.


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[jdme]

The point isn't about harder or softer impact. The point is no one country with heavy linkage of foreign trades will be shielded by the potential collapse of the American economy, India included. Impacts will be felt harder in specific areas of the economy and less elsewhere but no one is safe.
The fact of the matter that India is the third largest Asian economy after China and Japan means they too will be hit hard respectively. Our countries got to where we are on the international stage by foreign trades (still in dollars), not by domestic consumption.

Only saving grace in this scenario is falling oil price.

 

[Guest01]

The point isn't about harder or softer impact. The point is no one country with heavy linkage of foreign trades will be shielded by the potential collapse of the American economy, India included. Impacts will be felt harder in specific areas of the economy and less elsewhere but no one is safe.
The fact of the matter that India is the third largest Asian economy after China and Japan means they too will be hit hard respectively. Our countries got to where we are on the international stage by foreign trades (still in dollars), not by domestic consumption.

That is where the fallcy is my friend. When will a business suffer? When the consumption decreases. Now where is the consumption in the respective cases?

But of course everything is relative. Never absolute.


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[Aramsogo]

The consumer market is in India??? Are you insane??? Ask Apple, BMW, Mercedes, McDonalds, KFC, Any watch company, any spirits company, any fashion company, et cetera, et cetera, et cetera if the market is in China or India???

What you'll never understand is that China runs on RMB. The USD is just a nuisance they have to park somewhere. If it all went away, China would be India. Just another poor country running a current account deficit.

I did address all your "core" points including somalian comments. But now that you have new core points, let us not keep you waiting and get to it immediatley.

First, China is nowhere close to being done riding the US consumer. If you look closely in the export log books then you will find that over 50% of the Chinese exports are to US. That kind of dependence means that they own you rather than you owning them. To paraphrase, imagine that one customer pays you 50 RMB and 50 other customers pay you 50 RMB put together. Do you think that you can leave that 1 supreme customer? Now further imagine that this single 50 RMB customer has not paid you for 6 months and owes you 300 RMB. Now again think, will you ever be able to leave that customer?

Now about factor productivity. Smart term by the way. Nice to drop it here and there. So what does this actually mean. It actually works against China here. Considering that US is miles ahead in technological developments and the only reason why they are outsourcing the manufacturing to China is the lesser cost of manufacturing, any depreciation in USD in this crisis will immediately lead to better Total Factor Productivity for US economy. The only thing that keeps China's boat sailing currently is "Cheaper". TFP should be a scary word for China. Please use it cautiously.

China has money? I already addressed that above and I think you would already know now where the money is.

Now where will China or for that matter anyone invest? My friend, the money is where the market is. The market is where the consumer is. Ideal consumer market is a combination of dispensable income + population. Both these things are going for India. Why do you think that US even when it did not want and even when it knew that its technologies will be unscruplously copied in China, still invested there? So going by that, you would understand why I say that I will rather be happy that China does not invest in India.

Now about your comments about RBI etc. I will just assume that it was another one of your attempts to hide your sheer incompetence on the subject by throwing around the sass but it is less this time so I am glad that we are slowly communicating and you ARE getting the message here.

Again waiting for more extending more help you you. And guess what, all this is free!!



.

 

[Guest01]

The consumer market is in India??? Are you insane??? Ask Apple, BMW, Mercedes, McDonalds, KFC, Any watch company, any spirits company, any fashion company, et cetera, et cetera, et cetera if the market is in China or India???

What you'll never understand is that China runs on RMB. The USD is just a nuisance they have to park somewhere. If it all went away, China would be India. Just another poor country running a current account deficit.

I know that you are getting frustrated but let me break it down for you.

There is higher gross dispensible income in China today as compared to India. But that was not what we had originally started discussing. Did we? So I will not bring even the net saving %iles in both economies. Let us leave that for some other day. This is more about he relative impacts of this crisis on China / India / Somalia as we started out discussing originally.

Now this very high dispensible income that is available today is under threat when you wish for the demise of the US economy. Because it is US which is paying for the McDonalds and the BMWs and also the cosmetics. I think by now you would have started understanding that.

About the local currency. Yes China runs on RMB and the artificial depreciation of which was the sole reason for the booming exports and the skewed balance of trade. Don't tell me that you do never knew this. It is not much of a mystery. And the reason to fund US is not out of benevolence. There were two benefits. One to get the best assured security for the fund besides influence on the fluctuation of USD. But the core reason has been to assure that the demand for USD continues to remain high even when the actual purchase parity should decrease with the net import impact and negative balance of trade in the US economy. Because if the USD continues to remain higher, then Chinese exports there will continue to remain eternally competitive. Simple trick but only miscalculation what that never fund your buyer so much that one day he rules you.

That is why the pain was felt when the RMB was made to move up by US pressure. Do you not like to shop now in Hong Kong instead of China since HKD is now weaker than RMB? You have to ask the textile businesses in China about their opinion of ceasing of the subsidies. I read in the South China Post last week that they are now threatening to close down because they are not making any money anymore!!

See I have been telliing you that economics is quite simple and it is there in the basic things that we do in life. No rocket science. I am happy that you are continuously learning and you have now learnt enough to NOT use any derogatory term for India or Somalia.


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[Aramsogo]

There two sides to every coin. You just regurgitated the US side. Use your head. Do you really think US fiat money funds Chinese consumerism?? What funds Chinese consumerism is the same thing funding German consumerism. Hard work.

The real mystery is what's funding Indian consumerism?? My guess is debts just like in the US. Only problem is the rupee is not a reserve currency and you don't have anywhere near the wealth. See, it's easy.

I know that you are getting frustrated but let me break it down for you.

There is higher gross dispensible income in China today as compared to India. But that was not what we had originally started discussing. Did we? So I will not bring even the net saving %iles in both economies. Let us leave that for some other day. This is more about he relative impacts of this crisis on China / India / Somalia as we started out discussing originally.

Now this very high dispensible income that is available today is under threat when you wish for the demise of the US economy. Because it is US which is paying for the McDonalds and the BMWs and also the cosmetics. I think by now you would have started understanding that.

About the local currency. Yes China runs on RMB and the artificial depreciation of which was the sole reason for the booming exports and the skewed balance of trade. Don't tell me that you do never knew this. It is not much of a mystery. And the reason to fund US is not out of benevolence. There were two benefits. One to get the best assured security for the fund besides influence on the fluctuation of USD. But the core reason has been to assure that the demand for USD continues to remain high even when the actual purchase parity should decrease with the net import impact and negative balance of trade in the US economy. Because if the USD continues to remain higher, then Chinese exports there will continue to remain eternally competitive. Simple trick but only miscalculation what that never fund your buyer so much that one day he rules you.

That is why the pain was felt when the RMB was made to move up by US pressure. Do you not like to shop now in Hong Kong instead of China since HKD is now weaker than RMB? You have to ask the textile businesses in China about their opinion of ceasing of the subsidies. I read in the South China Post last week that they are now threatening to close down because they are not making any money anymore!!

See I have been telliing you that economics is quite simple and it is there in the basic things that we do in life. No rocket science. I am happy that you are continuously learning and you have now learnt enough to NOT use any derogatory term for India or Somalia.


.

 

[below_freezing]

The consumer market is in India??? Are you insane??? Ask Apple, BMW, Mercedes, McDonalds, KFC, Any watch company, any spirits company, any fashion company, et cetera, et cetera, et cetera if the market is in China or India???

What you'll never understand is that China runs on RMB. The USD is just a nuisance they have to park somewhere. If it all went away, China would be India. Just another poor country running a current account deficit.

Actually it is the USD driving inflation in China. If it all went away, that would mean the US is gone, and no one has USD reserves. All currencies of major economies would be equal, and China would be uniquely positioned as the largest economy in the world to push the RMB as at least part of a new reserve currency.

The difference between India and China is not the account balance. It is the level of the economy.

BTW Guest01: 20% of exports, which make up 27% of the economy, are to the US. If the US collapsed, our GDP will only drop slightly. Even if all Western nations collapsed, our GDP will only drop 13% which we can make up in 2 years. Our economy is not export driven since 2005, but investment driven - making buildings, bridges, railroads and other physical goods that stay in China. The export market is becoming less and less important, as consumerism increases and investment stays constant.

In fact, the primary constraint on China's economic growth today, is the shackles of the USD. It is limiting our import of natural resources and driving inflation.

 

[below_freezing]

I heard China is on a treadmill called construction useless construction

Better than printing money. Once the owners developers start losing serious money for holding the properties while still paying the newly instated property taxes they'll depreciate and sell even at a loss. Once we clean house against corruption this issue will be over; its a problem of distribution, not production.

India on the other hand has serious issues of production and distribution.

 

[Aramsogo]

^^^^

A gradual, controlled strengthening of the Yuan is in China's best interest. It's actually the responsible thing to do as a global stakeholders. If China de-pegged tomorrow there would be food riots in Mexico, Egypt, India, etc. The real irresponsible party is the US because they wanted to save finance guys like me. Commodities prices are coming down, inflation will start to fall in China.

Any wealth effects from a strong yuan will be short lived and most likely squandered. The real wealth is there in China and as long as there is political stability that wealth will always be there and people's lives will improve everyday.

For a perfect example of why a sudden appreciation of the currency is bad, you only need to look at Japan. The Japanese went crazy in the US in the 80's. Pebble Beach, Rockefeller Center, Universal Studios, record prices on Van Goghs and Renoir. Well, the Japanese own none of those trophies now and had a two decade hangover that's still ongoing.

 

[lem34]

Oh, we were discussing China now? I didn't know that.

Oh JDME just read the top that gives you the thread title and it means thats what you discuss. Sorry for telling you off earlier for being off topic. Now I realise you do it all the time,