Increase in China’s defence spending likely to unnerve neighbours

[Hamartia Antidote]

So we make all the products like slaves and Americans get to enjoy all the fruits of our labour.

What a nice deal.

Careful as your standard of living rises your wages will start going up and then manufacturing will eventually move to a cheaper country - then things sudden hit the fan. That is a pattern repeated all over the world.

 

[Hypersonicmissiles]

Careful as your standard of living rises your wages will start going up and then manufacturing will eventually move to a cheaper country - then things sudden hit the fan. That is a pattern repeated all over the world.

Then how come Germany with some of the highest wages in the world still manufacture and run trade surpluses?

 

[Chinese-Dragon]

The whole point of an economy is to enjoy the fruits of your production.

What's the point of having jobs when you're still in poverty?

All the slaves had jobs, but they couldn't buy any products as they didn't have the purchasing power.

America just prints money and buys Chinese made products.
American companies make all the profit and American consumers live like kings.
While Chinese workers work hard for $2 a day.

So what is your solution?

How do you think America became a developed country in the first place? By becoming the world's largest manufacturer, a title they held for a hundred years.

Now they are getting fat on debt and deficit-fueled consumption, much of which is unnecessary.

 

[Hypersonicmissiles]

So what is your solution?

How do you think America became a developed country in the first place? By becoming the world's largest manufacturer, a title they held for a hundred years.

My point is that you have to consume your own production instead of letting others enjoy the fruits of your labour.

Produce and consume.
Not produce and export.

For consumption, you need purchasing power. For purchasing power you need a strong currency. But the RMB is being artificially held down which is transferring the purchasing power from Chinese consumers to American consumers.

The main problem of the Chinese economy is the currency peg where the PBOC has to increase the RMB money supply to absorb the dollars to maintain the currency peg. This is why the PBOC has over $3.8 trillion in reserves which was used to buy US bonds.

The whole point of the currency peg is to hold back the purchasing power of Chinese consumers so American consumers can buy Chinese goods. But if the RMB were allowed to rise to its market level, Chinese consumers will have the purchasing power to buy up Chinese goods instead of relying on overseas consumers.

China has property bubble and high inflation due to the increase of the RMB money supply to soak up the dollars to maintain the currency peg.

Time to get rid of the peg.
That's my point.

 

[Hamartia Antidote]

Then how come Germany with some of the highest wages in the world still manufacture and run trade surpluses?

Germany has outsourced many manufacturing jobs. If fact here is an article from Spiegel that talks about how manufacturing wages are getting too high in China and they are relocating.

When Outsourcing Fails: One in Five German Firms Leaving China - SPIEGEL ONLINE - News - International

 

[Genesis]

Then how come Germany with some of the highest wages in the world still manufacture and run trade surpluses?

They can make things others can't.

America can make cars, maybe better cars, but they can't make Mercedes, Audi, and Volkswagen. Mercedes is a car, but also not a car.

Germany makes brands, brands that China doesn't have. I have German cars for exactly that reason, if it was up to just the quality to price, the KIA Cadenza is my fav, and a number of Chinese cars also have good quality and cool new features.

But the Benz is what it is. It doesn't need cutting edge, it just needs to be Benz.

You have to be patient, one day Chinese brands will win over the world with quality, price and innovation, but that takes time.

 

[Hamartia Antidote]

They can make things others can't.

America can make cars, maybe better cars, but they can't make Mercedes, Audi, and Volkswagen. Mercedes is a car, but also not a car.

Actually all three of these manufactures have manufacturing facilities here in the US. They also make them in other countries such as Mexico and India.

Edit:
List of Volkswagen Group factories - Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Mercedes-Benz#Factories

 

[Genesis]

Actually all three of these manufactures have manufacturing facilities here in the US. They also make them in other countries such as Mexico and India.

Edit:
List of Volkswagen Group factories - Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Mercedes-Benz#Factories

yes, exactly, I know US can make these cars, these are not revolutionary tech, even China can make them, but it's the brand.

China cannot produce a world wide brand......yet. But soon.......

 

[ChineseTiger1986]

For a developing country like China 4-5% is not really appropriate.

China has massive needs to build up more infrastructure and also spend on areas like education, health and social welfare for it's ever growing elderly population.

Even if China was to spend 4-5% of it's GDP, the weapons that it would procure in large numbers would be inferior to what the US has. Better to wait another 10 years for the gap to close and then purchase weapons in large numbers. The current budget gives ample funding for R&D and spending 2-3 times as more would not really help much.

I think 2% a year is about right now and then maybe increase over the long term to 3% a year in order to be able to match the US.

Agree, 4% is absolutely the maximum limit.

I think 2-3% is more appropriate in the near future as China's GDP will be around 20 trillion in 2020, so a 500-600 billion military expenditure is already enormous compared to the rest.

USA has a lot of burden of their war on Afghanistan and the oversea military bases, while China doesn't have this burden, so the military expenditure can be purely used for the R&D.

 

[Hypersonicmissiles]

Clowns don't understand.

The more high tech the weapons become the more expensive each unit of a weapon becomes thus you need more money.

LOL why don't we just have 1% military and be invaded again.

*Sigh*

Some people never learn. Too ignorant.