US Congress committee approves China sanctions bill

[CAPTAIN AMERICA]

China’s currency manipulation: Flipping off America
By Leo W. Gerard - 09/16/10 11:19 AM ET

China is disrespecting America.

The Asian giant is an international trade outlaw, and U.S. manufacturers and workers are its crime victims.


China illegally subsidizes its export industries and unlawfully manipulates its currency. That kills U.S. industry and destroys U.S. jobs. Earlier this year, the Obama administration asked China nicely to allow its currency value to float up naturally on international markets. On June 19, China said it would.

And then it didn’t.

That’s flipping the bird at America.

Before China’s June 19 promise, bipartisan groups of lawmakers in the U.S. House and Senate proposed legislation that would force the U.S. Treasury Department to even the score and to call China out for what it is: a currency manipulator. Hearings on the bills are being conducted this week.

Pass the legislation. It’s time for America to flip the bird back.

Negotiation and threats have failed to produce a sustained, substantial currency float by China. Now, the Chinese currency, the renminbi, is undervalued by as much as 40 percent, a figure accepted by conservatives like C. Fred Bergsten of the Peterson Institute for International Economics. Even the International Monetary Fund managing director said the currency is undervalued.

China simply denied it. In March, the Chinese premier, Wen Jiabao, said he did not believe the renminbi was undervalued. That’s flipping off the world.

It works like this: China prints renminbi to buy billions of U.S. dollars, which makes them appear more desired and valuable, and the renminbi, by contrast, less valuable. That undervaluation of the renminbi acts as a subsidy for Chinese exports, artificially making them as much as 40 percent cheaper when sold in the U.S. Conversely, it acts as a tax of as much as 40 percent on American-made goods sold in China.

This dynamic contributed significantly to the rise of manufacturing in China. Earlier this year, China surged past Japan to become the world’s second-largest economy. And it contributes significantly to America’s massive trade deficit. The gap in July was $42.8 billion, more than half of which -- $25.9 billion -- was a result of trade with one country – China.

China’s rapid economic growth has ended poverty for millions of its workers. Here in the United States, however, China’s flouting of international trade law is destroying the lives of millions of workers. The Economic Policy Institute estimates that 2.4 million American jobs have been lost or displaced since 2001 as a result of the trade deficit with China. American workers celebrate their Chinese counterparts’ improved quality of life, but they condemn the government of China for accomplishing that with beggar-thy-neighbor trade practices.

Earlier this year, it briefly looked like threats would prompt China to act. In March, a bipartisan coalition of U.S. Senators introduced legislation specifying the factors necessary to label a country as a currency manipulator and detailing American reprisals. And in April, the Treasury Department delayed its report identifying countries that manipulate currency rates, suggesting that it was ready to take on China.

China appeared to respond to that pressure in June. It announced it would allow the renminbi to float toward its real value on the open market. The Treasury Department backed off, omitting China from its list of currency manipulators in July.

China then permitted the value of the renminbi to rise less than one percent. One percent. When it’s as much as 40 percent undervalued. That’s flipping the bird at America. Big time.

Still, America didn’t react.

On Aug. 25, the Commerce Department announced 14 new measures to crack down on trade violations such as ending certain exemptions from duties.

It did not, however, mention currency manipulation.

Dan DiMicco, CEO at Nucor Corp., the largest U.S. steelmaker, said the 14 measures are important, but the problem with China won’t be resolved until the United States takes on currency undervaluation. Here’s what he said:

“As long as we continue to let them get away with it, they’ll keep doing it.”

Six days later, in a trade case filed by the U.S. Aluminum Extrusions Fair Trade Committee, a coalition of domestic manufacturers of aluminum extrusions and the USW, the Commerce Department again squirmed out of dealing with currency manipulation.

Commerce imposed import duties on Chinese aluminum companies because China unfairly subsidized $514 million in aluminum exports to the U.S. in 2009. But Commerce refused to investigate the Fair Trade Committee’s evidence that China’s currency manipulation functions as an additional illegal export subsidy.

Sen. Chuck Schumer of New York, a sponsor of currency manipulation legislation, said afterward:

“The Commerce Department made its finding while still managing to ignore the elephant in the room, which is China’s currency manipulation.”

Commerce and Treasury have decided the proper response to China flipping off America is averting their eyes. See no evil.

Yesterday Japan followed China’s lead. It bought dollars and sold yen, decreasing the value of yen and increasing the value of dollars. This, the New York Times explained, was “a bid to protect its export-led economy.” That’s exactly what China is doing.

It’s a very public show of contempt for international regulations and for American citizens.

Normally, Americans don’t respond passively to contempt. Be normal, America.


Gerard is International President of the United Steelworkers (USW)

China?s currency manipulation: Flipping off America - The Hill's Congress Blog

 

[Molawchai]

China?s currency manipulation: Flipping off America - The Hill's Congress Blog

No, No, No, CAPTAIN bro, wrong move, you got to hit the Chinese at where it hurt, some so-called union leader(steal worker) from a blog won't get the job done and its kind of outdated too(9/16).

But on the other hand, well done with the "Art of Hiding", "source" only, man you are getting there quick, congrate bro.

 

[CAPTAIN AMERICA]

No, No, No, CAPTAIN bro, wrong move, you got to hit the Chinese at where it hurt, some so-called union leader(steal worker) from a blog won't get the job done and its kind of outdated too(9/16).

But on the other hand, well done with the "Art of Hiding", "source" only, man you are getting there quick, congrate bro.

He is the president of the United Steel Workers
and will be able to influence a number of polticians.

Representative Charles Rangel, a Democrat from New York, scoffed at claims of electoral calculations and said that the United States needed to act to restore its manufacturing industry and halt the flood of inexpensive imports.

"We're sending a message to communist China that we will not tolerate unfairness in trade, notwithstanding the fact that we are the beneficiary of their cheap slave labor," Rangel said.

http://www.allvoices.com/contributed-news/6842403-china-is-punished-by-us-currency

Mark Matheny | “Give me control of a nation’s money and I care not who makes her laws.”

More Bullying.

Bullying is abusive behavior. Teasing, taunting, threatening, stalking, name-calling, making threats, coercion, exclusions.

I have noticed you all have aready run a number of people off so you can dominate discussions about China.

 

[CAPTAIN AMERICA]

What is trolling?

Trolling is abusive behavior. A troll is someone who posts inflammatory, extraneous, or off topic messages on forums to elicit emotional reponses and disrupting otherwise normal discussions.

I have noticed that you have kept on posting China bashing remarks on a number of topics so you can offend Chinese people.

I dont have a problem with the Chinese people or China, but I find the Chinese goverment to be repugnant.

 

[somebozo]

Ohh the poor americans..victim of arab radicalization, victim of global terrorism, victim of cave men, victim of chinese economic manipulation, victim of energy black mailing..does this self victimization ever stop???

They should instead curb american addiction to consumermism, responsible economic policy and telling american to work hard and unionize less..serious there are hippies in the white house and its evident.

Ohh and where the part of China funding american debt T-bonds?? They seem to forget that while beating propoganda drums..China did not become the largest trading partner by offering to export on cheap..it actually earned in rightfully by financing the crap called T-bonds.

 

[SekrutYakhni]

Some people say, 310,330,000 American people will work in service/CONSUMING based industry. They do not need manufacturing in their country. They are all educated, quite smart you name it..Outsourcing is actually quite good. We, in North America, do not need to get our hands dirty.


I feel quite illiterate now.

 

[somebozo]

Some people say, 310,330,000 American people will work in service based industry. They do not need manufacturing in their country. They are all educated, quite smart you name it..Outsourcing is actually quite good. We, in North America, do not need to get our hands dirty.


I feel quite illiterate now.

Yep they can all make a living by answering phones now for Wipro, TCL, TATA, Satayam!

 

[SekrutYakhni]

Yep they can all make a living by answering phones now for Wipro, TCL, TATA, Satayam!

Kindly elaborate.

 

[CAPTAIN AMERICA]

The best I can tell Pakistan exports about 5 billion to China while China exports about 15 billion to Pakistan.. the reverse is true for the USA Pakistan exports. Pakistan exports about 15 billion to the USA and the USA exports about 5 billion to Pakistan. How many more jobs would there be in Pakistan if China allows its currency value to float up naturally on international markets. A million, five million?

India has its problems too with China, but then who doesnt.
http://www.financialexpress.com/news/ntbs-obstruct-correction-in-trade-imbalance-with-china/568377/

 

[lcloo]

This is old news, just for recap for some members who insist undervaluation of Yuan.

IMF Directors Split Over Whether China's Yuan Is Undervalued
By Shamim Adam - Jul 28, 2010 8:30 AM GMT+0800 Wed Jul 28 00:30:00 UTC 2010
International Monetary Fund directors split over whether the yuan is undervalued, reflecting similar differences between U.S. and Chinese officials over the nation’s exchange-rate regime.
Some IMF board members said the assumption that the exchange rate is undervalued is based on “uncertain forecasts” for China’s current account surplus, the Washington-based lender said in a statement dated yesterday after concluding a July 26 meeting. In its annual assessment of the country’s economy discussed by the board, the IMF said growth is expected to remain robust and the outlook for inflation is benign.
China indicated on June 19 it was scrapping the yuan’s two- year-old peg to the dollar, deflecting criticism from trading partners and curbing inflation while protecting a recovery in its exports. Asia’s second-largest economy has faced pressure to allow the yuan to rise from U.S. lawmakers, who claim an undervalued currency gives its exporters an unfair advantage.
“Directors welcomed the recent decision to return to the managed floating exchange rate regime,” according to the statement. “This decision will increase the central bank’s flexibility to tighten monetary conditions.”
China’s current-account surplus will shrink for a second year in 2010 as domestic demand plays a greater role in driving the nation’s economic growth, according to the State Administration of Foreign Exchange on July 8. The gap, the broadest measure of trade, amounted to 6.1 percent of China’s gross domestic product last year, down from 9.6 percent in 2008, the currency regulator said.
‘Window’ to Watch
A nation’s current-account balance can be used as a “window” to watch if its exchange rate is at an equilibrium level, China’s deputy central bank governor Hu Xiaolian said on July 3.
Some IMF directors said strengthening in the yuan, a denomination of China’s currency the renminbi, will help the country rebalance its growth drivers, while others said such a shift is already taking place.
“Many directors stressed that, over time, a stronger renminbi would help facilitate a shift from exports and investment to private consumption as the principal driver of economic growth,” according to the statement. “A number of directors pointed to signs that a structural shift in the balance of payments is already underway, reflecting the reforms already put in place to strengthen consumption.”
Monetary Tools
The fund also called on China to use “market-based instruments” such as higher interest rates and reserve- requirement ratios to protect banks’ balance sheets.
Premier Wen Jiabao has left interest rates unchanged since December 2008, relying on administrative measures and controls on lending to prevent overheating. The central bank has raised banks’ reserve-ratio requirement three times this year to contain property prices and inflation.
IMF officials “agreed that the targeted reduction in broad money growth this year balances well the need to provide continued support to the economy with the desire to safeguard the health of bank balance sheets,” the statement said. They “highlighted the need for regulatory and supervisory vigilance to manage any deterioration in credit quality, and for increased transparency in lending to local government financing vehicles.”
Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan ($1.1 trillion) they’ve lent to finance local government infrastructure projects, a person with knowledge of data collected by the China Banking Regulatory Commission said earlier this month.
China’s budget is supporting a resumption in private demand and there is more room for the government to redirect the stimulus toward measures to boost consumption and raise household incomes, the IMF said. The lender supported a “gradual phase out” of fiscal stimulus in 2011.
The government may need to consider more measures to control increases in real estate prices, the IMF said, suggesting the consideration of a property tax and more financial market development to channel savings.
To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

 

[lcloo]

Another one on Yuan

China Bashing Over Yuan Needs a Long Rest: Commentary by Ronald McKinnon
By Ronald I. McKinnon - Jul 5, 2010
I’ll say it at the outset: Focusing on the yuan-dollar rate is a serious distraction, and it’s time for the U.S. to back off from bashing China over problems that are born mostly at home.
Let’s start with the source of all the misdirected attention. On June 20, the People’s Bank of China bowed to American pressure and said it was abandoning the peg of 6.83 yuan to the dollar. Now the bank will vary the exchange rate at the beginning of each trading day, as well as widening the range of variation to plus or minus 0.5 percent.
But the PBC is concerned about re-introducing the one-way bet that prevailed between July 2005 and July 2008: that the currency steadily rises as it did at about a 6 percent annual rate. This led to massive inflows of hot money that threatened a loss of monetary control while impeding the forward market in foreign exchange.
China’s central bank is again in a difficult situation. The U.S. Congress, led by New York Senator Charles Schumer, again is threatening to impose punitive tariffs on imports from China unless the yuan appreciates. Thus China’s ritualistic de-pegging exercise to defuse American pressure.
Yet any gradual appreciation, or even the threat of it, will restart the hot-money inflows. Moreover, any sharp appreciation won’t defuse the situation because it will be unlikely to reduce China’s trade surplus, mainly the result of that country’s high savings rate.

False Belief
Unfortunately, what lies behind this unnecessary political crisis is a widely held but false economic belief: the idea that the exchange rate can be used to control any country’s trade balance, which is the difference between its saving and investment rate. Instead, the problem is a saving deficiency in the U.S. -- with very large fiscal deficits and low personal saving -- coupled with surplus saving in China.

To correct the trade imbalance between the two countries, these fundamentals must be jointly altered by changes in public policies.
Nobody disputes that almost three decades of U.S. trade and net saving deficits have made the global system of finance and trade more unstable. Dollar debts outstanding have become huge, and threaten America’s own financial future.
Because the U.S.’s main creditors in Asia -- Japan in the 1980s and 1990s, China since 2000 -- rely heavily on exports, the transfer of their surplus savings to the U.S. entails that they run large trade surpluses in manufactured goods.
The result has been that U.S. trade deficits have worsened the decline in the American manufacturing sector.
Industrial Decline
One unfortunate consequence of this industrial decline has been an outbreak of protectionism in the U.S., which is exacerbated by the conviction that foreigners have somehow been cheating with their exchange rate.
However, the prevailing idea that a country’s exchange rate could, and indeed should, be used to bring its external trade into better balance is often wrong.
This conventional wisdom is based on faulty economic theorizing. It need not apply in a globalized financial system where capital flows freely.
There are several forces at play tied to a simple economic formula with exports and imports on one side and saving and investment on the other.
Most economists and commentators focus on exports and imports. Looking at this alone suggests that a depreciation of the home currency will make its exports cheaper in world markets and make the home country’s imports more expensive, leading to an improved trade balance.
Whole Picture
But that’s not the whole picture. For the trade balance to improve with currency depreciation, overall domestic expenditures must fall relative to aggregate output. This is the same as saying that domestic saving must rise relative to domestic investment. Looked at this way, one can’t presume that U.S. net saving will rise when the dollar is devalued.
Indeed, the presumption may go the other way when domestic investment (fueled in part by multinational firms) is sensitive to the exchange rate.
Suppose the yuan were to appreciate a lot against the dollar. Potential investors -- either foreign or domestic -- would now see China to be a more expensive place in which to invest and the U.S. less expensive. This might set off a minor investment boom in the U.S., where investment expenditures rise from a relatively small base, and a major slump in China’s huge investment sector, which now is about 45 percent of the country’s annual output. Overall, investment-led expenditures in China would fall, the economy would contract, and Chinese imports might fall.
Japan Lesson
So why wouldn’t the trade imbalance between China and the U.S. be reduced? Let’s look to Japan to see what happened when it allowed its currency to appreciate in the 1980s into the mid- 1990s, when the yen went ever-higher.
Japan became a higher-cost place in which to invest, so that large Japanese firms decamped to invest in lower cost Asian countries and in the U.S. Yet, even though yen appreciation slowed Japan’s export growth, because its economy slowed and imports declined, the trade surplus with the U.S. still increased.
No wonder China is reluctant to appreciate. Like Japan, its trade and saving surplus would likely not diminish because domestic saving is relatively insensitive to the exchange rate.
Critics in the U.S. and Europe might well come back and say “you just didn’t appreciate enough.” But continual yuan appreciation is an invitation to further hot money inflows. The People’s Bank of China would be, as it has been, forced to intervene to buy dollars on a grand scale to prevent an indefinite upward spiral in the yuan.
So we need a permanent moratorium on bashing China to appreciate its exchange rate, allowing China’s central bank to stop its obscure fiddling with the yuan-dollar rate. The U.S. should work toward a credible program for closing its enormous fiscal deficits and encouraging personal saving, while China works on reducing incentives for corporate over-saving by allowing a freer labor market and more rapid wage growth. But these are stories for another time.
(Ronald I. McKinnon is a professor of international economics at Stanford University. The opinions expressed are his own.)

 

[CAPTAIN AMERICA]

If the above is true, then China would allow the Yuan to float on the open market, there would be no need for Currency controls. I can remember in Russia the ruble exchange rate was 75 cents when it was worth 20 dollars on the blackmarket. I notice that China has many of the controls on currency as the USSR.

 

[lcloo]

If Germany can benefit in trade with China, why can't USA? Because USA is stick to its sanction on China and is unwilling to sell high tech machinery. Germany workers benefitted from USA's faulty policy.

Hamburg Deaf to U.S. `Nonsense' as Exports Power German Growth
By Alan Crawford and Tony Czuczka - Jul 7, 2010

Hamburg calls on Chancellor Angela Merkel to reduce the trade surplus. Photographer: Rodger Bosch/AFP/Getty Images
Hamburg, the port city that sends 1 million tons of goods to foreign markets each week, has a reply to those who say Germany’s economy is too reliant on exports.
“Nonsense,” said Frank Horch, the city’s Chamber of Commerce president, in a June 24 interview in the offices of the 345-year-old trade group. “You cannot say Germany has to stop exports, it makes no sense. Germany was born out of this.”
Hamburg, Germany’s largest port and a crossroads in European trade since at least the 13th century, is the city with the most to lose from U.S.-led calls on Chancellor Angela Merkel to reduce the trade surplus in Europe’s biggest economy.
As global demand for German goods increases, Merkel is torn between fostering the export boom and honoring a Group of 20 pledge to bolster domestic growth and rely less on foreign trade. Her Cabinet’s backing yesterday of a $100 billion domestic savings program suggests she’s ignoring calls by President Barack Obama to tackle what some say are German imbalances.
“Germany is very skilled at exporting, and it’s neither possible nor desirable for it to meet U.S. and European calls to curb exports,” said Fredrik Erixon, director of the European Centre for International Political Economy in Brussels. “It’s politically convenient for some leaders and people to keep raising export surpluses, even if they know Germany can’t and won’t do anything about them.”
Hanseatic League
The message resonates in Hamburg, located on the River Elbe between the Baltic and North seas. Germany’s second-biggest city after Berlin traces its trading credentials back to the medieval Hanseatic League, a network of merchants’ guilds from London to Novgorod that dominated northern European trade for 200 years.
Hamburg, with a population of 1.8 million, is the richest of Germany’s 16 states, with a per capita gross domestic product of 48,229 euros ($60,700) last year, almost double Berlin’s and the European Union average, government statistics show. The city also has the country’s biggest red-light district, the Reeperbahn, a boulevard stretching from the port that includes bars where the Beatles played some of their first gigs.
Where merchants once dealt in amber, fish and timber, port operators such as Hamburger Hafen und Logistik AG and Eurogate handled about 40 percent of Germany’s 808 billion-euro export trade of goods in 2009, including machinery from Munich-based Siemens AG and chemicals from BASF SE of Ludwigshafen.
Hamburg handled about 642,000 containers in March, the latest complete statistics available, or more than 20,000 per day. In 2009, Hamburg handled 7 million containers, known as TEU or twenty-foot equivalent units, the port’s website shows. That compares with just over 5 million TEUs in the Port of Long Beach, California.
Port Traffic Rises
Port traffic is picking up, said Axel Gedaschko, Hamburg’s state minister for economy and labor, in a July 5 interview. There has been a turnaround since March from a 28 percent slump last year, with container volume up 16 percent in May from a year earlier, he said.
China, which overtook Germany as the world’s biggest exporter last year, sends more goods through Hamburg than anywhere else in Europe. An estimated 2.5 million containers will pass through the port traveling to and from China this year, up from 2.27 million TEU in 2009, according to the Hamburg Port Authority. That compares with 566,000 TEU with second- placed Singapore, followed by Russia and Sweden, which with 264,000 TEU was Hamburg’s highest-ranked trading partner in the European Union.
Chinese Consulate
China Cosco Holdings Co., China’s largest container line, has its European headquarters in Hamburg, one of more than 400 Chinese companies with offices in the city. China has a consul general in Hamburg, reflecting the city’s growing links with the world’s most populous nation.
“Some question our successful export model,” Economy Minister Rainer Bruederle said July 1 in a speech to parliament in Berlin. “They say: raise wages drastically, do more to stimulate the economy. That way risks turning Germany’s economic policy into that of Greece, and we refuse to do it.”
Germany came under pressure to do just that last month with calls by Obama and Treasury Secretary Timothy F. Geithner to boost domestic spending. The G-20 Toronto’s summit communique required countries to “reduce reliance on external demand and focus more on domestic sources of growth.”
The euro’s 12 percent drop against the dollar this year is helping German exporters cement their advantage. German plant and machinery orders soared 61 percent in May from a year earlier, the VDMA machine makers’ association said July 1.
In Hamburg, the influence of centuries of seaborne trade is evident in street names such as San-Francisco-Strasse and Shanghai Allee. The downtown Ernst Brendler store has offered “Marine and Tropical Supplies since 1879.”
‘Port of Future’
Jens Meier, who runs the Hamburg Port Authority from a 19th century redbrick warehouse once used to store coffee and tea, said he’s overseeing as much as 1 billion euros of investment over the next four years to create the “port of the future.” He plans to curb noise and light pollution, make the site more accessible to tourists, and boost efficiency via technology.
“The simple things like carrying bags may not be the future, and the dirty, dusty, noisy business maybe also isn’t the business for this port,” Meier said. “There’s still a huge nucleus of engineers and people producing innovation here.”
Horch at the trade chambers, who is also managing director of Hamburg-based shipyard Blohm & Voss AG, which built Russian billionaire Roman Abramovich’s superyacht Eclipse, sees Hamburg’s advantage in turning its “Hanseatic view and Hanseatic behavior” to today’s globalized world.
“Hamburg is not a residents’ town like Berlin or Munich, Hamburg is a trading town,” Horch said, surrounded by oil portraits of his predecessors and a tapestry presented to mark the trade chambers’ 300th anniversary in 1965. “We build up industry, we build up know how, we bring ideas.”
To contact the reporters on this story: Alan Crawford in Berlin at acrawford6@bloomberg.net; Tony Czuczka in Berlin at aczuczka@bloomberg.net.

 

[siegecrossbow]

If Germany can benefit in trade with China, why can't USA? Because USA is stick to its sanction on China and is unwilling to sell high tech machinery. Germany workers benefitted from USA's faulty policy.

Hamburg Deaf to U.S. `Nonsense' as Exports Power German Growth
By Alan Crawford and Tony Czuczka - Jul 7, 2010

Hamburg calls on Chancellor Angela Merkel to reduce the trade surplus. Photographer: Rodger Bosch/AFP/Getty Images
Hamburg, the port city that sends 1 million tons of goods to foreign markets each week, has a reply to those who say Germany’s economy is too reliant on exports.
“Nonsense,” said Frank Horch, the city’s Chamber of Commerce president, in a June 24 interview in the offices of the 345-year-old trade group. “You cannot say Germany has to stop exports, it makes no sense. Germany was born out of this.”
Hamburg, Germany’s largest port and a crossroads in European trade since at least the 13th century, is the city with the most to lose from U.S.-led calls on Chancellor Angela Merkel to reduce the trade surplus in Europe’s biggest economy.
As global demand for German goods increases, Merkel is torn between fostering the export boom and honoring a Group of 20 pledge to bolster domestic growth and rely less on foreign trade. Her Cabinet’s backing yesterday of a $100 billion domestic savings program suggests she’s ignoring calls by President Barack Obama to tackle what some say are German imbalances.
“Germany is very skilled at exporting, and it’s neither possible nor desirable for it to meet U.S. and European calls to curb exports,” said Fredrik Erixon, director of the European Centre for International Political Economy in Brussels. “It’s politically convenient for some leaders and people to keep raising export surpluses, even if they know Germany can’t and won’t do anything about them.”
Hanseatic League
The message resonates in Hamburg, located on the River Elbe between the Baltic and North seas. Germany’s second-biggest city after Berlin traces its trading credentials back to the medieval Hanseatic League, a network of merchants’ guilds from London to Novgorod that dominated northern European trade for 200 years.
Hamburg, with a population of 1.8 million, is the richest of Germany’s 16 states, with a per capita gross domestic product of 48,229 euros ($60,700) last year, almost double Berlin’s and the European Union average, government statistics show. The city also has the country’s biggest red-light district, the Reeperbahn, a boulevard stretching from the port that includes bars where the Beatles played some of their first gigs.
Where merchants once dealt in amber, fish and timber, port operators such as Hamburger Hafen und Logistik AG and Eurogate handled about 40 percent of Germany’s 808 billion-euro export trade of goods in 2009, including machinery from Munich-based Siemens AG and chemicals from BASF SE of Ludwigshafen.
Hamburg handled about 642,000 containers in March, the latest complete statistics available, or more than 20,000 per day. In 2009, Hamburg handled 7 million containers, known as TEU or twenty-foot equivalent units, the port’s website shows. That compares with just over 5 million TEUs in the Port of Long Beach, California.
Port Traffic Rises
Port traffic is picking up, said Axel Gedaschko, Hamburg’s state minister for economy and labor, in a July 5 interview. There has been a turnaround since March from a 28 percent slump last year, with container volume up 16 percent in May from a year earlier, he said.
China, which overtook Germany as the world’s biggest exporter last year, sends more goods through Hamburg than anywhere else in Europe. An estimated 2.5 million containers will pass through the port traveling to and from China this year, up from 2.27 million TEU in 2009, according to the Hamburg Port Authority. That compares with 566,000 TEU with second- placed Singapore, followed by Russia and Sweden, which with 264,000 TEU was Hamburg’s highest-ranked trading partner in the European Union.
Chinese Consulate
China Cosco Holdings Co., China’s largest container line, has its European headquarters in Hamburg, one of more than 400 Chinese companies with offices in the city. China has a consul general in Hamburg, reflecting the city’s growing links with the world’s most populous nation.
“Some question our successful export model,” Economy Minister Rainer Bruederle said July 1 in a speech to parliament in Berlin. “They say: raise wages drastically, do more to stimulate the economy. That way risks turning Germany’s economic policy into that of Greece, and we refuse to do it.”
Germany came under pressure to do just that last month with calls by Obama and Treasury Secretary Timothy F. Geithner to boost domestic spending. The G-20 Toronto’s summit communique required countries to “reduce reliance on external demand and focus more on domestic sources of growth.”
The euro’s 12 percent drop against the dollar this year is helping German exporters cement their advantage. German plant and machinery orders soared 61 percent in May from a year earlier, the VDMA machine makers’ association said July 1.
In Hamburg, the influence of centuries of seaborne trade is evident in street names such as San-Francisco-Strasse and Shanghai Allee. The downtown Ernst Brendler store has offered “Marine and Tropical Supplies since 1879.”
‘Port of Future’
Jens Meier, who runs the Hamburg Port Authority from a 19th century redbrick warehouse once used to store coffee and tea, said he’s overseeing as much as 1 billion euros of investment over the next four years to create the “port of the future.” He plans to curb noise and light pollution, make the site more accessible to tourists, and boost efficiency via technology.
“The simple things like carrying bags may not be the future, and the dirty, dusty, noisy business maybe also isn’t the business for this port,” Meier said. “There’s still a huge nucleus of engineers and people producing innovation here.”
Horch at the trade chambers, who is also managing director of Hamburg-based shipyard Blohm & Voss AG, which built Russian billionaire Roman Abramovich’s superyacht Eclipse, sees Hamburg’s advantage in turning its “Hanseatic view and Hanseatic behavior” to today’s globalized world.
“Hamburg is not a residents’ town like Berlin or Munich, Hamburg is a trading town,” Horch said, surrounded by oil portraits of his predecessors and a tapestry presented to mark the trade chambers’ 300th anniversary in 1965. “We build up industry, we build up know how, we bring ideas.”
To contact the reporters on this story: Alan Crawford in Berlin at acrawford6@bloomberg.net; Tony Czuczka in Berlin at aczuczka@bloomberg.net.

No need for Germany to get antagonistic because they are one of the few developed nations that is doing well so far. Kudos to German work ethics and intelligent economic planning.

 

[below_freezing]

There is a certain cost threshold required to be crossed before businesses would consider shifting. Also, government policies on the ground affect how friendly it is to new businesses. All these factors contribute to momentum which means businesses won't shift at the drop of a hat but after they can be assured that significant gains are to be made by shifting. Right now Chinese wages are not evenly distributed even throughout China. Jobs are therefore shifting to other parts where stuff is cheaper to produce.

China's Shifting Jobs Keep Migrants Closer to Home

How Rising Wages Are Changing The Game In China



In a truly globalized world, this would not matter. Technology can always be transferred. A Chinese businessman one day figure he isn't making sufficient money from a plant in China. He may decide to open one in Vietnam instead where costs are lower. Expertise can also be found from the local population. If not it can be brought in from outside. Rest depends on how much incentives the receiving country gives to support these entrepreneurs. Ultimately China's wage increase will move its economy from manufacturing dominant to more service based economy.

This stuff is already happening. Vietnam Tycoon Lures China Companies With Cheap Labor

Vietnam’s textile industry: opportunities and challenges


Also, do not underestimate American, Russian, German or Japanese manufacturing tech. Most of the manufacturing base that these countries have been able to retain is because of rapid modernization and automation, which would otherwise have been shifted to China or otherwise be forced to shutdown. High tech products such as aircraft, satellites and communications, cars, defense items etc, are still majorly produced by these nations (partly because of TOT restrictions).

it's not a truly globalized world though. i don't know if you have chemistry experience, but some analytical equipment cannot be moved without damage, such as HPLCs and IR spectroscopes. infrastructure is one other thing that does not move since you can't move railroads or ports from china to vietnam.

and of course, american manufacturing tech, depends on chinese 5 axis milling machines for precision manufacturing. in 1990, we were unable to produce a single one. in 2010, we dominate the market in this area.

what china lacks isn't anything you've said actually, we've made aircraft, weapons, medical equipment, telecom (and are arguably the best in the world at this), etc. what we have problems with are chemical analysis instruments. HPLC, GCMS, AFM, STM, IR spectroscopes, NMR, etc. are all manufactured in Japan and the US... not even Germany has many good ones. This is a SHAME and is holding our pharmaceutical sector back.