Sober Realist

China Becoming a 'Middle-Class' Nation

Jeff Nieson said
"ONLY Corporate America has a positive net-worth. And, as we have seen in the scams from Wall Street and the dismantling of the U.S. manufacturing sector, these multi-national corporations have ZERO allegiance to ANY government."
--- agree with this statement, but little else from your usual pom pom parade for China.

Trade Deficit with China Continues to Expand: Why?

Your right. The Americans and Europeans can't compete with slave labor. It's not about being able "to compete" as you put it. It's about how massive the profit margin is to the corporations. It's about GREED.
Globalization has made corporations very rich at a huge cost to the western consumer. Many of the good manufacturing jobs in America have been shipped overseas and replaced with low end service jobs. The MNC's have by and large overlooked quality issues in their foreign manufacturing plants because of the cost-savings reaped from the exploitation of cheap foreign labor. With retail prices just marginally less than they would have been were they manufactured domestically, the profits to the distributors are massive.

On Aug 15 04:36 AM ArtfulDodger wrote:

> Sober Realist:
>
> With all due respect to your view of me, I think you've tossed me
> into the wrong ballpark.
>
> I'm an investor and I have to go where I'm forced to go. The opportunties
> are in China, and that's where I've invested over the last several
> years.
>
> If I had my way I would abolish the world bank, IMF, et al. I abhor
> globalism and internationalism, and I don't at all like the idea
> of the US merging with any other nation. Or relinquishing its sovereignty
> for any reason.
>
> I'm not at all interested in 3rd World Poverty, so I don't understand
> all the sites about that. I certainly don't think "globalism" is
> going to cure world poverty. I try to help people close to me that
> I can see, touch, and talk to. I can't be concerned about people
> who've been living in huts in Africa, Asia, Mexico, and South America
> for thousands of years.
>
> You wrote: "The problem as I see it is that MNC's have no allegiance
> to any people or nation. They also are big compaign contributors."
>
>
> I agree with you that our businesses have no allegiance to America
> other than to sell their goods here as they do elsewhere, but I'm
> not anti-business. This nation won't let you become a Nationalist.
> If you mention that you'll get demonized quickly, as did Pat Buchanan
> a few years back. Or Ross Perot, who was made out to be a fool when
> he spoke of "that big sucking sound you hear."
>
> Hollywood is much the same way and they're also huge campaign contributers.
> Would you bar those Marxists from contributing, as you would evil
> Big Business. What about unions; they're even bigger contributers.
>
>
> After all this I'd like for you to show me how US manufacturing companies
> could compete with Asian companines that do not have the onerous
> burdens placed on them that US companies do.
>
> You then get right back to the $150 pair of drawers, which is hyperbole
> (but just a little) to make a point.
>
> If I had my way, the propaganda I would have put out over the last
> seventy or so years would have had business leaders satisfied with
> what they could earn here in the states. The government would not
> be promoting globalism for the purpose of eventually merging with
> other nations.
>
> But I can't control any of these things. So I must put my money where
> I think I have the best return for the least amount of risk.
>
> I assume you are an investor, even though you don't mention it, but
> I wish you well anyway.

Trade Deficit with China Continues to Expand: Why?

ArtfulDodger,
The MNC's are happy to hear you comment. They have you beautifully brainwashed. $150 drawers? LOL!

My intention is not to be rude, but can I suggest a little more reading for you?

Does Globalization help the poor:
www.thirdworldtraveler...

The Polarised World of Globalisation
www.globalpolicy.org/c...

Globalization and free trade – wonders of a past era, now enemies of America
fabiusmaximus.wordpres.../

Flaws in the theory of globalization
p2pfoundation.net/Flaw...

Serious About Green Jobs? It's Time to Throw 'Free Trade' out the Window
www.alternet.org/envir.../


The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade Are Sinking American Living Standards
With the 1990s economic boom over, The Race to the Bottom deftly explores how the United States has entered a no-win global competition in which the countries with the lowest wages, weakest workplace safety laws, and toughest repression of unions win investment from the U.S. and Europe. Tonelson analyzes how the entry of such population giants as China, India, and Mexico into the global market have accelerated the erosion of wages and labor standards around the world. He describes how an ever larger share of this low-wage competition is hitting not just sectors such as apparel and toys, but many of America's highest wage industries such as aerospace and software. Tonelson explains why the reeducation and retraining programs touted by many political leaders offer only false hopes to most U.S. workers, and outlines the real decisions Washington needs to make to ensure long-term prosperity for America and the rest of the world.
www.powells.com/biblio...
Globalization's cheap labor policy
www.europe-solidaire.o...

The Wealth Gap and the Collapse of the U.S.
seekingalpha.com/insta...

Juliette Beck & Global Exchange
www.ecoworld.com/busin...



On Aug 14 10:33 AM ArtfulDodger wrote:

> I am definitely long several stocks on the Shanghai index, but it's
> not because I'm a globalist or because I love China. It's because
> of the very things HR is speaking of in this article.
>
> When people complain to me about our trade imbalance with China,
> I ask them would you rather pay $150 a pair for your underware?<br/>
>
> That's pretty much what it amounts to. We either buy at reasonable
> prices from some "emerging nation," or we have to pay the high prices
> that it would take to pay for workers compensation, EPA rules and
> regulations, social security, medicare, medicaid, maxicare, welfare,
> union wages, and steep corporate taxes.
>
> I can't see that if makes any difference whether it's Mexico, Indonesia,
> or China that makes the products. I don't like it mind you, but the
> American people are not going to want to pay $150 for a pair of drawers.
>
>
> Thank you for the article, HR.

Trade Deficit with China Continues to Expand: Why?

Howard,
I appreciated this article. You have to remember that people critisizing you here are all invested in China. So why would they support your views?
However, answer me this. Why is the U.S. government allowing American MNC's to set up shop there. They are the ones shipping our jobs overseas. I just read recently that an S&P report showed that for the first time in history, American MNC's are paying more in taxes to foreign governments than to America.
A recent article sheds light on this problem:

"The globalization knowledge gap began flummoxing policy-making in the 1980s, when large companies from all countries began greatly increasing their production of goods and services outside their home countries, as well as the foreign content of their individual products.

The companies reaped big cost savings and other efficiencies. But policy-makers and voters confronted new difficulties in gauging the domestic effects of surging global trade and investment flows. The companies themselves, of course, knew everything about their new worldwide production chains. They couldn't make money otherwise. But although Washington gathered much of this information, the U.S. government released little.

The costs of this secrecy first appeared in the 1980s. Skyrocketing U.S. trade deficits and foreign-investment inflows raised the question of whether it mattered, and if so, how to respond. Many economists insisted that neither mattered in the emerging, allegedly borderless global economy. Others responded that knowing "Who is us" mattered crucially....

The companies oppose full disclosure by arguing that (a) detailed reporting would boost production costs and (b) the information has great strategic value. But with all businesses participating, none would realize cost or strategic advantages. And higher costs passed on to consumers could well be offset by better jobs saved or created by better globalization policies.

The companies are probably more worried that exposing their full economic record would create a public relations and political nightmare. But why should their sensitivities shape U.S. policy - especially when coddling them forces the rest of Americans to fly blind?"

TONELSON: In the dark on globalization, trade policies
www.washtimes.com/news...

The problem as I see it is that MNC's have no allegiance to any people or nation. They also are big compaign contributors.

China: A Reason to Be Cautious

The jaded people think that America won't learn a hard lesson from the undue influence the financial sector has had on our government and economy. The very fact that people are debating this problem and ripping GS to shreds tells you something about our society. Try that in China or Russia and you will mysteriously disappear.

"The one long term benefit we see resulting from the global financial crisis is the discrediting of the entire financial sector both at home and abroad. In the simplest of terms, for the time being the world wants nothing to do with American ‘financial innovation’ and has essentially stopped buying it; this in turn will re-focus the financial sector on the domestic markets. Whether the US will revert to manufacturing, developing, growing and extracting more of the things it needs and the world wants to buy remains to be seen, but we certainly have the ability to do so. Though the gaping hole rent in the economy from the collapse of the financial sector means we are in for hard choices and hard times, should the US decide that it wants to produce its way out of the financial crisis, it is far better positioned and much more competitive than is widely perceived , the misperception that it is not being due in no small part to the propaganda emanating from Wall Street in its endless lobbying on behalf of China."
www.financialsense.com...


On Jul 28 10:52 PM Wisdom vs. Information wrote:

> comparing corruption in the US to corruption in BRIC is idiotic.
> the family oligarchies in India are just plain scary, and the communists
> in China and near-coms in Brazil and Russia can and will turn on
> you at any moment; and what about Isreal? as i have learned first
> hand over the last twenty years, the difference is molehills to mountains

The China 'Bubble': Buy, Sell, Or Hold?

meant no say..."no allegiance"

The China 'Bubble': Buy, Sell, Or Hold?

Multinational corporations have to allegiance to you. That's why they export your job to LDC's.
"Globalisation has made corporations very rich at a huge cost to the western consumer. Now that all the piece good jobs have been exported the tertiary manufacturing of most Western countries has all but disappeared. Western economies have been turned into service economies with only Mc Jobs to offer. Everyone will attest to the declining quality of goods carrying brand names such as HP, Toshiba, DeWalt ,Stanley, G.E etc: with retail prices just marginally less than they would have been were they manufactured domestically, the profits to the distributors are massive. China has always had a quality problem but has offset it by price and to a large extent the brand manufacturers have been complacent because profits are so high.
If China wants to have a proper economy then it has to generate its own consumers, have fair working practices, a fair legal system, an end to sweatshop labour, and a decent social system and a proper distribution of wealth. This will take many years but what exists now is reminiscent of the cotton mills and mines of 19th century Britain. That will blow up in their faces very soon and then we will see a situation reminiscent of Britain in the 50's ad 60's where there was a total absence of reliability or quality, or a return to hard line communism. "


On Jul 28 03:25 PM harammph wrote:

> Typical American Arrogance: Do as we Do.
>
> How about Helping India's poor, Zimbabwe, Nigeria, or North Korea.
>
>
> Yeah, Lets help North Korea. If we help them, they will look up to
> us.
> Or Iran and Venezuela, they could use a handout too.
>
> But closer to Home, how about Asking Mexico to send us their poor.
> Lets send trucks to bring them in, cloth and, feed and provide Health
> Care.
>
> That will surely change the way the Government in Mexico works.<br/>They
> will not ask for handouts, Bribes or gifts anymore.
>
> Instead of Trying to help the Downtrodden in China, How about a Little
> help for the Unemployed in the "Lets right the wrongs in the rest
> of the World." USA
>
> I couldn't care less about the Rest of the World.
>
> I'm about to use the last of my Unemployment checks, How about a
> little Help Here.

The China 'Bubble': Buy, Sell, Or Hold?

Yeah I think the world is terribly misinformed and deluded about China. Here's a good video to watch from Jun '09:
www.youtube.com/watch?...
In one part of the film a college student is looking for work and he's scouring a job post bulletin board. He has to pay 200 yuan if he wants to apply for one of the listings. The only problem is that the job posting could be fake and he won't get his money back.

---According to another poster on the Michael Pettis website, these fake job advertisements in China are widespread.

Han Dongfang is also in this video. He was jailed without trial for 2 years and then banned from mainland China. He resides in Hong Kong now. "He says that no one is standing on the (Chinese) workers side. It's just sick."
The interviewer tells Dongfang that "We(the West) always hear that China is a modern country and the workers have never been better off than they are now."
Dongfang replies," We didn't hear that. We all know that (Chinese) workers are working in one of the worst situations and the worker's rights is one of the worst in the world. We never heard that workers in China were better off."

Wake up America! Those singing the praises of this dictatorship are deluded.

The China 'Bubble': Buy, Sell, Or Hold?

What's not to like about investing in a ruthless dictatorship that hoards all the wealth generated off the backs of its its dirt cheap labor pool?
Here's a good read: "Rich China, Poor Peasant"
online.wsj.com/article...

And "The Dark Side of Chinese Manufacturing"
seekingalpha.com/insta...

China Growth Story: Fact or Fiction?

China's large population means nothing if 96% of them are just eaking out a living. Here's an interesting statistic for you:
"The average disposable income of Chinese urban dwellers is about US$1,350 annually, growing at between 10-20% each year. In rural areas, it is about a third of that figure. It will be a long while before it is possible to reach the US$5,000 figure, the point at which discretionary spending is said to take off."

China's Well-Prepared; We're Not

Go here for more on the GDP history:
74.125.95.132/search?q...


On Jul 15 09:51 PM schoolchildren wrote:

> Many many thanks coreopsis. I place a lot of emphasis on how long
> something has been around for forecasting its long-term prospects.
> I did not know that about China. In case you are interested there
> is a fine article published in the early 90's in the British magazine
> Nature by Richard Gott, which makes a very interesting argument about
> this point. Thanks again.

China's Well-Prepared; We're Not

There is no growing middle class in China. As a matter of fact, the opposite is happening. Have you read the headlines today?

"Income gaps, corruption fuel China riots"
www.msnbc.msn.com/id/3...
updated 4:17 p.m. MT, Tues., July 14, 2009
BEIJING - Widening income gaps, corrupt local administrations and policies that seem to favor the well-connected few over the disadvantaged many are fueling spasms of violence that spring up in cities across China...."

A recent study by the Asian Development Bank points out that China is one of the Asian countries with a noxious wealth gap, it has also warned that this trend will persist into the future.

"China’s future …
The absolute size of China means that even if its economy falters, China will continue to be a major presence in the region. However, given the weaknesses in its economic strategy and civil society, we need to consider the possibility that China is becoming more like an unbalanced South American giant such as Brazil than an East Asian success story such as Taiwan and South Korea."
www.cis.org.au/POLICY/...

China's One Hundred Years of Ineptitude
The unrest in Xinjiang and arrest of a foreign corporate executive show that China is not ready to lead.
"...China is not ready to lead because its "value systems" -- cultural, ideological, and political -- are not yet part of the regional mainstream. Beijing's example is not an attractive one for other countries. Subsequently, China lacks the ample reserves of "soft power" required for real world leadership.

Two events in the past week support the argument that China needs to develop internal political stability and allow for productive dissent and competition before it begins exporting its cultural, ideological, and political fruits...."
www.foreignpolicy.com/...

I noticed recently that George Soros is starting to question is assumptions on China---
"Maybe we're making the same mistake again by thinking that China and India will decouple from the developed world," Mr. Soros says.

In Free Market We Trust: Says China, Not U.S.

Here's why the author has a scewed, myopic view:
"...I started building China First Capital, a boutique investment bank that works with China’s private SME to arrange pre-IPO private equity finance...."

Let's move on to the next article.


On Jul 13 06:17 AM Ben Gee wrote:

> I am reading a person in love with China. Love is blind.
> China has a long way to go and many problems to solve both politically
> and economically.
> While most people worked or visited China have a good opinion of
> China, 99% of the people outside China had never visited nor worked
> in China. Most of these people heard either good things or bad things
> about China and very confused. Like most big countries, there are
> good things as well as bad things happened there. Hopefully, people
> will learn more and be better judges for thwemselves.

Fixing China Trade Is Key to a Sustainable Recovery

China doesn't have any intention of playing by any rules or returning any favors of buying U.S. products. Their talk of creating internal consumption has been just talk.
"The Chinese government has quietly started adopting policies aimed at encouraging exports while curbing imports, even though China, as one of the world’s largest exporters, has aggressively criticized protectionism in other countries.
The government has sharply expanded three programmes to help exporters, giving them larger tax rebates, more generous loans from state-owned banks to finance trade, and more government-paid travel to promote themselves at trade shows around the world.
At the same time, Beijing has banned all local, provincial and national government agencies from buying imported goods except in cases where no local substitute exists."
“China is not only continuing but accelerating many of the protectionist approaches they’ve taken in the past to promote economic development,” said Michael R. Wessel.
“The focus on maintaining export competitiveness to prevent job losses is clearly trumping longer-term considerations of rebalancing growth and reducing reliance on exports,” Eswar S. Prasad, a senior fellow at the Brookings Institution.
In other moves, Beijing has halted the rise of the renminbi against the dollar by intervening heavily in currency markets, dumping billions in renminbi and buying dollars and other currencies.
Provincial governments also appear to have cut back on their enforcement of counterfeiting laws and other intellectual property protections. Chinese consumers have less need to buy imported goods when they can buy much less expensive copies produced locally."
www.businesstimes.com....

This is the kind of behavior you can expect from a totalitarian regime focused only on staying in power, no matter the cost to its people or other nations.

Liquidity Is Working... At Least in China

McHattie,
"The number of (CCP) officials before and after the Tiananmen protests has more than doubled, from 20 million to 45 million. Since the early 1990s, the CCP has re-taken control of the economy. State-controlled enterprises receive more than three-quarters of the country's entire capital each year, reversing the situation prior to 1989. The private sector is denied both formal capital (bank loans) and access to the most lucrative markets which are reserved for the state-controlled sector. Only about 50 of the 1400 listed companies on the Shanghai Stock Exchange are genuinely private. Fewer than 100 of the 1000 richest people in China are not linked to the party. This state-corporatist model favours a relatively small number of well-placed insiders. Meanwhile, a billion people are largely missing out on the fruits of GDP growth. In fact, 400 million people have seen their net incomes decline during the past decade. Absolute poverty has doubled since 2000.

This extensive role of the CCP has coincided with a rise in systemic corruption. Courts at all levels are still explicitly under the control of party organs. According to the Chinese Academy of Social Sciences studies, stealing from the public purse by officials amounts to about 2 per cent of GDP each year, and it is rising. According to a 2003 CASS report, more than 40 million households have had their lands illegally seized by corrupt and unaccountable officials.

Levels of dissatisfaction with especially local authorities are so bad that there were 87,000 instances of mass unrest in 2005, according to official figures, rising from a few thousand in the mid-1990s. To appease unhappy citizens, Beijing has instituted a system of "petitions" whereby aggrieved citizens can appeal to a higher authority against their local officials. A good idea, perhaps, except for the fact that of every 10,000 petitions lodged, only three are heard.

Democracy under these circumstances is unlikely to produce a better result for the vast majority of China's people. China needs institutions. But the CCP knows that if strong institutions are built, it will lose its privileged place in Chinese society and economy. And if so, eventually it will likely lose political power."

Read my instablog, which I update, to see the problems with you notion that the Chinese " will just go shopping.".