HaavBline

Why the Dollar's Decline Is Good

Good or not good, the Dollar's decline was inevitable. It will EASE a lot of US problems for the short term, but noot SOLVE our problems. Only once again delaying those problems down into the future.

Opportunity in the Brazilian Real and Chinese Renminbi

I agree the long term bullish cases for both Chinese RMB and Brazillian Real. But ‘non-deliverable forward contract’ seem like a rather complicated and cumbersome investment vehicle for lazy investor like me.

What about the ETFs? There are CNY and CYB for the RMB and BZF for the Real. WisdomTree has been running ads for CYB on CNBC recently.

China Signs $5.5 Billion Russian Trade Deals Including Energy and Mineral Plans

On paper, Russian oil and gas are very attractive to the Chinese. They are neighbors and the energy supply can be delivered economically though pipelines. But the Chinese has long found that dealing with the Russian can be most unpleasant and risky.

The Russians had been playing the oil pipeline game between the Chinese and the Japanese for more than a decade. The Chinese had long given up on the Russians and pursued their energy needs all over the world from Central America to Africa to Latin America and Canada. It would be nice if they now get access to Russian oil and gas, but they know they can not count on the Russians to honour their 'plans' and 'aggreements'.

The global financial crisis proves that it is the Russians who made a big strategic error for more than then years in their economic development by treating the East Asian markets as only a fall-back market and negotiating lever, rather than seriously developing the Asian markets to complement their focus as energy supplier for Europe. With European energy demand tanking, the Russian GDP this year will shrink by 9%, and that is why the Russians now are scrambling for China deals. They will now need to redouble their efforts to repair their credibility problems with not only the Chinese but also the Japanese and Koreans, as the East Asians have developed alternative sources.

China: The Coming Clash in Savings

Agreed. One can not ponder global economic issues while restricting oneself to U.S.-China bilateral terms. EU and Japan still have substantail impact.

In particular, the impacts of new policies of the new Japanese goverment is worth watching. As a savings economy, they are still a close second to China. More importantly, as a much richer nation than China, the discretionery portion of the Japanese's savings pile is still a lot bigger than China's, in my opinion.


On Sep 22 10:38 AM djackson wrote:

> I'm not sure an increase in US savings necessitates a decrease in
> Chinese savings. If you think globally, the US increase could be
> offset elsewhere. In point of fact, we are rapidly approaching the
> point at which various developed economies will have significant
> tendancies toward dis-savings due to retirements of the large population
> cohort born shortly after WWII. I believe how to fund that is an
> even bigger issue in Europe and potentially Japan than it is for
> the US.

China Commandeers Australian Commodity Players, Starts to Nibble in Africa

Commandeer? Not really.

All the small acquisitions add up to only a small fraction comparing to BHP + Rio Tinto.

The two giants joining hands in iron ore are just too fishy and dangerous for the Chinese steel mills. They are on the defensive.

Death Comes to Wal-Mart

I appreciate the excellent suggestions and in depth understanding of the bleak difficulties a Chinese employee may faced, which many foreign bosses from multinationals will have never imagined or wouldn't care until something like this happens to their company.

China and Renminbi Bonds: This Looks Like the Ending of a Beautiful Friendship

Most of China's rural poor will have to migrate to cities to improve their lives. It will not be economical for factories to move to them. Some of the low-end manufacturing work are already moving to Vietnam, Cambodia, Bangladesh, instead of Chinese inland provinces. Low cost, time-saving access to ports are the issue, and that's why China frentically improves railway and highway infrastructure to give better coastal access to inland provinces.

As China's domestic consumption grows, the inland cities, perhaps even rural areas will become more viable for factories serving domestic markets.

Some African countries will not have to wait for 50 years. China already finds excellent matches in many African countries. China can offer what Africa desperately needs at prices African countries can afford: low cost infrastructure, financing, and low cost basic goods. And some African countries have what China desperately needs: natural resources, market for basic goods, and even farmable land.


On Sep 09 01:03 PM John Galt wrote:

> Fascinating.
>
> I posted (even on SA I believe) thoughts along these lines. How the
> standard of living is different for the urban Chinese vs the hundreds
> of millions of rural Chinese ( I saw 750 million but your 800 million
> could be correct).
>
> Think about it, our country has a population of 300 million, but
> they have over 2 USs worth of people living in extreme poverty in
> rural areas. That's a huge potential manufacturing base there right
> now.
>
> As the evolution of capitalism would go, once their standard of living
> rises, then the low skilled jobs move to Vietnam, Burma, and other
> poorer South east Asian countries.
>
> I also noted that in the more distant future, maybe 50 years, maybe
> less, maybe more I do believe those manufacturing jobs will eventually
> be outsourced to Africa ( at some point).
>
> So Mark, do you feel the Chinese not floating their currency ( and
> keeping it undervalued) is a grand form of "dumping", where they
> are letting the world skim some off the top in Forex, in exchange
> for (higher employment) and a manufacturing base to be put work (
> and eventually more)?

China Becoming a 'Middle-Class' Nation

You are right. It will get harder as China grows closer to the global adverage. But there is still a long way before China gets there, as the China Daily recognize that China has progress to only 'lower middle-class' status, and per-capita GDP still rank somewhere close to #100 in the world (was #107 in 2007, I think).

Continuing moving up from a low base toward middle-income will take another 15-30 years. Meanwhile, since China is a huge economy that covers some extremely difficult terrains, the leading edge of it will be quite advanced while the trailing edge will remain very 'challenging' for a long time.


On Sep 09 03:44 PM dshark wrote:

> 90% of it has been in the last 30 yeas, Nil before that. Also when
>
> your starting from a 1$ is it easy to jump to $2, it's gets exponentially
> harder as you catch up to the rest of the world and try to manage
> growth and people.
>
> SHARK

China Becoming a 'Middle-Class' Nation

Susan:

I wonder if it is appropriate to post entire articles from another publisher?

No one is arguing that China's statistics are up to western standards. Still there are plenty varifiable information to confirm China's tremendous growth over years.

Can China fake the $2T forex reserve and the $1T+ US goverment debt they hold? Can China fake the endless new infrastructures the build? Can China pay for all those foreign resource acquisitions with worthless RMB? Will the consumers respond to goverment's car buying insentives with such gusto if there are no hidden wealth in China? Can there be a #1 car market if only the corrupt officials get rich, as many China-bashers are insisting?

First Solar Set to Conquer China's Growing Market

Author made a ridiculously hyped one-liner at the beginning to catch attention. Then she proceed to write a pretty good, but flat, compilation of information that fail to provide that evidence of her claim that First Solar will CONQUER the Chinese market.

Be realistic. That will NOT happen.

China Becoming a 'Middle-Class' Nation

Excellent article.

China-doubters will point to the Chinese source (China Daily) as 'questionable', but any objective observers who looks at big pictures can neglect all Chinses official statistics and still come to the same conclusions.

It is not important to argue wether China is now 'lower middle-income' or still working their way toward that goal. It is clear that China has been consistently moving UP toward that direction at a very decent pace, and that direction and pace will continue despite the burst of global financial bubble. There is no doubt that the middle class continues to grow quickly.

In addition to the accumulation of financial reserves, few people pay much attention to the significance that China now has accumulated a surplus of 'college grad' reserves. This is much more meaningful that most people realize.

30 years ago, at the end of the Cultural Revolution and the beggining of the current modernization drive, China faced an extreme shortage of educated elite, a whole generation of young elites wasted a decade away from universities, which were all closed. This situation led to the fundamental limitations faced by China's reformist leaders in the past 30 years which resulted to the TWO glaring deficiencies within the impressive success of China's development.

1. With a extreme shortage of educated capable officials, China must allocated the small pool of them to big cities in coastal regions. Goverments in vast rural and inland areas had to put up with unqualified officials who has absolutely no need skills to handle moderrnization programs.

2. A advanced service industry, which requires a large pool of educated employees, could not be developed.

To address these problems, China has been expanding university enrollments at a much faster pace that GDP growth rate in the past 10-15 years. (Quality is going to suffer for sure) And now faces a different problem, finding jobs for a surplus of millions of college grads.

This virtually garantees that new Chinese goverment policies will focus on modernizing rural and inland goverment administrations with new college grads and the development of the serivce sector to assorb large numbers of these educated youths. The much expanded pool of educated youths will now support three main DOMESTIC drivers of future economic growth, continued vast urbanization, rural and inland development, and service sector development. And as a result, China will develop into a much more balanced economy in the next 30 years.

ETFs for China's Internet Boom

Good introduction.

All three ETFs are good bets. I favor EWT most, as Taiwan is now very well position to help China move up the value chain, and benefit its own economy in the process. It is also more reasonably valued.

China, Gold and the Non-Open Door

A Chinese official speaks, multiple analysis follow. This days, the investment community is indeed watching not only every MOVE, but also every WORD, from China.

There's No Shortage of Those Who Want to See the Dollar Go Lower

triplebalck is right. This article is all nonsense.

It is the U.S. that benefits most from the lowered Dollar. The huge debts we owed to foreign goverments will be de-valued, plus exports will be more competitive against Japan and EU, hopefully creating more factory jobs.

On Sep 08 04:32 PM tripleblack wrote:

> A case could be made for many of the interested parties in a stronge
> dollar:
>
> 1. OPEC still executes virtually all oil trades in dollars. If they
> wanted the dollar damaged, all they need do is switch to an alternate
> currency, say, Euros. Many wealthy OPEC members hold huge investments
> in dollar instruments, or direct investments in American companies.
> When the dollar goes down, their investments are worth less.
>
> 2. China has huge dollar investments, and holds hundreds of billions
> in bonds. AND though it is true that a drop in dollar value makes
> their goods EASIER to sell because of the yuan/dollar peg, it also
> means that imports cost them more. Having a devaluing currency where
> YOU do not control the devaluing is a dangerous game.
>
> 3. Commodity producers (Australia, S. America) also trade their goods
> in dollars, and end up with considerable supplies of dollars as a
> result. They are also countries that import many things and pay for
> THEM with dollars. A strong dollar in the hand is worth two in the
> ground.
>
> 4. Russia....
>
> Wants the Ruble (seekingalpha.com/symbo...) to become
> the world's reserve currency.

China and Renminbi Bonds: This Looks Like the Ending of a Beautiful Friendship

These are inevitable, incremental steps as China continues to reform its economy, rises in global stature, and further integrates into the globalized economic structure. It will be a long and steady process but the direction will not change.