2010: Already a bad year for China and the US

this is exactly what i'm talking about. even with the measure of trade incorporated, china still has a long way to go. the article is brief but makes good points.

Neither state has anything to gain through military conflict.

Calm_incense: could you post where you got the info from? Interesting stuff there.

https://www.cia.gov/library/publications/the-world-factbook/index.html

The only two likely biases of the CIA World Factbook are that it is either not up-to-date or stretches statistics in favor of the US—both errors for which—if corrected—would balance in China's favor.

Hopefully the CCP will stop fearing it's own people.

I've heard a couple experts on China say if they actually allowed free speech they wouldn't have much to worry about.

what kind of leverage are you talking about? what are we trying to resist? hypothetically (even though we wouldn't), we could crash their economy in a split second by crashing our dollar because of the trillions they hold. they are still an emerging market and a developing country. as far as Obama's agenda in foreign policy is concerned, we are doing as we please as is obvious by the news, but it's not like we're trying to object to everything they say or even go out of our way to upset them. Obama is doing what he thinks is right to do and there's nothing extreme that necessitates leverage or resistance. Sure, in the decades to come whenever China has an efficient market and is no longer a developing country the country will be the future. It has the world's largest labor force by far, but you need to look at more stats. They have a lot of social and economic problems to face before they become the supposed next super-power. Around 55% live in rural areas as opposed to our less than 20% which tells you a lot about the efficiency/productivity of their labor market. Their per-capita income is just now around $6,000 after all of their growth compared to our $46,000. There are still millions living there in poverty - not the U.S. poverty - but the less than $1.25 a day poverty.

We don't need leverage to resist anything right now.

China's economy is also growing around ten percent a year while ours is growing very little or remaining stagnant.

While China may not be be as developed has Western countries, I still agree with Incense, China is the future.

first off, growth isn't distributed equally. things like poverty don't get wiped away purely by growth. i also never said china wasn't the future. i said it would be given a lot of time. my comment said we need no leverage to do what is on Obama's policy agenda right now.

second off, do the math. if per capita income of 6,000 were to grow 10% a year while we grew none at all, how long would it take them to catch up to us right now at 46,000? the answer is about 21 years. and look at the unreal assumptions (a) they maintain extraordinary 10% growth, and (b) we don't grow at all over the 21 year period.

Uh...since when do living standards define global clout?

Norwegians have the highest GDP per-capita, but that doesn't mean the White House kowtows to whoever the fuck runs Norway. -_-

I can't even imagine why you would point our that crashing our dollar could harm their economy—that's the mindset of a suicide bomber, and I'm pretty sure the US prioritizes its own existence over the destruction of China's economy. Crashing our dollar would decimate our economy far more than the PRC's, so I really have no idea why you even made such a bizarre claim.

It really does not matter how many millions China might still have in poverty, because China has over four times' our population. China already has more Internet users than our country's entire population, and if it hasn't already happened, China will likely soon have a larger middle class than our country's entire population.

There really is no good reason why such economic growth should stop until China's per-capita GDP reaches levels achieved by South Korea, Japan, and Taiwan. South Korea certainly didn't start off any better in the 1950s, and if the Chinese in Taiwan, Singapore, Hong Kong, and Malaysia can do it, not to mention overseas Chinese all over the world, there really isn't any reason why economic growth in mainland China should just stop. Yes, China has a large rural population—so did the United States, so what's your point?. Again, only a war could reverse what is now nearly the inevitable.

Obama is doing what he thinks is the right thing to do? Well good for him. I suppose the US ought to loosen up on the Taliban and al-Qaeda because—after all—they're only doing what they think is the right thing to do. -_-

China doesn't need to be as rich as us per-capita—stop thinking in terms of living standards; this is about sovereign states, not individual citizens. -.-

your friend said growth in income determined it, not me. i just gave him a lesson on numbers and how growth works.

your suicide bomber mindset comment is ridiculous. i guess you missed the word "hypothetical" when i showed you that indeed we do have something called leverage. in baby terms for you, they don't want us to devalue our currency. that is our leverage. it is also not a claim. it is a fact. devaluation could hurt them and in the most extreme of case, which i said wouldn't occur if you read correctly, we could crash it all.

what's my point with the rural population? i made it. read. it's about productivity in an economy. we were, and there's reasons we aren't. just because they have volume doesn't mean they have productivity. their size is just as much as a hindrance as a support. infrastructure and type of economy play into the size of the rural economy.

your sideways point is ridiculous about Obama. You take a centrist-left president and compare his actions to suicide bombers and terrorists to make a comparison of what's "right".

and yes, poverty does matter. how do you win a war with a starving army my friend?

"your suicide bomber mindset comment is ridiculous. i guess you missed the word "hypothetical" when i showed you that indeed we do have something called leverage. in baby terms for you, they don't want us to devalue our currency. that is our leverage. it is also not a claim. it is a fact. devaluation could hurt them and in the most extreme of case, which i said wouldn't occur if you read correctly, we could crash it all."

That is not "leverage" because we would never do that in the first place. Guess what? China could also destroy our economy by dumping its US bonds. But guess what? That's not leverage either, because it would adversely affect China's financial reserves. And yet, it would harm China less than US, because whereas US bonds comprise only 60% of China's foreign reserves, and of course their foreign reserves comprise only a fraction of their wealth, the US dollar is the foundation for our ENTIRE economy.

"your sideways point is ridiculous about Obama. You take a centrist-left president and compare his actions to suicide bombers and terrorists to make a comparison of what's "right"."

This has nothing to do with what's right, and everything to do with state perception of threats to its sovereignty. The US sees the Taliban and al-Qaeda as threats to its security, and China sees the Dalai Lama as a threat to *its* security. Period.

"and yes, poverty does matter. how do you win a war with a starving army my friend?"

How many times do I need to tell you? China doesn't NEED its entire population. Even a quarter of its population will already outnumber us, and guess what? Nearly half of its population is already urban, and this ain't going to slow down anytime soon.

My point, however, isn't that China and the US will be fighting a war anytime in the near future. That's ridiculous. My point is that the US will increasingly be in less and less of a position to dictate conditions with China.

I'm with Incense (who's paying more attention to these posts than I am), and I never claimed that growth in income delivers global clout; I mean more general economic growth. I hear you on China's poverty and frequently forgotten rural population, but the Chinese government is already a world leader.

We also shouldn't forget the power of the Chinese government to act unilaterally and decisively. Becoming one of the world's leaders in the production of green energy technology, for example.

extremely incorrect. free trade is the way to go. increasing tariffs on china will pointedly lead to a protectionist trade war. not only that, but as we're touting our free trade agenda globally, there undoubtably would be negative repercussions from other countries besides china if we were to increase tariffs. i'm not against rebuilding/investing in our economy, but not if the costs are far worse that the benefits. have a look at the international trade economics behind this concept at this site. it's interactive so it should be easy to understand:
http://www-personal.umich.edu/~alandear/glossary/figs/OfferCurve/oc.html#

Increase the tariff and the US will definitely have inflation. Rebuilding factories and training workers takes months if not years, not to mention significant capital. With the U.S. economy in at a standstill with no jobs being created and the average household debt skyhigh, where's the demand for goods going to come from in the short term? Long term wise, due to the average American consumer leveraged to kingdom come, how will they pay for more stuff? More debt?

"Increase the tariff and the US will definitely have inflation."

US will definitely have inflation anyway, given vast money pools fed by the FED (pardon the pun) to financial institutions. Amd since similar policy was followed by most of afflicted economies, looks like we will have a decade of world-wide inflation.
Still, it may be better than a deflation we would face if the international trade would stop.

Outtheinside, I'm with you "ALL the way", especially increasing tariffs on china... I think that is a bad idea. I wish politicians/law-makers will read you guys debates. Very interesting.

Hahaha 13 billion? Oh boy, that would be the day.

They probably own at least ten percent of our economy, not counting our material dependency on them.

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES AS OF NOV 2009:
(in billions of dollars)

1. China, Mainland 789.6
2. Japan 757.3
3. United Kingdom (a) 277.5
4. Oil Exporters (b) 187.7
5. Carib Bnkng Ctrs (c) 179.8
6. Brazil 157.1
7. Hong Kong 146.2
8. Russia 128.1
9. Luxembourg 91.7
10. Taiwan 78.4

(a) United Kingdom includes Channel Islands and Isle of Man.
(b) Oil exporters include Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.
(c) Caribbean Banking Centers include Bahamas, Bermuda, Cayman Islands, Netherlands Antilles and Panama. Beginning with new series for June 2006, also includes British Virgin Islands

From: http://www.ustreas.gov/tic/mfh.txt

**** China with HK collectively holds 935.8 Billion dollars in treasuries as of Nov 2009.

but we shouldn't be doing any business with them. we fought WW2 to fucking get rid of tyranny then we had the cold war for 50 years against the motherfucking COMMUNIST, so why did we do that. so we could be best buddies with the PRC? FUCK CHINA we shouldn't deal with any of there shit.
Americas not perfect far from it but we don't need help from them. EVER.

Because they provide cheap labor for U.S. corporations and nearly everything you buy is now made there.

I'm not saying I like it, but that's the reality. And as long as there is a conservative movement in this country it won't change.

Yeah, we really screwed our way into this. How easily we were misled. We need to go back to manufacturing quality products.That will be hard in the economy like this where no small business owner can grow the business to employ and train people to do a skilled job. Government frowns most on small businesses. There are less and less active every day, fewer and fewer. Sad, isn't it?

its very sad that this is the america we live in

During the Cold War, when the Russia-China rift became more pronounced, the US and China eventually developed a more friendly relations to further weaken the Russians. For the U.S. (specifically the corporations), it meant entering the world's largest common market; for China, it meant leverage against Russia and the chance to modernize her economy.

I think this is what happened: when the corporations started to penetrate China, instead of ramping up productions in the US, they decided to open up factories in China (maybe through political quid pro quo). The corporations must've then realized that the Chinese didn't have enough cash to buy their goods BUT the output was far cheaper than what they can produce in the U.S., even when logistical costs were factored in -- so they decided to export from China to the U.S.

Plus, there are so many less restrictions on the businesses in China than here, so the companies can grow huge quickly without curtailment from many sides.
There not only is labor cheap, but also, human life has little worth to the Chinese government. Look at the way the flooding of centuries of family heritage and lands occurred with the damming of the Yangtze river, putting all those people into apartment complexes that removed their traditional social, commerces and family ways of living.

China's thinking is different from Western thinking: they are more open to sacrificing some parts to save the whole. Read some of their history and it's replete with examples like this, some are even remembered as heroic and loyal tales. Look at China as a hive, not as a federation of independent bodies (unlike the Germanic model). Even Chinese families are run like this: the fathers are generally the head and the kids follow what the head tells them to do. It's a culture in place for thousands of years and have proven to be very effective.

I do understand this model yet it, too, is not perfect.

I don't think it's going to happen. Why would producers pay workers here when they could do it for less in other countries?

Only when the stuff they can produce require sufficient skill and experience. There are tons out there but the world's catching up. It's either the US become more competitive or sit back, relax and wake up being far behind.

The quality of education in the U.S (university level) is still superb but expensive; creativity, innovation and risk taking is very much an American advantage. The challenge is how to connect those advantages to newer markets. The only way for the US to survive now is by going up the value chain further.

The problem with Democracy is that the system's terrible in setting priorities; Authoritarian (mostly Republics nowadays), like China, need only decree which course they would like their future to be at. For instance, green tech. From a NY Times article:

Concern that China may be edging ahead in potentially lucrative growth sectors like renewable energy was palpable here, where senior officials from the United States and Europe warned that the West could not afford to be complacent.

“Six months ago my biggest worry was that an emissions deal would make American business less competitive compared to China,” said Senator Lindsay Graham, a Republican from South Carolina who has been deeply involved in climate change issues in Congress. “Now my concern is that every day that we delay trying to find a price for carbon is a day that China uses to dominate the green economy.”

He added: “China has made a long-term strategic decision and they are going gang-busters.”

Christine Lagarde, the French finance minister, agreed. “It’s a race and whoever wins that race will dominate economic development,” she said. “The emerging markets are well-placed.”

In China, the government poured an estimated $440 billion into clean energy last year.

http://dealbook.blogs.nytimes.com/2010/01/30/the-race-is-on-to-develop-green-cle...