Re: china manipultes currency

Unless children are kept in secret after being born, the numbers will be quite accurate. China has a registration system for its citizens (when you are born you are registered to that province and only receive benefits from that province. This is used to combat the very large (going from memory but I think China had a floating population of 150 million)...

Country    1999    2000    2002    2003    2004    2005    2006    2007    2008    2009    2010
China    3,800    3,600    4,400    5,000    5,600    6,800    7,700    5,400    6,000    6,700    7,600

Ok, this is your data that you provided to support your argument. Yes, 2007 saw the GDP drop from 7,700 to 5,400...but I am pretty sure 6,000 is greater than 5,400...and 6,700 is greater than 6,000....and 7,600 is greater than 6,700...I am just saying, 3 consecutive years of growth...coupled with the information I provided of the growth rates of 2010, and the predictions of 2011, to say that you don't see the PPP rising is turning your eyes off at information that you simply don't agreeb with (and failed to provide supporting evidence...also you made an argument based loosely on a single year and then made the comment that you don't trust it, not the best way to make an argument tongue)...sure the PPP dropped in 2007, but as mentioned, so did many other nations in that area (who have subsequently rebounded...the PPP of China is almost at its highest it's been in recent years, and that itself should say something. It is 2nd only to the US, which is having financial issues recently (and the original reason for this thread)...another 2 nations to watch out for are India and Brazil, plenty going on there and may be the next big economic boom wink

I give your invention the worst score imaginable. An A minus MINUS!
~Wornstrum~

27 (edited by xeno syndicated 30-Oct-2011 04:30:59)

Re: china manipultes currency

To put things in perspective, here is a question.  What will happen when China can no longer under price its exports?  In other words, when China cannot produce anything for much cheaper than anyone else can, what will happen to their economy?

It is just a matter of time before China is no longer able to sell its products cheaply enough to compete with other global manufacturers.  First, the inevitably and ever-rising yuan is making its exports more expensive year by year.  Second, the coming labor shortage set to hit about 2015 will drive wages up and cause chaos in labor markets, further increasing the price of exports.  Third, scarcity of resources, making China increasingly import its resources, is likewise putting upward pressure on costs of manufacturing.  Fourth, while global manufacturers have had to implement innovative techniques into their production methods in order to compete with Chinese manufacturing over the last few decades, the Chinese manufacturers on the other had have not, enjoying the benefits of cheap labor and cheap resources to provide for their competitive edge. Thus, over the last few decades, a plenitude of inefficient, wasteful bad habits have seeped into many factories' production lines.  Fifth, the effects of pollution, corruption, inflation, and income gap disparity has not only further exacerbated production costs, but more importantly created in the Chinese consciousness a rather bitter attitude towards this so called period of "economic prosperity" that seems to have prospered so few at the expense of so many, thereby elevating the fears of the central government of social unrest and further increased costs in having to clamp down on the increasingly belligerent masses.

Now, after costs have increased, and after it is clear that there simply isn't enough domestic demand for Chinese-manufactured products due to ever-disappointing domestic consumption rates, Chinese manufactures will become increasingly hard-pressed to be able to sell goods at a profit in their own country and abroad.  Chinese manufacturers face further costs in having to implement last-minute efforts in transitioning their production lines fast enough to be able to compete with global manufacturers who have over the past 2 decades been cutting costs by implementing innovative, efficient changes to their production systems and have been doing so without lowering wages too much.  It may very well be the Chinese who initiate the coming trade war when they will have no choice but to impose tariffs on goods imported to their country.

When Chinese manufacturers cannot then sell their products in their own country, and cannot sell them in other countries, and it becomes clear that the promises of central government to provide for future prosperity for the Chinese people of they sacrifice themselves by working hard today is proven to have been a false promise, what sociological effects are to be expected, I wonder?

Re: china manipultes currency

Rising wages, rising value of the currency, falling unemployment rate...hmmmm this sounds like Singapore in the 1970's (I will get to this point later)...at no point did I suggest that the economy of China would not change in the future, it is inevitable.

The labour shortage I find difficult to believe considering the amount of migrant workers in China that are simply trying to find work. When the labour force is 815.3 million people, and the unemployment rate is 4.9% in 2009 =~40 million unemployed workers (rough maths, I would appreciate it if someone double checked tongue) I find it hard to imagine that there would be a labour shortage in China in the near future (next 5-10 years). I agree that with the aging population there will be issues that will arise, but the last figure trends I saw showed that there would not be any reduction in population size in China until 2050.

Now I promised to get back to the Singapore example. Singapore was very poor in the 1970's and it wasn't until manufactoring was outsourced to Singapore (in order to exploit cheap labour). Singapore's unemployment rate dropped, wages rose, and did this spell the end of Singapore's economy? No, they transistioned into R&D, shipping, and economic ventures in SE Asia. Same can be said about Indonesia (which now has a middle class larger than the whole population of Australia). How this relates to China? When we examine other nations that were in similiar circumstances, we are able to predict how the Chinese will react when wages increase, and employment drops. Right now they are using low manufactoring costs and cheap exports to push economic growth, but when the market changes, China will implement changes also...

I give your invention the worst score imaginable. An A minus MINUS!
~Wornstrum~

Re: china manipultes currency

You actually think China will ever become like Singapore?

There aren't enough resources on planet Earth for that.

Re: china manipultes currency

@Wornstrum: Your stats really understate the extent of China's labor surplus.  The country has an internal visa system that keeps a large portion of the populace living in impoverished regions dominated by subsistence farming.  They can't move to go work in the industrialized special economic zones.  If China starts dealing with significant labor shortages, they can easily allow migration from the subsistence farming regions to the industrial regions and resolve that.  This isn't going to be an issue for them in the near future.

@Xeno: Increasing Chinese prices are being driven by increasing Chinese wages above all else.  If Chinese wages increase to the point that they don't have a definite advantage over products produced in other countries, their consumer base should be capable of purchasing the slack.  I don't think it's plausible that Chinese products will become expensive enough to cause export problems for their economy and that Chinese consumers won't be able to fill that gap.   Seems like an accounting identity issue to me.  Your two concerns are mutually exclusive.

Re: china manipultes currency

"The country has an internal visa system that keeps a large portion of the populace living in impoverished regions dominated by subsistence farming.  They can't move to go work in the industrialized special economic zones."

They are able to move, but are not given any support (such as education, health care, etc), but as I mentioned before, there is already a floating population of (still really need to look into the actual figures, but from memory...) 150 million floating population (migrant workers working in different provinces). China has relaxed some of its internal immigration laws due to labour shortages in the past, allowing a floating population.

"You actually think China will ever become like Singapore?
There aren't enough resources on planet Earth for that."

Yes, because Singapore became a large consumer of natural resources after it's economy transitioned from largely manufactoring.../endsarcasm
My point was that economies change over history. Just because China is taking advantage of its cheap labour, doesn't mean that it will be like that forever. When it no longer is viable, the economy will transition. Just take alook at the education standards in China. Most high school students desire is to attend university (and the list of universities in China was long...it was an absolute bitch trying to pick 3 universities out of the entire list). Also, if you ever went to university, the number of foreign students from China? My university in Australia had so many students from China, most of whom studied all night long (would always find the labs filled with Chinese students). It has become part of the stereotype that Chinese students are highly dedicated to their education.

China has capabilities above and beyond the scope of manufactoring.

I give your invention the worst score imaginable. An A minus MINUS!
~Wornstrum~