Is the quoted blue text below not EXACTLY what I predicted China would do several years ago? Perhaps you should also believe the last part of my old prediction? I.e. That there will soon (less than 5 years now) come a day when it is to China's economic advantage to destroy the dollar by dumping its remaining holdings of US bonds and taking that ONE TIME loss to send US and EU into deep, long-lasting, depression so that EVERY YEAR, its imports cost less without US & EU competitively buying the same items, like oil, iron ore, etc. I.e. China will say: "
Go to hell, USA. Your green paper is worthless now. We don't need to lend you money to buy our goods as now we mainly trade with other Asian nations and the suppliers of the energy, raw materials, and food stocks we must import." There is also a stronger, deep psychological reason why China wants to destroy the western economies. To understand it, read post 358 at:
http://www.sciforums.com/showpost.php?p=2668027&postcount=358
"... China has made it perfectly clear that they are unhappy with current U.S. monetary and fiscal policy, and with the direction the US dollar is heading. ...
China has begun to diversify their foreign exchange reserves by tweaking their investment allocation. This shift is the main driver that makes this issue vitally important. But if they're not buying Treasuries, what are they buying?
China is very active in Brazil, Russia and Venezuela. All of these emerging countries have a common element -- Natural resources. China is a major consumer of oil, iron ore, and base metals like copper. They are redirecting a greater portion of their foreign exchange reserves to these investments, circumventing funds that would generally be used to buy U.S. Treasuries.
China's foreign exchange reserves have grown so large that they eclipsed the World Bank in total global lending in 2010. Once upon a time, China was the biggest borrower of funds from the World Bank -- now they ARE the "Bank".
Many of the loans are cleverly tied to oil production and other resources that would be directed straight back to China. China is also lending to emerging markets that are denominated in Yuan, which are in turn used to purchase Chinese goods and equipment. China is clearly finding ways to diversify their exports and have less reliance on developed economies like the U.S. and Europe. ..."
Part of today's Email from:
The Tycoon Report <TheTycoonReport@tycoonpublishingllc.com>
Billy T comment: China's 6 increases in bank reserve requirements and other measures seem to be working as last quarter of 2010 GDP growth slowed to "only" 9.8% yet despite this, China’s full year 2010 GDP growth rate was 10.3%, but China’s rate of real growth is much higher. This is because GDP does NOT measure the material growth but the dollar value of it. Because everything made or service provided in China costs much less,, their dollar measured growth was only 10.3% but their production of goods and services increased something like 50%.
For example, a 1 Km taxi ride in Beijing cost only 10% of what a 1 Km taxi ride in the NYC does and is essentially the same “service” created and provided. Thus, to make the same dollar contribution to GDP, China must produce 10 taxi rides for every one that takes place in NYC. The same is true of a newly made bridge, or highway, or pig farm, or new city*, etc. The net effect of this is that even though China’s GDP is only 1/3 as large as that of the US China is already (or before the end of 2011) producing more goods and services than the US is. – I.e. a larger
real economy!
China's under valued Yuan also adds to this effect. E.g. if 7 Yuan to the dollar were changed to 3.5 Yuan to the dollar, then a million Yuan of economic activity becomes twice as many dollars of economic activituy. I.e. China's GDP, measured in dollars, would double by this change of FX rate alone! That is why looking at the
real production of goods and services is a more realistic measure of the economic strength of China. A higher valued Yuan is also a not yet much used but strong tool China has to fight inflation as after re-evaluation it will be more expensive for foreigners to invest in China, (lower FDI) etc. Thus, expect the upward movement of the Yuan to at least continue and probably accelerate.
They are making rapid advances in their military might too. More than a year ago, China shot down an Earth orbiting satellite. China planted the Chinese flag 3.5 miles down on the bottom of the South China Sea, now has a "carrier killing" ballistic missile that can sink a "zig -zagging" US carrier 1800 miles away, a stealth jet fighter, etc. See post 361 at:
http://www.sciforums.com/showpost.php?p=2671060&postcount=361
China is also advancing rapidly in home grown civilian technology: China has twice placed satellites in orbit about the moon (The next man on the moon will speak Mandarin.) Has and is exporting the world's fastest trains with more than the rest of the world's total miles of high speed tracks by end of 2011, has a rapidly growing domestic large aircraft production capacity, but demand is growing so rapidly that Boeing and Airbus will still be selling to China for a few years more, is the world's largest producer of both solar cells and wind machines (but the Danish Vespas owns their main wind machine factory).
--------------
*In this and the next 5-year plan, China will build 100 new cities for populations of at least one million each. The first, White Horse Village, was completed a few years ago. China two years ago began to permit the peasants to rent “their” land (it really belongs to the state). This has two very important effects: (1) it makes large efficient farms possible & (2) has greatly increased the urban populations in the interior of China (hence the need for new cities). These former pig farmers** etc. now have a secure income, rain or no rain, and the greatest mass urbanization in human history is well under way as a result. Population in many interior cities are expanding at more than 15% per year and their economies at about 18% per year, as China shifts production for exports from coastal cities to more production for domestic consumption in the interior, builds high speed rail to inter connect these new interior cities, etc.
For example, FoxComm, closed two coastal factories and relocated them to the interior as the salaries it had to pay in the costal factories to attract workers were increasing at 30% per year. Now that the peasants do not need travel far from home to get a steady, higher-paying, factory jobs compared to raising pigs and vegetables, Foxcomm has decided to go to where the workers are now staying – the interior.
The amazing transformation of China that has taken place in the last three decades (average GDP growing of nearly 10%) is really just getting started as China transitions to an urban, rather than rural, economy.
As they say: "You ain't seen nuttin yet!"
** This is why I frequently have called the peasants "pig farmers" with no intent to slur them:
Pork, not beef, is the preferred meat (with possible exception of chicken feet)
That could not have anything to do with Friday be the biggest demonstration / protest in Egypt taking up all the TV time could it? Of course not -that would imply the government is manipulating the news / us