China's Emergence As A Global Superpower

[Billy T]

Right, Africa and South America are going to replace the United States as an export market for China.

You do realize that the entire GDP of Africa is something like 1/4 that of China, in ER terms? And that South America is not that much more impressive? ....

Quad, you are smart, often better informed than I am, but you do tend to make the "turkey's mistake."
Always judge what will be by the past and then get a big surprise on Thanksgiving Day that things can rapidly change.

China is busy (while Uncle SAM is trying to stop the ship of state from sinking now) building a huge African trade relationship.* China needs the wealth of Africa (and of S.A. too) to bring four times the US population up to US living standards. Kmguru pointed out the FUTURE potential in this growing region. China is not making the turkey’s mistake but looking to the future with a 50 year plan (10 separate 5 year plans.) Agreed it will not happen overnight, but it will happen as I foresee the future. – I have a good track record of doing that correctly.

And I never said Africa & S.A. ALONE would replace US & EU markets. I expect more than 80% of their production will be for the rapidly growing domestic market in a decade at most. You can project current domestic consumption trends and see that their buying power will exceed that of the US in less than a decade - already Chinese are buying more cars, cell phones, and computers (as well as making more of them.) than the US is.

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*to give just one example: China is building many dams for power in china, including the world's largest now on line making power but half of all the dams now being built in the entire world are in Africa, and almost all of them are being built by Chinese. They are not the best “good will ambassadors” - They first build their own housing, communal kitchens, import their own food, etc., and offend the locals they hire and poorly pay for manual labor.

 

[kmguru]

I have a company that works with several American and Israeli Companies in Africa. My partners just came back from SA and Namibia. We have strong relationships with several countries from Libya to South Africa. Based on our hand-on knowledge, Billy's forecast is correct.

 

[quadraphonics]

China needs the wealth of Africa (and of S.A. too)

The "wealth of Africa?" You're talking about a place that is substantially less wealthy than China in the first place, and falling further behind. That continent can't even support its own population at a decent standard of living, let alone China's.

What China wants from the continents of the south is the same thing that everyone else has always wanted: to exploit them for cheap resources. China has no illusions about these spots becoming substantial export markets, and would not want them to in the first place (since it would involve them leap-frogging China in terms of development).

The wealth that they need is in the places that enjoy a higher standard of living than China, and so can provide export markets, investment and technology capable of fueling double-digit manufacturing growth.

(10 separate 5 year plans.)

"Five year plan" is another of those phrases that educated, informed people go to pains to avoid being seen using, especially in this context...

And I never said Africa & S.A. ALONE would replace US & EU markets.

Technically true, but you didn't suggest anything else, when prompted on the issue, so that's all I had to work with.

I had expected you to point to rising internal consumption in the first place, as this will account for far more demand for manufactured output than all of Africa and South America combined.

You can project current domestic consumption trends and see that their buying power will exceed that of the US in less than a decade

Only if current trends keep going. And current trends are fundamentally premised on China hosting a disproportionate share of world manufacturing employment, and an anemic share of world manufacturing consumption. That is where all the income that is boosting consumption there is coming from. And this, in turn, is premised on cost advantage and technology transfer, factors that by definition will decline in prominence as Chinese development approaches that of the rest of the world. More to the point, however, is the fact that one can't have an export-led manufacturing economy, without external demand growth. To the extent that Chinese manufacturing growth becomes proportional to Chinese demand growth (which is inevitable as China's economy becomes significant with respect to the world economy, and their standrd of living increases), said manufacturing growth will no longer be able to push the Chinese economy forward by impressive margins.

Current trends are plainly unsustainable. The only questions are: exactly how much longer can China keep operating this way, and how much disruption will they suffer when the inevitable end is reached?

 

[Billy T]

“… Contrary to conventional wisdom, China’s sharp economic slowdown was not triggered by a collapse in exports to America. Its growth began to slow in 2007, well before exports stumbled, driven by a collapse in the property market and construction. This was the result of tight credit policies aimed at preventing the economy from overheating. The global slump dealt a second blow late last year, but China is less dependent on exports than is commonly believed. Exports account for nearly 40% of GDP but they use a lot of imported components, and only make up about 18% of domestic value-added. Less than 10% of jobs are in the export sector.**
If a collapse in domestic demand led China’s economy down, it can also help lead it up again. Not only is China’s fiscal stimulus one of the biggest* in the world this year, but the government’s ability to “ask” state-owned firms to spend and state banks to lend means that the government’s measures are being implemented more rapidly than elsewhere. To take one example, railway investment has tripled over the past year …”

From: http://www.economist.com/finance/displaystory.cfm?story_id=13497030 (With two sentences made bold by Billy T.)

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* THE Biggest in the world wrt GDP and easily paid for from reserves, not by borrowed or newly printed money.
**US will probably have 10% unemployed. To match that by loss of Exports, China would need to export nothing, instead of being second only to Germany in exports (and likely to move into first place soon.)

SUMMARY:
China’s still growing and has an economically better system to sustain growth during global contractions than the US has. China is rapidly converting to a domestically driven economy that with exports paying for it imports of food stock, minerals and energy* will keep its economy “humming.” – Same point I have been making for years. Just wait until the average Chinese knows what a credit card is and has one. Then he will not be saving 40% of his income, but buying for a few decades like Americans once could, and there are four times more of them!

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*PS to Quadraphonics. Yes Africa is poor (in your sense of term), but that is not the "wealth of Africa" I spoke of. It is Africa's ability (with Chinese help to be sure) to supply these three needs of China. China will pay for these imports with material items the African (and South Americans too) need like rail roads, computers, power dams, ports, hospitals, etc. - I have given longer list of examples in prior posts. These payment items will be part, perhaps even 15%, of what the Chinese factories make during the next 25 years as China displaces the US (or the EU) as the world's wealthiest (in your sense) nation.

...Current trends are plainly unsustainable. The only questions are: exactly how much longer can China keep operating this way, and how much disruption will they suffer when the inevitable end is reached?

Yes, "unsustainable." But I think that applies to the world's largest debitor, who needs to borrow (or simply print) trillions more every year for as far as one can foresee, and not to the world's largest saver, with a population that also saves (40% of income) and does not even know what a credit card is, instead of having 5 or more maxed out to their limit!

 

[quadraphonics]

Less than 10% of jobs are in the export sector.

That's because something like half of the jobs in China are still in agriculture. Only something like 25% of Chinese jobs are in industry in the first place, so that 10% works out to something like 40% of all industrial jobs in China. More to the point, the current approach involves transitioning large numbers of those agricultural workers into the industrial sector (i.e., lots of the job growth is in that "10%"), and that can't happen if the industrial sector isn't growing rapidly.

Also, I note that you omitted one of the final paragraphs in your reference:

"The biggest task for China is to find a new engine for future growth. It cannot rely on exports, nor can the investment stimulus be sustained for long. Without stronger consumer spending, China’s growth will be much slower than in recent years. Reforms to improve health care and the social safety net will take many years to encourage people to save less."

This is not a matter of simply providing consumer credit to Chinese people. The reasons that Chinese savings rates are so high are related to the expectation that they will have to pay their own way in retirement (insufficient government safety net, and not enough kids to rely on because of the one-child policy), and the undervalued Chinese currency (they can't afford the imported stuff they'd like to buy). The former issue is not easily solved - and even the difficult solutions require generational time spans to work. The latter issue could be addressed rather quickly - stop holding down the yuan - but the result would be to make Chinese manufacturing way less competitive (and so destroy lots of jobs and growth), and the resulting spending would fall too heavily in the import category for it to make up the difference.

PS to Quadraphonics. Yes Africa is poor (in your sense of term), but that is not the "wealth of Africa" I spoke of. It is Africa's ability (with Chinese help to be sure) to supply these three needs of China.

China has many more than just 3 needs. They also require big export markets, and sources of FDI, technology and management expertise.

Don't get me wrong: I expect that we will see expanding bilateral trade relationships between China and continents of the South. China will be happy to have cheap access to raw materials. But they will not add up to a replacement for the present export markets.

But I think that applies to the world's largest debitor, who needs to borrow (or simply print) trillions more every year for as far as one can foresee, and not to the world's largest saver,

There's an old saying: "If you owe the banker $1000, you are at his whim. If you owe the banker $100000, he is at your whim."

I.e., given that so much of China's savings is denominated in US dollars, printing them on a large scale amounts to wiping out the value of China's savings. If the dollar were to truly tank, China's foreign exchange reserves would likewise become worthless, destabilizing their currency and so economy. And that's without noting that the loss of the US export market would itself knock the bottom out of the value of Chinese manufactured output, in the first place. Having gotten into bed with us, they cannot afford to see us fail any more than we can. And attacking the dollar doesn't amount to getting out of bed with us: that's like setting the bed on fire, with both of us still in it.

And, again, don't get me wrong: I expect China to continue to develop, and fully expect to see China's total PPP GDP exceed that of the United States before a terribly long time goes by. The per-capita GDP, however, probably will not match that of the US any day soon, if ever. Possibly more interesting than either of those, however, is what the ER GDP will look like. I expect that even after China's PPP GDP reaches parity with the US, the ER GDP will still be far smaller, owing to currency manipulation to maintain the US and EU as substantial export markets. And that means continuing to support the dollar.

As the Chinese economy grows, export-led growth will become less and less sufficient (since the disproportion between Chinese and external consumption will ease), and China will pursue a gradual, cautious move towards a consumption-led economy. In addition to the mentioned changes to social security and consumer credit, this will involve a gradual, orderly unwinding of Chinese exchange rate policy (and, with it, the big trade surpluses and accumulation of foreign exchange reserves). The big question, then, is how much longer export-led growth can persist, what state Chinese society will be in by that time, and what plans they come up with for making the transition. And as of yet, nobody really have much idea about those issues.

And while I do expect them to work out some reasonable way forward, I do not expect that they will be able to count on double-digit growth, once their economy (including labor demographics and technology) comes more into line with developed countries. The model of leveraging cheap labor to use imported technology to produce goods for sale to gargantuan external markets, will not work once 40% of your workforce is no longer in subsistence agriculture, invention (as opposed to adoption) is the only path to improve manufacturing and business efficiency, and the export markets aren't orders of magnitude bigger than the internal one. After all, the present ranks of developed countries can't figure out how to grow that quickly, and it's not for lack of trying.

What I don't expect to see is any sudden, unilateral Chinese move against the dollar (or Euro), or a tightening of trade and investment posture. That is suicide, and they know it as well as we do.

I also do not expect that economic parity (even in exchange-rate, per-capita terms) will result in a China that has comparable global influence to the United States. This is because China is a land power in Asia, surrounded by other titans, with a brittle foundation for political legitimacy (and serious issues in Tibet, Xinjiang and Taiwan to worry about): they have to use a lot of their resources and clout just to maintain their own position. The United States, on the other hand, is effectively an island: almost all of our resources and clout can be expended on exerting global influence.

 

[Billy T]

Have not read your latest, yet, will soon, but here is more of what I said form Bloomberg:

"... Urban fixed-asset investment surged by almost a third in March and industrial-output growth accelerated, reports accompanying China’s gross domestic product figures showed yesterday. ...
“The economy has gained significant momentum since February,” said Sun Mingchun, an economist at Nomura Holdings Inc. in Hong Kong, who predicts the economy will expand 8 percent this year. “We still expect a V-shaped recovery.”

A pickup in China will contribute “strongly” to growth in the rest of Asia by increasing demand for commodities and products from around the region, according to the World Bank. Wen has cautioned that while the economy is in better-than- expected shape, China is yet to establish a solid foundation for a recovery.

“China has bounced and I think it’s very important,” Barclays Plc President Robert Diamond said in an interview yesterday in New York. “The impact that that can have, if we’re right and we see this continuation in stronger Asian countries, is pretty phenomenal.”

UBS AG yesterday raised its estimate for economic growth this year to as much as 7.5 percent from 6.5 percent previously and Royal Bank of Scotland increased its estimate to 7 percent from 5 percent. Merrill Lynch expects second-quarter growth of 7.2 percent, climbing to 8 percent for 2009.

“China got its stimulus plan started months ahead of the U.S. and it’s really working,” said Frank Newman, chairman of Shenzhen Development Bank, who served as a deputy secretary at the U.S. Treasury from 1994 to 1995. “We see a lot of it in action because we are financing it.”

Economists have been increasing their forecasts since February. The median estimate of 15 surveyed by Bloomberg News before the release of yesterday’s data was for 7.7 percent growth this year, up from 7.2 percent in February. ..."

From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aQwLEtKXXrlc&refer=home

 

[kmguru]

Besides, China's export to US has not slowed down much either. Go to any Wal-Mart which sells 85% Chinese goods will tell you - the parking lot is usually full.

 

[Billy T]

... Also, I note that you omitted one of the final paragraphs in your reference:
"The biggest task for China is to find a new engine for future growth. It cannot rely on exports, nor can the investment stimulus be sustained for long. Without stronger consumer spending, China’s growth will be much slower than in recent years. Reforms to improve health care and the social safety net will take many years to encourage people to save less."

I have said that dozens of times. Told the CP understands it must provide better safety net so people save less and spend more. I have cited fact that domestic spending grew 18.8% (2007 vs 2006) and 22% (2008 vs 2007), etc many times. CP and everyone understand (and more importantly China is doing it) that China must become a domestic consumption orientated economy - I have even in prior post noted that big reason for this is that Joe American is broke - hardly can buy at Wal Mart, if he still wants to eat. China does not want to "replace the exports markets" - It wants to RAPIDLY grow the domestic market - good times make all like the CCP.

... given that so much of China's savings is denominated in US dollars, printing them on a large scale amounts to wiping out the value of China's savings. If the dollar were to truly tank, China's foreign exchange reserves would likewise become worthless, destabilizing their currency and so economy. And that's without noting that the loss of the US export market would itself knock the bottom out of the value of Chinese manufactured output, in the first place. Having gotten into bed with us, they cannot afford to see us fail any more than we can. And attacking the dollar doesn't amount to getting out of bed with us: that's like setting the bed on fire, with both of us still in it.

Exactly why I have said it will not happen soon, but note China's call for a new reserve currency to replace the dollar and the fact it no longer buys the longer term US Treasury bonds and is using ever more of its assets, as I have noted in several posts, to buy real items for its future need in long term contracts, paid for by Chinese made goods, not dollars. (Just couple of day ago, 10 billion to Congo for years of minerals to be paid for by rail road, new port and mining equipment.)

...As the Chinese economy grows, export-led growth will become less and less sufficient (since the disproportion between Chinese and external consumption will ease), and China will pursue a gradual, cautious move towards a consumption-led economy. In addition to the mentioned changes to social security and consumer credit, this will involve a gradual, orderly unwinding of Chinese exchange rate policy (and, with it, the big trade surpluses and accumulation of foreign exchange reserves). The big question, then, is how much longer export-led growth can persist, what state Chinese society will be in by that time, and what plans they come up with for making the transition. And as of yet, nobody really have much idea about those issues.

I mainly disagree with the "pursue a gradual, cautious" - China is pulling out all the stops to make it happen as fast as possible as they, like me, know Joe American and Uncle SAM are broke and China does not want it people working long hours to hold Joe up with cheap goods. The CCP needs to give these workers a better life QUICKLY for its own good. Why the domestic consumption is growing at ~20% /year. Price of pork has tripled as production cannot meet increased demand, why Chinese are now buying more cars than the US people are.

BTW China's electric hybrid (BYD's car) is now rolling off the mass production lines at $22,000 price. It goes 100km on full charge, which is gets overnight from house's current. Like all electric cars it is very fast accelerator and has top speed of at least 120km/hour. With more than a year on all others, and significantly lower price, China hopes to leave them in its dust, so don't think China will cease to export, unless for air pollution reasons BYD is not allowed to. (It is a good looking car, but CNN was not allowed to lift the hood to show the batteries.)

I do agree that as China’s workers enjoy more of what they produce and exports fall in significance, that China may only grow at 6% on average during the next decade. (But as I expect the US & EU will be in a depression then, there may be political unrest in the US and a desire to be more like China, even if some loss of freedoms is required.)

 

[quadraphonics]

the fact it no longer buys the longer term US Treasury bonds

In my understanding, they were never significant purchasers of longer-term US debt. They have always concentrated on short-term, low-return bonds, because the entire point was to drive down US interest rates and so buouy the US as an export market. So they dump the entire trade surplus into short-term bonds with returns that are at or below inflation. Basically, it amounts to taking the profit they make selling us stuff, and handing it back to us so that we can repeat the process. Out of this deal, we get cheap money and cheap products to spend it on, and they get massive investments of capital and technology, leading to manufacturing-led growth. And while that relationship is fraying, the fundamentals remain: we still need cheap money and goods, and they still need investment and manufacturing growth.

 

[Billy T]

In my understanding, they were never significant purchasers of longer-term US debt. They have always concentrated on short-term, low-return bonds, because the entire point was to drive down US interest rates and so buouy the US as an export market. So they dump the entire trade surplus into short-term bonds with returns that are at or below inflation. Basically, it amounts to taking the profit they make selling us stuff, and handing it back to us so that we can repeat the process. Out of this deal, we get cheap money and cheap products to spend it on, and they get massive investments of capital and technology, leading to manufacturing-led growth. And while that relationship is fraying, the fundamentals remain: we still need cheap money and goods, and they still need investment and manufacturing growth.

I don't think so. they need more grains as population is eating better, now more meat, etc. Brail's exports of soy to Chinas are still expanding. Nearly 1 million farmers/ per month may no longer come to the cities looking for factory jobs, but they still need greater supplies of pigs and chickens as population lives "higher on the hog" now days.

There is no "massive investment" gain for China by giving us the dollars to use to buy their production in an endless circle. The reason they have had so much FDI is that everyone with funds to invest can see that huge market and wants a piece of China's growth. A few US factories have even been crated up and shipped to China as that is where the profits and future markets are.

China's switch to a short term buyer of Treasuries is large part of why the yield curve has become so steep - only about two or three years ago it was occasionally inverted as China did not like to constantly roll its Treasuries so mainly bought longer term bonds. This drove the 30 year bond interest below the 2 year bond at times! - Crazy economically, but more convenient for China's fund managers.

 

[Billy T]

Here is some infromation on China's health care "safety net" needs and plans

"... Only half of all Chinese citizens are covered by basic health insurance, and this coverage is inadequate. It averages only $18 per person a year.

Although most hospitals in China are still government owned, they are under pressure to balance their budget and turn a profit. That's why healthcare costs have increased so dramatically in recent years — a hospital stay in China is about $800, or equal to 33% of urban and 92% of rural annual average per capita income.

This shortfall in China's healthcare system is one of the main causes behind the country's high savings rate and under consumption.... Chinese need to create their own safety net, saving large portions {~40%} of their paychecks in case a medical emergency arises.

The Chinese government realized that in order to boost economic growth and consumer spending in the country, it needed to take action by increasing a social safety net and enticing Chinese to save less and consume more. ...

On April 6, the Chinese government unveiled its final draft of the highly anticipated healthcare reform plan. Here are the key points of the plan:

(1) An increase in government healthcare spending of $125 billion (or 3% of GDP) over the next three years;

(2) Expand basic medical insurance to 90% of the population by 2011, with an increase in insurance subsidies from 80 RMB per person to 120 RMB per person;

(3) Upgrade medical facilities;

(4) Create a prescription plan with medications covered by insurance and costs controlled by government involvement in production and distribution;

(5) Improve public healthcare in rural regions by reducing the discrepancy between rural and urban medical services;

(6) Build 5,000 central health clinics in towns, 2,000 county level hospitals and 2,400 community healthcare centers.

The precise budget allocations for China's healthcare reform plan are yet to be determined, ... we'll likely see further clarity on these plans revealed during the National People's Congress in October. ..."

From: RobertHsu@ChinaProfitStrategy.com (His Email to me of this date. I can't give direct link into my inbox.)

SUMMARY (AND ANALYSIS of impact on GDP):
Assume that ¾ of 300E6 Chinese are urbanites, with annual income equal to $2,400 (from article). That is 900E6 x $600 = 5.4E11 dollars. If they were to save only 20% of their income and spend the other 20% they are now saving, then that would be an increase of 1.08E11 dollars buying goods and services. With the increased spending of the rural folk, let’s call it 1.1E11 or 110 billion dollars. Or a direct boost of GDP of about 2.5%. They will consume more drugs, need more nurses, etc. as well as buy more cars and cell phones, etc. so lets assume a modest multiplier effect of only four as this direct buying step propagates thru the economy. I.e. Better public health services easily has the potential to boost China’s GDP by 10%. Thus it is very conceivable (but ignored by most) that China will return to double digit GDP growth soon. Certainly the domestic market will easily continue with > 20% annual growth and in a few years, China will not need to sell anything to the US and EU. Then there is no reason for them to finance the US's ever growing debt's interest payments. China can, and will tell US to go to Hell - your green paper is worthless now.

 

[Billy T]

China's auto sales up 40% last month even with decline in sales of the larger models. More details at:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aGLz4gjXguL4&refer=home

Also CNN (international, at least) is having a week long report on Chinese auto industry. First episode showed many first time buyers and crowds at the Shanghai auto show. I was surprised to learn that there are more than 100 Chinese car makers active in the market, but the CCP is trying to make most merge. This is meeting resistance from local government officials who fear their local companies may close and they will lose tax income.

CNN showed young newlyweds buying their first - a BYD electric for one and another buying Chery Motor's model A3, which is very popular. They said they wanted to buy from a Chinese maker, but that would be politically correct thing to say in front of a TV camera so who knows how deep that goes, but it was said with apparent sincerity. All of the cars looked very modern, but they should in what may be the world's largest auto show. (It will run for 6 days and most of the 100+ makers have their latest model on display.) Most models keep the costs down by avoiding frills, like electric windows and seats, AC, and CD players etc. etc.

I expect China will sell more cars every month than the US does for many years. - Few have cars there and the salaries of many are rapidly growing in purchasing power. Car sales drive many other industries including paint, rubber, plastics, glass, copper, and of course steel, but so does the Chinese government buying for infrastructure (and unlike the US, they have the cash to do it with zero borrowing).

 

[quadraphonics]

Your analysis of the impact of healthcare has some serious problems. In the first place, health care is only one component of improved safety net required to decrease the savings rate, so I don't expect it to halve the national savings rate on its own. In the second place, building and operating such a system will cost money - lots of money - so you must account for this in estimating where the currently-saved income will go. Much of the money taken out of the savings column will go to taxes to fund this system. Finally, even if we accept that introduction of an improved health system will result in the increases you estimate, those boosts will be spread out over a very long time - closing the gap between rural and urban health services, in a country like China, is a generational undertaking - and so will not be expressed as double-digit growth rates.

Regarding the auto market, you are again confusing "sales" with "purchases." What you are talking about is Chinese (and American) auto purchases. That is not the same thing as China "selling" cars, since most of the cars being purchased in China are made by American and European companies. GM, for example, is the second-biggest auto seller in China (behind Volkswagen), with 10% marketshare. Likewise, many of the "Chinese" auto brands are themselves joint ventures between American companies and local manufacturers.

And, again, telling the US "the dollar is worthless" is exactly the same as allowing the yuan to (re)appreciate. And while revaluation of the yuan will ultimately be an appropriate thing, it must be emphasized that when this happens, it will cause a radical realignment of Chinese labor demographics. Even if we accept the (absurd) idea that the internal Chinese market will have become so large as to make the US and EU markets insignificant in supporting the prices of Chinese manufactured goods, the fact remains that getting from today to a strong yuan means that Chinese imports are going to expand drastically - i.e., it won't be Chinese manufacturers filling all that internal Chinese demand, if the exchange rate isn't held down.

 

[Billy T]

Quadyou are again missing (or ignoring) my point which is that the Chinese are buying more every year as their real purchasing power is rapidly growing. I have also noted that it can grow much more rapidly when they learn what credit cards are, stop saving so much, etc. which they can if they have more adequate social safety net.

I never said or even implied that only better health care was missing from their safety net. I have mentioned pensions and other aspect also. Post 971 was only about the just released 6-point plan to improve their health care services. Here is the first sentence of that post:

“Here is some information on China's health care "safety net" needs and plans: ”

That in no way requires that I be told there is more to a safety net than health care, especially as I have already posted about other aspects of the TOTAL safety net needs.

Likewise I have repeatedly stated that I am mentioning the fact that the Chinese are buying more cars monthly than Americans are as evidence that their purchasing power is rapidly increasing. I have stated that I was not talking about who was making the cars or profiting from their sales. I have in fact mentioned several times that Buffet owns 10% of BYD motors and also stated that I doubt any car is 100% made in any country as the auto industry is very global (In recent post I even mentioned that some Chinese company just bought the brake division of GM’s bankrupt former subsidiary Delco.) Thus for me, your idea of American made vs. Chinese made is sort of silly. Cars are global made and locally assembled.

When I said China sold more cars* that included the sales of GM and VW cars assembled in China. I operate on the premise that for every sale there is a purchaser, so tend to use these terms interchangeable when talking about the volume of sales or purchases. If you insist I will try to say “Chinese purchased more cars than Americans did again last month.” but as I have several times told my reason for making this observation (to prove the rapidly growing purchasing power of the Chinese) and also explicitly said that I am not talking about who is making the cars, you are being obtuse to keep telling me I should say purchased instead of sold.
later by Edit: I just heard more of CNN international's "TalkAsia" week long special on China. You need to correct them also as they too say:
"China is selling more cars monthly than the USA."

Also about the health care system improvement I did not say : I “expect it to halve the national savings rate on its own.” I made some assumption , clearly stated, and then said:

“IF they were to save only 20% of their income and spend the other 20% they are now saving, then that would be an increase of 1.08E11 dollars buying goods and services. …”

Of course it will cost money to train doctors and nurses, build hospital and clinics. Point 1 of the 6 even gives the estimated increase as: “increase government healthcare spending of $125 billion (or 3% of GDP) over the next three years”

I was illustrating that a 20% reduction in saving by the people for three years would more than double the government’s planned increase in spending for better health care. They of course would not go back to saving 40% of their income annually after three years so the government’s ONE TIME spending $125E9 over three years is a good LONG TERM stimulus even if it only causes a 5% increase in spending by lowering the saving rate to 35%.

In order to pull itself out of the current “Made in USA” recession, China needs to get its population to go into debt now and enjoy the good life now, not save for the future and work long, low-wage, hours so that Americans can buy cheap at Wal-Mart. The CCP understand this and is making all the right moves to achieve it, IMHO.

BTW, China’s GDP last month is now growing at more than 8% on an annualized rate and all most all economists expect China to recover much faster than the US, which still has negative GDP growth rate.
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*See car photos of three models, including BYD's world's first mass production electric hybrid and some specs on it at:
http://www.sciforums.com/showpost.php?p=2234852&postcount=128 (I did not want to double post.)

 

[Billy T]

China and US have GDPs changing by about the same rate now, but one is proceeded by an minus sign.

I.e. US GDP change in 4Q08 was -6.3% and in 1Q09 -6.1% If continued that will cut an ecomony in half in less than 12 years and China will double in about 10, assuming they do not get back to double digit growth. Their goal, 8%, which was achieved in March09, will double their economy in only 9 years.

Doubling of China's and reduction by 50% of the US economy will make them essentially equal.

US exports in March were lowest in 40 years.

 

[Billy T]

Hsu's latest Email quotes a recent report by McKinsey Global Institute:

" ... In 20 years, China’s cities will have added 350 million people—more than the entire population of the United States today.”

“By 2025, China will have 221 cities with more than one million inhabitants—compared with 35 in Europe today—and 24 cities with more than five million people.”

“By 2030, 1 billion people will live in China’s cities…170 mass-transit systems could be built…40 billion of square meters of floor space will be built in five million buildings—50,000 of which could be skyscrapers.”

In other words, as China transforms itself from a nation of farmers to a nation of urban dwellers, the equivalent of 10 New York cities will need to be built ..."

------------------Billy T comments:
I do not know anything about "McKinsey Global Institute" - it could even just be a sub-division of Hsu's research staff. Perhaps some one will search. It really does not matter to me as I have seen other sources noting the same sort of things.

I find 350E6 added in 20 years a little hard to believe as the peak migration into the cities has been abolut 1 million / month so migration would probably add ~240 million at most; however, there will be population growth within the cities, despite the official "one child" / family policy, so perhaps 350 million more urbanites in 20 years is plausible.

 

[Billy T]

Not only does US importing oil from Arab states fund the terrorists (and could be avoided, or at least greatly reduced, by removal of tariffs, quotas and surcharge of 54 cents / gallon against tropical alcohol) It also helps build the infrastructure of Asia which is killing US jobs:

"... China Petroleum & Chemical Corp., Kuwait Petroleum Corp. and an overseas oil producer agreed to build a $9 billion refining and petrochemical plant in southern China’s Guangdong province, the head of China’s energy authority said. ..."

From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aAQB32c6pfHo&refer=home

Again I ask, as my old thread's title does: How Dumb can US Voters be?

 

[kmguru]

US voters are very dumb as they elect representatives to congress repeatedly that pass laws to send jobs overseas (free trade not fair trade) and import labor to the USA undercutting prevailing wages in this country.

 

[kmguru]

Great article here

http://www.moneyandmarkets.com/five-economic-storms-raging-now-33659

 

[Billy T]

China is leading world in efficient power generation from coal (and has policy of closing older plants as new technology comes on line):

“… By adopting “ultra-supercritical” technology, which uses extremely hot steam to achieve the highest efficiency, and by building many identical power plants at the same time, China has cut costs dramatically through economies of scale. It now can cost a third less to build an ultra-supercritical power plant in China than to build a less efficient coal-fired plant in the United States.*

While the United States is still debating whether to build a more efficient kind of coal-fired power plant that uses extremely hot steam, China has begun building such plants at a rate of one a month. …”

From: http://www.nytimes.com/2009/05/11/world/asia/11coal.html?_r=1&ref=todayspaper

“… Supercritical (SC) and ultra-supercritical (USC) power plants operate at temperatures and pressures above the critical point of water, i.e. above the temperature and pressure at which the liquid and gas phases of water coexist in equilibrium, at which point there is no difference between water gas and liquid water. This results in higher efficiencies – above 45%. Conventional coal-fired power plants, which make water boil to generate steam that activates a turbine, have efficiency of about 32%. ..."

From: http://www.greenfacts.org/glossary/pqrs/supercritical-ultra-supercritical-technology.htm

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*And are less costly to operate as more KWH generated per ton of coal. Also less CO2 is released.