China's Emergence As A Global Superpower

[quadraphonics]

I don't think fixing it value to the dollar is "devaluating the Yuan" - that seems more like keeping it fixed, unless you are stating that the US policy is to devaluate the dollar.

Said devaluation occurred years ago, when the yuan was first pegged to the dollar. As part of that monetary policy, they slammed the value of the yuan by around 50% (IIRC) before pegging it to the dollar. They idea was to manufacture and lock in an exchange-rate advantage.

Until about three years ago (perhaps a little less?) they did let the Yuan appreciated wrt the dollar.

Only for a short time, and only by a very small amount. And that was a time when the Euro was appreciating wrt the dollar, so the overall monetary policy relative to their export markets as a whole was still effectively a peg.

I, like many others, think they will again let it increase in value wrt to the dollar.

They likely will eventually. The question is when, and by how much. And to that, it will neither be soon nor dramatic.

The Chinese are not dumb - they know they really have no choice but to produce more for the internal market to keep job growth up and keep the support of the population.

That, or bring back the currency peg to prop up exports, and inject a huge stimulus to hold up employment until the export markets recover. Which is what they did. If they were looking to make a leap to internal consumption and away from exports, their monetary policy would not have moved in the direction it did, and their stimulus would not have taken the form that it did.

exports mainly to Europe, China's biggest customer now.

But not for long, I expect. The Euro is in for a decline - people are talking parity with the dollar by year's end - and China isn't going to be able to devalue the yuan to track that without really pissing of the USA (since it would require devaluing with respect to the dollar as well).

The answer is that planes use more energy per passenger mile than trains

They also travel much slower and require the maintenance of large expanses of distributed infrastructure (neither of which are economical for regions with low population densities, which would be most of the US land area).

and in the long run are less economical.

And yet, they barely cost any less than travel by plane in the US, and almost nobody uses them. Apparently, riders value their time more than they value the slightly lower cost of train travel.

- By a huge factor when you start to speak of moving bulk goods like grains or coal by plane instead of rail, but then the US slower trains can be used for this too.

And so they are. High speed rail lines are not used for moving bulk goods anywhere that I know of. It's all passenger travel.

I only mention it to forcefully drive home that trains are much cheaper than airplanes

Again, the markets disagree with you. Especially if you place any value on your time - in my case, the extra time associated with train travel makes it vastly more expensive than travel by plane or car.

So by Christmas 2010, perhaps you will better understand why trains instead of airplanes.

I'm not holding my breath. A plane flight from here to see my parents for Christmas costs only about 10% more than a train ticket, but takes 20 hours less travel time. Accounting for my time at the rate I get paid at work, that works out to the cost of the train exceeding that of the plane by around $1000, each way. From a fiscal standpoint, I'd be crazy to take the train, even if they didn't charge me for the ticket at all. It's only economical if you place zero value on your time, or enjoy spending entire days on a train for its own sake.

 

[Billy T]

Said devaluation occurred years ago, when the yuan was first pegged to the dollar. As part of that monetary policy, they slammed the value of the yuan by around 50% (IIRC) before pegging it to the dollar. They idea was to manufacture and lock in an exchange-rate advantage.

That devaluation must be more than 10 years ago. I had www.wollframAlpha.com show a graph of Yuan's value for last 10 years (longest choice available) and did not see that 50% devaluation. When was it? In fact, the Yuan is more valuable now than 10 years ago (buys more dollars any way - perhaps that is just decline in the dollar?)

By chance the is some data in today's China daily:

" ... The yuan was not to blame for the US trade deficit with China." Foreign Ministry spokesman Qin Gang said... "A huge amount of facts has demonstrated the yuan exchange rate is not the main cause of the imbalance in Sino-US trade," Qin said in a statement on the Ministry's website. "Do not politicize the yuan exchange rate issue,"** he said. ...

During the first quarter of this year, US exports of goods to China increased about 50 percent year-on-year, compared with less than 20 percent for other regions. Since July 2005, the yuan has risen by about 21 percent against the dollar, raising costs of Chinese exports to the US. But the US trade deficit with China has not improved much, Qin said, ...

The blocking of high-tech product exports from US to China is also a major contributor to the deficit. "It is an important factor in causing such an imbalance."

The yuan appreciation will not solve the problem of US trade deficit, nor can it help improve employment, raise the low savings rate of US citizens and their excessive lending-based consumption. "Relevant people in the US political circles should think seriously about how to solve the structural problems of the US economy instead of pointing fingers at others."

From: http://www.chinadaily.com.cn/china/2010-06/15/content_9978120.htm
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** I would agree with him as that is making it harder for China to raise the value of the Yuan (face saving / not "kow towl" to US demands). I think China wants to raise the value of the Yuan to boost domestic consumption and smoothly cut its dependency on exports to US and EU (not have it crash) as I think they too expect at least a W shaped recession in US & EU, not a V shaped one so know their factory workers will lose jobs (politically dangerous for the CCP) if they can not sell more to Chinese and trade more with other Asians. I.e. Chinese need a more valuable Yuan to buy low value added goods from other Asians, putting Yuan in their hands so they can then buy more Chinese made high-tech, high-value-added goods. China is no longer the low cost producer of simple items like shirts, shoes, even bicycles so wants to import these things for greater economy (Just as Americans do) instead of make them domestically at greater cost. Real wages are surging in China with the labor shortage the stimulus has made, especially in the interior regions - 100 new cites, each for 1 million former farmers, new rail service etc. car sales surging etc.

 

[quadraphonics]

That devaluation must be more than 10 years ago.

Yeah, it was early/mid 90's IIRC.

I had www.wollframAlpha.com show a graph of Yuan's value for last 10 years (longest choice available) and did not see that 50% devaluation.

You can see it here:

http://www.data360.org/dsg.aspx?Data_Set_Group_Id=61

Note that there's steady depreciation of the yuan from about 1980 to 1993 (with a plateau in the late 80s) and then in late 1993 it takes a huge jump and then remains pegged through 2006. There's some appreciation over the following year, and then the peg resumes.

When was it? In fact, the Yuan is more valuable now than 10 years ago (buys more dollars any way - perhaps that is just decline in the dollar?)

Yeah, that's entirely due to the period where the peg was eased a few years back. You can't read actual real value from that chart since it's an exchange-rate graph - to tell whether a change in the yuan peg amounts to a change in real value, you first have to assess inflation in the dollar. But I'd have a hard time believing that the yuan is up in real terms.

Anyway, here's a recent article on financial statecraft as it pertains to the Sino-American relationship that I expect will interest you:

http://www.mitpressjournals.org/doi/pdf/10.1162/isec.2009.34.2.7

"This article appraises the ability of creditor states to convert their financial power into political power, drawing from the existing literature on economic statecraft. It concludes that the power of credit between great powers has been exaggerated in policy circles. Amassing capital can empower states in two ways: first, by enhancing their ability to resist pressure from other actors and, second, by increasing their ability to pressure others. As states become creditors, they experience an undeniable increase in their autonomy. Capital accumulation strengthens the ability of creditor states to resist pressure from other actors.

When capital exporters try to use their financial power to compel other powerful actors into policy shifts, however, they run into greater difficulties. As the economic statecraft literature suggests, the ability to coerce is circumscribed. When targeted at small or weak states, financial statecraft can be useful; when targeted at great powers, such coercion rarely works. There are hard limits on the ability of creditors to impose costs on a target government. Expectations of future conflict have a dampening effect on a great power’s willingness to concede. For creditors to acquire the necessary power to exert financial leverage, they must become enmeshed in the fortunes of the debtor state.

More often than not, the attempt to use financial power to exercise political leverage against great powers has failed. Looking at recent history, what is surprising is not the rising power of creditors, but rather how hamstrung they have been in using their financial muscle. To date, China has translated its large capital surplus into minor but not major foreign policy gains. To paraphrase John Maynard Keynes, when the United States owes China tens of billions, that is America’s problem. When it owes trillions, that is China’s problem."

 

[Billy T]

Thanks for the graph* of Yuan required to buy a dollar from Jan 1981 to now. Yes in late Jan 1993 they did devalue – made about 1.4 Y more required to buy a dollar but note that before that one time devaluation there was a relatively steady devaluation due to market forces I assume. If that steady devaluation is extended beyond late Jan 1993 it intersects the fix 8+ Y/$ line at about Jan2001. Thus a more charitable interpretation of this history is that China wanted stability in the exchange ratio and in late Jan 1993 decided to anticipate 8 years of the effect of this steady devaluation.

In this POV, since Jan 2001, the interventions of China in its FX with US has been to appreciate the Yuan for the last 9 years compared to the nearly straight line devaluation it experienced between Jan 1981 and the one time step devaluation. Since early 2005, the Yuan has been appreciating, even in absolute terms (up 21% now).

This is very consistent** with my POV that China has recognized the US and EU are in economic trouble and decreasingly (on annual averages) able to buy what China can produce. Thus, China is wisely doing many things to switch to a domestic economy from the old export model such as increase the purchasing power of the average Chinese. - Both by double digit real increases in their average wage and this 21% in what each Yuan of their growing salary will buy. Also The CCP is building a “social security net” so they do not need to save ~50% of their salary for old age and medical expenses etc. The CCP is giving them mobility by building new train lines. I consider extremely important, perhaps the most important part of the planned effort to switch to a domestic economy the change in land laws made a couple of years ago. Now the farmer who was working his tiny plot can rent it to larger, more efficient, producers.

With this income, he is moving to the new inland cities that are being constructed (100 with populations of at least 1 million are planned and about a dozen are nearing completion. – White Horse Village is one of the first to be finished and was subject of BBC documentary about two years ago.) This opportunity for construction jobs in the heart land is causing real problems in the coastal city factories – labor shortages and rapidly rising wages (Foxcom a very large producer of electronics like ipods etc. just upped their salaries by 30%, but most annual increases are in the range of 15 to 20% + additional benefits like free or low cost food from the factory kitchen and better housing for the workers.) In almost all of China, the minimum wage, by law, stepped up 20% less than two months ago.

We have a saying: “You can take the boy out of the country, but you cannot take the country out of the boy.” That is true in China too. The former farmers now living in White Horse Village openly piss in the street and take shits in behind trash cans in alleys etc. but their children, being taught in modern schools via many internet courses as well as a local teacher, are embarrassed about this, so it will change.


*BTW, WolframAlpha will calculate to order almost anything you want, including integrations etc. but you cannot post the results for more than about 10 minutes as they do not store the results for you to link too.

** That does not prove my POV is correct, but I cannot think of anything more that the CCP can do to accelerate the growth of the domestic economy, can you? Only time will tell if I am correct that China is growing its domestic economy as a percentage of its GDP. Why I suggested we call a truce on our debate and see if the domestic or export economic is the one that the CCP is stimulating.

 

[Billy T]

"... China's central bank, has decided to proceed further with the reform of the Renminbi exchange rate regime to enhance the RMB exchange rate flexibility, a spokesperson of the central bank said Saturday {19June10}. … with the reform, continued emphasis would be placed to reflecting market supply and demand with reference to a basket of currencies.

China's external trade is becoming more balanced. The ratio of current account surplus to GDP, after a notable reduction in 2009, has been declining since the beginning of 2010. {Billy T inserts in blue: Exports are declining relative to imports for more than a year as the domestic economy, stimulated by the CCP's domestic investments, soars.} With the BOP {Balance of Payments} account moving closer to equilibrium, the basis for large-scale appreciation of the RMB exchange rate does not exist, ..." {I.e. Don’t expect much change in the value of the RMB = Yuan. The CCP just doesn’t want it to crash with the dollar when that day comes, so will now switch the peg to a basket of currencies, not the dollar alone.}

From: http://www.chinadaily.com.cn/china/2010-06/19/content_9993010.htm
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"... In his discussion with students and faculty of Peking University's Guanghua School of Management, Cheung predicted that the RMB's internationalization would be China's final choice... {China has already taken big steps towards that with the signing of currency exchange agreements with more than a dozen central banks. After the dollar crashes, the Yuan will be the main currency central banks hold in their reserves.}
As to the financial crisis, Cheung said the cause was defects in the financial system. According to Cheung, the financial system of the developed countries was full of flaws, with excessive innovation on derivatives that turned out to be quite risky and the lack of regulation on rating agencies, ... China should learn from the mistakes of those countries, Cheung said. ..."

From: http://www.chinadaily.com.cn/bizchina/2010-04/16/content_9741604.htm

Value of the Yuan has been appreciating (1.47/121 => 21.5% in this graph):
http://news.bbcimg.co.uk/media/images/48122000
/gif/_48122994_chinese_currency_466.gifBut US restricts sale to China of much of what China wants to buy, so US exports to China have NOT gone up with the increased value of the Yuan - The BOP problem is US made and improving now, ONLY because Joe American can not afford to import Chinese toys, etc. now.

 

[Billy T]

"... If the annual appreciation of the currency can be kept below 3 percent, it will make it hard for speculators to profit, since they will have to pay dual-way transaction costs that will be close to what they can gain from a rising yuan, said Zhou Shijian, senior economist at the China-US relations research center of Tsinghua University. "If the yuan rises, it must be narrow-floating."

A hasty, swift appreciation of the yuan will make it difficult to control an influx of "hot money" and endanger the Chinese economy, Zhou said, ..."

From: http://www.chinadaily.com.cn/china/2010-06/21/content_9994140.htm

Billy T comment:
I.e. China is well aware that many want sell dollars to invest / speculate / in Yuan, and has means and will to limit that. The rapidly growing prosperity of the average Chinese consumer is a much more important source of hope for lowering the US’s chronic balance of payments problem with China than a ~3% per year appreciation of the Yuan. Thus the CCP's stimulus to the domestic economy, the 20% increase in the minimum wage, allowing small farmer to rent their land, the creation of Jobs in the heart land (building new railroads, new power plants and 100 new cities for 1 million population each) is much more beneficial to US's troublesome BoP problem than slight upward drift in the value of the Yuan.

 

[Billy T]

"... (CNNMoney.com) -- China's manufacturing sector is on the brink of passing that of the United States, according to a report released Monday. ... China's manufacturing sector nearly caught the U.S. output in 2009. The value of goods produced by China's factories reached about $1.6 trillion last year, compared to $1.7 trillion by U.S. manufacturers.

Mark Killion, a managing director at IHS, says China may be able to quickly close that gap following the announcement by China over the weekend that it will let its currency, the yuan, rise in value versus the dollar.

But even without a stronger yuan, China's manufacturing sector was already growing at a much faster clip than in the U.S. China's industrial output rose nearly 17% in May compared to a year ago, according to figures from the Chinese government, while Federal Reserve estimates U.S. factory output was up only 8%. ..."

From: http://money.cnn.com/2010/06/21/news/economy/china_us_manufacturing/index.htm

Billy T comment:
Recall this thread was originally called: "Do you think China will surpass the US someday?" Several still posting here said "yes" but none, me included, indicated it would be his soon.

The Chinese economy has been doubling about ever 6 years, for last 30 years. Now 2^5 = 32 fold increase and 2^6 = 64. With the Yuan rising wrt the dollar China's GDP is gaining on the US, just due to the exchange rate changes, but to remove these exchange rate effects, the Purchasing Power Parity measure of GDP is more meaningful.

By PPP the US GDP was almost but not quite twice that of China in 2009. - I.e. if China and US keep there their current rate of growth, the Chinese PPP GDP will pass that of the US in about 8 years. (Now it is only their manufacturing that is passing the US.)* I expect that "GDP passing" will be sooner as I expect the US growth will turn negative again in 2011 at the latest.

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* US GDP is mainly service sector, not manufacturing.

 

[kmguru]

I am sure U.S. Manufacturing numbers include assembly of products from imported semi-finished goods.

 

[Billy T]

I am sure U.S. Manufacturing numbers include assembly of products from imported semi-finished goods.

I am sure you are correct and that reminds me of how China gets around Brazil's duty on imported bicycles: They only send "bicycle parts" to Brazil. I.e. the wheels, petals, seat and handle bars come in one box and the frame in another. So Brazil "manufactures" a lot of bicycles, in world record time each.

 

[Billy T]

"... Over the past several weeks, a series of strikes and stoppages to demand double-digit pay rises have spread across China, including a large-scale strike at a Honda Motor parts plant in Zhongshan. And although only a few large strikes have been examined in depth by the media, there are strikes every day in China that go unreported. ...

In the past, the Chinese government mostly sided with employers during labor strikes, sending out police to arrest or dispel striking workers. But this year, both the government and government-controlled media have actually supported workers against the largely non-state-owned export manufacturing sector in coastal cities such as Shenzhen. There are three reasons
why policymakers in Beijing want higher wages for Chinese manufacturing workers, even at the expense of its export sector:

To enhance social stability. Since 2009, the Chinese financial system has pumped nearly $2 trillion into the economy, fueling a rapid surge in urban property prices and {other} domestic investments. The move created huge wealth for government/SOE officials, urban property investors, and government contractors. ... {but...}
To increase domestic consumption in China and decrease reliance on exports. Prior to 2006, China largely relied on cheap labor to enhance its export sector. As China became increasingly prosperous, Chinese policymakers realized that it is important to develop domestic consumption. ...
To develop Chinese interior cities and better balance economic growth between its coast and heartland. In the past, China's coastal cities, led by Shanghai and Shenzhen, prospered through export-driven growth. Yet, the population in central China is more than twice as high as in coastal cities. To solve employment problems, China wants to transfer some of the growth from the coast to the interior. ..."

From: http://www.moneyshow.com/investing/articles.asp?aid=GURU-20058&iid=GURU&scode=015363

Each of the three sections starting with red type is longer at the above source.

Billy T comment: China is very concerned about the US economy. It may collapse before China is ready and welcoming that (to lower the competition for energy and minerals it must import). Thus, China has put more than 90% of it huge stimulus into developing the domestic economy. Currently ~50% of China's GDP is investment developing the domestic economy. The CCP is even handicapping the competitiveness of some of their export economy (prohibiting expansion of some exporting industrial plants, closing others, especially plastic junk/toys that effectively export oil, and canceling tax rebates the exporters once had) as exporting still continues to expand too rapidly, as if US and EU buying would always be there.
(China and I expect that buying to soon collapse.)

 

[soullust]

at least china has never been an extremely aggressive country nation empire, she has seen them all, to wards other nations she did not consider her own.

 

[Billy T]

Rich and strong China has an “Achilles heel” (I think, but not sure what is "disposable revenues"):

“…The nation's chief auditor warned on Wednesday that local government debt will pose risks to the Chinese economy amid concerns that the debt could trigger a European-style financial crisis. The ratio of debt to disposable revenues* at some local governments has exceeded 100 percent, with the highest standing at 365 percent.

"The scale is large, and the burden is quite heavy," Liu Jiayi, director of the National Audit Office, said while making an annual audit report to the top legislature. Liu came to the conclusion after an audit of the nation's budgets. Debt repayment pressure for some local governments is quite heavy, with the total public debt of 18 audited provinces, 16 cities and 36 counties amounting to 2.79 trillion yuan ($410 billion), he said.

Among those debts, 1.75 trillion yuan was accumulated before 2009, while 1.04 trillion yuan is new, accounting for about 37 percent of the total, he said. China launched a $586 billion economic stimulus package in late 2008, and local governments have also stepped up investment to bolster the national economy amid the global financial crisis. …”

From: http://www.chinadaily.com.cn/china/2010-06/24/content_10011366.htm

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*Does anyone know what this ratio is for say, California? Also, am I correct to assume "disposable revenues" are funds whose destination is not already mandated by law. I.e. disposable revenues <<< total revenues.

 

[soullust]

Rich and strong China has an “Achilles heel”:

“…The nation's chief auditor warned on Wednesday that local government debt will pose risks to the Chinese economy amid concerns that the debt could trigger a European-style financial crisis. The ratio of debt to disposable revenues* at some local governments has exceeded 100 percent, with the highest standing at 365 percent.

"The scale is large, and the burden is quite heavy," Liu Jiayi, director of the National Audit Office, said while making an annual audit report to the top legislature. Liu came to the conclusion after an audit of the nation's budgets. Debt repayment pressure for some local governments is quite heavy, with the total public debt of 18 audited provinces, 16 cities and 36 counties amounting to 2.79 trillion yuan ($410 billion), he said.

Among those debts, 1.75 trillion yuan was accumulated before 2009, while 1.04 trillion yuan is new, accounting for about 37 percent of the total, he said. China launched a $586 billion economic stimulus package in late 2008, and local governments have also stepped up investment to bolster the national economy amid the global financial crisis. …”

From: http://www.chinadaily.com.cn/china/2010-06/24/content_10011366.htm

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*Does anyone know what this ratio is for say, California? Also, am I correct to assume "disposable revenues" are funds whose destination is mandated by law. I.e. disposable revenues <<< total revenues.

yeah the Chinese Government Is Probably staging this so there currency will remain crazy low, allowing them to undercut our markets and take more jobs.:bugeye:

 

[Billy T]

"... The Chinese steel industry may suffer losses in the third and fourth quarters due to the government's decision to remove export rebates, putting further pressure on mills. Those mills have already suffered from falling product prices and soaring raw material costs, leading industry experts said on Wednesday.

"The move is a huge blow to Chinese steel mills, especially those State-owned enterprises producing industrial steel plates, forcing them to cut production," said Yu Liangui, a senior analyst from consulting firm Mysteel.com. ..."

From: http://www.chinadaily.com.cn/bizchina/2010-06/24/content_10012646.htm

Billy T comment: China's hard hitting drive to rapidly switch to a domestic economy continues, is even accelerating in the last week with this and freeing the Yuan peg to dollar.

PS soullust's quick copy of my post was made before I had time to edit and place the omitted NOT in last line.
I hope soullust will edit and correct his copy of my post.

 

[Billy T]

“… {China} the world’s most populous nation and currently second-largest {electric} power market after the US currently has plans to bring 28 new reactors on stream by the end of 2020. The target is 40 gigawatts of total installed nuclear capacity by 2020, which the country’s National Energy Administration now expects to bring to 70 gigawatts after approving a wave of new applications. That’s up from just 9 gigawatts currently…

Southern Company (NYSE: SO) is going nuclear. The four-state southeast US utility has accepted $8.3 billion in federal loan guarantees to finance two new reactors at its Vogtle site in Waynesboro, Georgia. …”

From: http://www.investingdaily.com/ufo/17484/going-nuclear.html?cigx=d.k,stid.13699,sid.2064413,lid.201#

Billy T comment:SO’s two are the first new nuclear plants in US in more than 35 years, but at least it is a start. China is also building supper heated steam coal fired power plants that get ~50% more electric output from each ton of coal. China also has what I think is the world’s most ambisious wind, solar and hydroelectric power plant programs; but even so, in 2020, approximately 50% of China’s electric power will come from coal. Before that date China will have smaller percentage of its power come from coal than the US does. – I.e. China will soon be “greener” than the US in power production.

 

[soullust]

Billy T comment:SO’s two are the first new nuclear plants in US in more than 35 years, but at least it is a start. China is also building supper heated steam coal fired power plants that get ~50% more electric output from each ton of coal. China also has what I think is the world’s most ambisious wind, solar and hydroelectric power plant programs; but even so, in 2020, approximately 50% of China’s electric power will come from coal. Before that date China will have smaller percentage of its power come from coal than the US does. – I.e. China will soon be “greener” than the US in power production.

Pound for pound, I think not, I mean remember they need to provide energy for 4 times the People.

 

[Billy T]

Pound for pound, I think not, I mean remember they need to provide energy for 4 times the People.

Total electric energy consumption in billion kwh.
US in 2007 = 3,923.814
China 2007 = 2,834.996

Despite having only 1 / 4 the population, US consumed 38% more electric energy than China in 2007 (latest year data for both is available from: http://tonto.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=2&pid=2&aid=2 )

China is growing much more rapidly than the US, but it seems unlikely* that the US will be consuming less than China does in 2020. Thus even in absolute terms (your “pound for pound”) China will be “greener” by then. Anyway, I clearly spoke of the percentage of electric generation that is not fossil fuel based.

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* "unlikely" to most, but not to me, as I expect US and EU will be in deep depression in 2020 but not still growing China. If I am correct, then yes on an absolute basis China will be burning more fossil fuel than the US in 2020.

 

[Billy T]

India is beginning to challenge China for locking up future supplies of oil but not nearly as rich so usually loses - The US is not even in the game. Read details of their progress / struggles here:
http://noir.bloomberg.com/apps/news?pid=20601109&sid=agt6gwmx0kCI&pos=14

Note both mostly promise to pay with construction of infrastructure items if they do not just pay up front in full as at least rich China does. (China is trying to spend dollars ASAP from huge reserves before they lose value.)

 

[Billy T]

This one appears to be an electric train. (Overhead wires at left of photo)
A high-speed train pulls out of the Shanghai Railway Station, on Thursday July 1, 2010.

"... China to build two new railways in underdeveloped western regions...to boost economic growth and ease pressures on existing routes.

One of the railways will be a 401-kilometer-long passenger expressway route linking Lanzhou, capital of Gansu Province, and Baoji, an important city in neighboring Shaanxi Province ... It will connect northwest China with developed eastern China via an existing railway...

The other line approved for construction will link Lanzhou with the capital city of southwestern China's Sichuan Province, Chengdu. It will be 463 kilometers long and pass through Jiuzhaigou, a high-altitude valley with lakes and waterfalls near the Sichuan-Gansu border...

Trains will travel at 350 km per hour {219mph, twice as fast as any US train} on the Lanzhou-Baoji route so the trip will take 1.5 hours compared with the current 7 hours. The Lanzhou to Chengdu train ride will take 4 hours, compared with the current 21 hours. ..."

From: http://www.chinadaily.com.cn/china/2010-07/01/content_10048157.htm

 

[Billy T]

"... General Motors, the iconic American automaker owned by U.S. taxpayers. ... sold 1.21 million vehicles in China, the company announced Friday. Its U.S. sales, announced Thursday, came in at 1.08 million. GM's Chinese auto sales are growing at a blistering pace, up 48.5% over the first half of the year. GM's U.S. sales are also showing improvement ... But the growth is a far more modest 15% in the first half of the year. ..."

From: http://money.cnn.com/2010/07/02/news/companies/gm_china/index.htm

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"... China's domestic auto output of 8.47 million in the first half of the year tops the world's auto industry, ..."
From: http://www.chinadaily.com.cn/2010-07/05/content_10067139.htm

Billy T comment:
Ironically, Chinese buyers make bail-out the US taxpayers as GM is increasing profitable, IN CHINA. GM sold 12% more cars in China than in the USA! Because that is where the real purchasing power of salaries has double digit growth (is not shrinking) and the new car market has barely opened. (I.e. is not mainly a replacement of old cars market). I.e. expect GM China to sell 100% more cars than GM USA does in a few years.

GWB's "Trickle down" tax relief to US wealthy built more modern factories and more jobs there than in US. Chery is planning to soon begin exporting to the US market nice cars at approximately half the US made cost.

The US is well on its way to becoming an agricultural products (and perhaps coal) supplier to the more industrial China.