Comments on: China economic forecasts: go herbal or Western? Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 By: Q Tue, 26 May 2009 05:26:30 +0000 China should use its reserves to buy US tech companies that produce future technologies that currently are super cheap and don’t have a huge market yet like green energy. This would prepare them for peak oil, the coming carbon credit market, and it would reinject the US economy with dollars, which would spur growth and spare the US gov’t and the fed from deteriorating their fanancial position trying to do the same.

They could also probably get a good deal buying or building US infrastructure with their huge dollar surplus, like ports, highways and windmills, and solar farms. They could buy up US farmland or mines etc. All they have to do to maintain the value of their surplus is invest them in the means of production of the real economy, while things are cheap. Forget treasuries. The US has things China actually needs.

By: Amateur Econ Mon, 25 May 2009 14:20:56 +0000 China derives over 25% of its GDP through export. It faces three huge challenges: (A) managing its huge excess capacity through a global slump; (B) stimulating internal consumption and services to replace exports as the engine of GDP growth; and (C) managing its monetary and fiscal policies through global instability of financial markets. The Chinese government cannot be faulted for trying to gloss over these challenges through rosy numbers. It needs to compete for investors money. Let us say, it has less so of a challenge in throwing window-dressing numbers to market its economy, than the stress-tests orchestrated by the US and UK.

By: John Kelly Mon, 25 May 2009 04:55:38 +0000 The east-west medicine analogy was a nice opening for this column. But for all the econo-babble that followed, about asking the patient how they feel. Do you believe numbers presented by the Chinese government? “Chinese officials favor the Baltic Exchange Dry Index ….”, oh yeah, that’s really what tells the story. ‘Coincident data’, try finding some coincident data on streets and where the Chinese people are sleeping after being locked-out of their jobs and dormitories.

By: Paul Mon, 25 May 2009 02:59:16 +0000 Although “decoupling” with the U.S. will eventually happen, it is still some ways off, and because most “analysts” are overestimating the strength in the Chinese (and Indian) economies, and because the Shanghai stock market is not cheap, this is surely not the time to be committing new capital to China. The widely-expected 8% growth in 2009 is an absurdity; 1-4% is more likely. When India reports on Friday, it will be seen to be approaching 0%, at least on a per capita basis. The only cheap market is Russia, and maybe HK or Singapore.

By: Paul Freeman Mon, 11 May 2009 17:45:16 +0000 Sorry to be unsophisticated, but a simple measure of China’s export economy is to look around the de-stocked warehouses and note the absence of Made in China products that people in the UK are not buying this year, but were buying early last year. No one, but no one, will convince me about any measure that suggests China is magically selling exports that no one is buying in the US or UK. Short term stimulus will be just that unless the world show gets back on the road. Not that it should, if we want to save the planet. Growth is not good, growth is tyrannical.

By: nyongesa Sun, 10 May 2009 13:51:28 +0000 Youri,

$2 trillion has not blown up in anyones face and is unlikely too. The U.S. national debt, is absolutley large, but relatively medium as a percentage of GDP, and puny relative to national wealth. This fact escapes many people excited by the big numbers shouted about during the economic crises. Layered upon that is plenty of wishfull illwill towards the U.S. for reasons that have little to do with economics.

This goes to Alan’s assertion of phantom assets. The U.S. capital stock, that is the physicall and other investments held by household and businesses, approach 65 trillion dollars. Against that some 10-15 trillion in debt is outstanding. That maybe absolutley huge, but is not large relative to the economy underpinning it.

So, it is important to take a sober and critical eye to the debt feuled disaster that has befallen the western economies, but these economies have built their wealth and strength over more than a century and have met their fare shae of disasters before, witness the destruction of WWII, they will recover, as they are brimming with educated, entrepreneural people encased within dynmic economic models.

It is the people that make china a dynamo, and the latest in the great stories of economic transformations of nations, to all our benefit. It is the people that also make the U.S. the dynamic economic system that it is. And the dollar has been a key anchor to China’s economic vitality. Transitions to a basket currency, will come slowly and eventually, but collapse is a term for those goldbugs selling gold. Not for sober discussion.

By: Youri Carma Sat, 09 May 2009 22:10:38 +0000 Correction: $2 trillion are the totale Chinese foreign exchange reserves like said before.$1.9537 trillion by the end of March to be precise.

Analysts believe China holds up to 70 percent of its foreign reserves in U.S. dollar-denominated assets, including Treasury securities.

So, 70% x $1.9537= $1.3676 say $1.4 trillion.

By: Youri Carma Sat, 09 May 2009 15:31:09 +0000 @David

Well you made a very sophisticated point there David, tnx!

But let me make a unsophisticated one, if $2 trill blows up in your face it does affect the framework though. Not that they couldn’t stand that blow but nevertheless.

By: David Fri, 08 May 2009 09:06:36 +0000 First, from the author: “Western economic theories have not been very successful in analyzing Japan, which managed to defy the Phillips curve by having both low inflation and a tight job market for years.”. Economic theory has advanced a lot since the 70s and I don’t think you can criticise all western economic theory based on the shortcomings of a single outdated concept.

I don’t really advocate those views China should be buying tangible assets that don’t help develop the country. I think they are doing some of the right things such as building new cities and improving old ones with the required infrastructure to provide future growth. The government’s job is to build a framework in which an economy can grow, not to take a view on whether it’s people need fridges, solar panels or large piles of gold sitting in a warehouse. The people can judge this much better themselves on a microeconomic level. All the government needs to do is grease the wheels (and in some places construct them) then it is doing a good job.

By: Youri Carma Thu, 07 May 2009 18:14:44 +0000 @P.D.O’Tyrrell

China is world’s largest gold producer. China has increased it’s gold by domestic purchases at local mines and refining scrap metal. They didn’t want to influence the International gold market. So, they didn’t have to use their dollar supply for that.

China now holds 1,054 tonnes of gold and has become the fifth largest official holder of gold as a part of China’s plan for more diversification. China recently made 70 billion Yuan monetary deal with Argentina. Malaysia, Indonesia, South-Korea and White Russia earlier cut a “Money line” deal of 260 billion Yuan as part of that plan.

China doesn’t want a dollar collapse cause it would hurt them as well having almost $2,000 billion as foreign reserve but they understand the reality of the situation in which the dollar is losing it’s appeal. How to get rid of the dollar whiteout a fast dollar collapse?

Well maybe steadily but gradually decoupling from the dollar is the answer. After all the dollar also has been gradually in decline for the last couple of years whiteout causing any panic reactions.