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Originally Posted by Jesus H Christ
Great post, but you need to consider that the US is also China's largest "raw" material supplier. We are not "just" trying to slow their economy, but forge a more secure symbiotic relationship. We did the same exact thing to Japan in the late 80's, Taiwan in the late 90's, (remember when everything was made in Taiwan?) and Korea in early 2000. In short, we make them filthy rich and look!..the US real estate market just happened to crash...  |
If the US is China's largest supplier of raw material, in theory, that should help the trade balance? I'm not familiar with raw supplies from the US to China (apart from steel and other obvious exports), but sounds that trading in these raw materials is not on the same level as consumption?
China is consuming raw product at an awesome rate eg there were reports of 56 bulk freight ships lined up outside one port for up to two weeks waiting to unload coal from Australia at a cost of $60K/day *lol* China is currently comsuming around 20% of the bulk freighters in the world and has forced freight charges up globally because of this - there are not enough ships.
China is a strange country to form alliances with. They have been building economic relationships globally - both at a govt and corp level. It is obvious they are investing in other countries with a view to spreading economic ties. They 'know' their forseeable future is in global trade.
At the same time all is not sweet - they have massive environmental problems and these are increasing. It costs many billions to try and "normalize" environmental damage and that's probably a lost bet as long as the rest of the world wants cheap product.
It's hard to say, but the expanding western Pacific rim/Asian economic powerhouse is going to be the biggest this world has ever seen and possibly unlikely that the region could be looked upon as another Taiwan or Korea - it's a much bigger fish.
Doubt that the Asian scenario will be the last in economic shifts in our lifetimes - Russia is probably next and they have more natural resource potential than any country.
China is "rich" thru their own efforts, cheap labor and via the companies who have invested in China (tho "rich" can be relative when you look at their other problems). Sure, China's customers played a role in this as well - but, that is a predatory role and these customers would probably not exist at the current level unless the Chinese product was cheap. Even corps investing in China have a predatory element (all corps are predatory by nature) - they want product for next to nothing to sell globally and show a healthy profit for their shareholders and don't really care about China as a country - the main factor is cheap labor.
PS The US home price devaluation is generally more related to optimistic forecasts, excessive (and predatory) lending where folks really can't afford these levels of mortgages. The main problem with the devaluation is that the home market within the US can have an affect on around 24% of the economy when you include all folks involved in construction/realtors/finance/insurance/domestic product manufacture and the businesses employing them - not good news.