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China's economic plan: Blame U.S.


Caesar

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"Is China planning to use a slowdown in the U.S. economy as an excuse to slow its own economy in 2008?

Sure looks like it: Nov. 15 gave investors the first clue of how China would justify the kind of economic pain it needs to inflict on its people in order to stop runaway inflation and financial speculation. The solution? Blame a U.S. economic slowdown for a plunge in Chinese export growth that will put an end to China's double-digit economic growth.

Certainly, putting the blame overseas is a whole lot easier politically than taking the heat for deciding the economy has to slow in the short term for China's long-term health.

As the Shanghai stock market climbed 130% in 2006 and then 101% this year (as of Nov. 15), investors chanted the mantra "No correction before the August 2008 Beijing Olympics" to persuade themselves to stay aboard the speeding train."

Source and full article

LOL this Chicom bubble is looking worst then what Japan had.

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Blaming the U.S. for China's economic slowdown means its also giving the U.S. credit as the main reason for rapid economic growth. While its a good thing that China's economy is slowing down a bit, I'd imagine that decreased exports to the U.S. are probably a large reason for it. U.S. consumption has been the fuel for China's growth and if it subsides it seems logical that growth would slow in China. I'm not saying this is a bad thing, however.

Furthermore, to make any solid analysis of whether the Chinese government's statement it true we need some actual statistics of how large a portion of the chinese economy is held together by U.S. exports and whether exports into the U.S. have actually decreased and by how much.

And even furthermore, at least on these forums it seems fashionable for americans to blame China for their economic problems. (Cheap labor taking our jobs)

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Blaming the U.S. for China's economic slowdown means its also giving the U.S. credit as the main reason for rapid economic growth. While its a good thing that China's economy is slowing down a bit, I'd imagine that decreased exports to the U.S. are probably a large reason for it. U.S. consumption has been the fuel for China's growth and if it subsides it seems logical that growth would slow in China. I'm not saying this is a bad thing, however.

Furthermore, to make any solid analysis of whether the Chinese government's statement it true we need some actual statistics of how large a portion of the chinese economy is held together by U.S. exports and whether exports into the U.S. have actually decreased and by how much.

And even furthermore, at least on these forums it seems fashionable for americans to blame China for their economic problems. (Cheap labor taking our jobs)

What's a sensible post like yours doing in a dumb thread like this? The last thing the world needs is China's economy spinning out of control.

Hasn't the US been aiming to devalue it's dollar to help it's exports, consequently making imports more expensive? Or is it that China's economy and it's major incoming trade partners, especially the major commodity suppliers are increasingly the place for investment dollars to go? Hence the Australian dollar has been hovering around 90 US cents of late. China's export growth may relax, but it's internal growth might just keep churning.

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What's a sensible post like yours doing in a dumb thread like this? The last thing the world needs is China's economy spinning out of control.

Hasn't the US been aiming to devalue it's dollar to help it's exports, consequently making imports more expensive? Or is it that China's economy and it's major incoming trade partners, especially the major commodity suppliers are increasingly the place for investment dollars to go? Hence the Australian dollar has been hovering around 90 US cents of late. China's export growth may relax, but it's internal growth might just keep churning.

Thank you, and that's an interesting point about the internal growth. I've understood that so far China's growth has been export oriented, but with the income rising in China it may be that the home market will keep economic growth at ridiculous levels all by itself. Another article by the same Jim Jubak that Caesar so selectively quoted gives some insight on Chinese inflation: How the U.S. trade deficit combined with the chinese rigid currency causes inflation in China.

Particularly interesting was the concluding paragraph:

"China's government has apparently decided to sacrifice inflation to growth. A 2% GDP growth rate in China would be regime suicide. Millions of jobless workers would riot in the streets of Chinese cities. A rate of growth near 8% would be ideal, Beijing's planners said at the beginning of 2007, because that is high enough to generate the jobs the country needs to stay even with its population growth and low enough to keep the economy from further overheating. And if it's a question of erring on the side of more growth, rather than gambling with the uncertainties of the effect of a stronger yuan on exports -- and jobs -- then full steam ahead."

I've understood that population growth isn't that high in China anymore? I don't see why they would "need" 8 % growth to keep the current level of employment.

Btw, I didn't know Australia is a big commodity supplier for China, or did I misunderstand you?

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Thank you, and that's an interesting point about the internal growth. I've understood that so far China's growth has been export oriented, but with the income rising in China it may be that the home market will keep economic growth at ridiculous levels all by itself. Another article by the same Jim Jubak that Caesar so selectively quoted gives some insight on Chinese inflation: How the U.S. trade deficit combined with the chinese rigid currency causes inflation in China.

Particularly interesting was the concluding paragraph:

"China's government has apparently decided to sacrifice inflation to growth. A 2% GDP growth rate in China would be regime suicide. Millions of jobless workers would riot in the streets of Chinese cities. A rate of growth near 8% would be ideal, Beijing's planners said at the beginning of 2007, because that is high enough to generate the jobs the country needs to stay even with its population growth and low enough to keep the economy from further overheating. And if it's a question of erring on the side of more growth, rather than gambling with the uncertainties of the effect of a stronger yuan on exports -- and jobs -- then full steam ahead."

I've understood that population growth isn't that high in China anymore? I don't see why they would "need" 8 % growth to keep the current level of employment.

Btw, I didn't know Australia is a big commodity supplier for China, or did I misunderstand you?

One possible reason I can think of is increasing efficiency in production. That means less jobs per factory, which means more factories are needed to sustain current employment levels. Or had you already thought of this?

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Btw, I didn't know Australia is a big commodity supplier for China, or did I misunderstand you?

Australia gets a lot of it's money from supplying a growing China with raw resources. A lot of it from mining. Our economy has been doing great from their growth.

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One possible reason I can think of is increasing efficiency in production. That means less jobs per factory, which means more factories are needed to sustain current employment levels. Or had you already thought of this?

True dat, that would explain it. Especially if they're still pretty labor-oriented there.

I mean...uhm...of course I had already thought of that... child's play really...uhm...just didn't bother to say it...so simple...uhm

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