Thanks to the 35 million Chinese workers each saving three dollars a day ..

jimmmy

David McWilliams had an interesting point on his RTE tv programme last night. He said it was the average Chinese worker, saving a few dollars a day out of his seven dollars a day wage, who was lending the money to our western governments....or words more or less to that effect. It showed McWilliams in a shed in China, and the Chinese person not too happy with his lifestyle either. ( I suppose he was looking at the clothes and affluence of the western camera crew ). It would take 35 million workers each saving two euro ( about three dollars ) a day , to accumulate the funds to lend our government the 70 million euro a day it is borrowing. For how much longer is this sustainable ? Will the Chinese keep on making our clothes / sports goods / hardwear / toys / consumer items and lending to the rest of the world , for ever ? They have more graduates now each year than the entire population of Ireland. McWilliams point I gather was about how the poor in the far east are subsidising the rich people our western governments pay. Anyone else see the programme ?
Methinks we are lucky we can still borrow the 70 million euro a day, and there are people in the world willing to work for very little so all our shops are well stocked. McWilliams seemed to hint at that as well eg he expained how the Chinese were starting to play hardball with the Australians, where they get a lot of their raw materials from...

Dannyboy83

Yes, he also had an article recently about how the Chinese had been reducing their exposure to American (bad) debt, by acquiring mines throughout the world, Australia being an example.

I still think its a tad over exaggerated, the USA still leads in everything except GDP (only marginally overtaken by Europe which has twice the USA's population) and still about 4 times worth of Chinas.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

USA will still have the technology, the weapons, the army, the universities etc. etc.

Assuming the USA doesn't grind to an immediate stand still/enter a time freeze, I can't really see how China can overtake all that development and technology in the West within our lifetime, but as he said himself, nobody believed the British Empire would collapse 100 years ago, and it happened.

ei.sdraob

if china deside to dip into their dollar reserves, the dollar would collapse and they end up with alot of paper


theres a reason why they keep buying dollars, it keeps their currency artificially low. This makes (the average) Chinese alot poorer than they would be, and of course few people on top close to politicians and "the party" make alot of money

hmm wait that last sentence sounds familiar


lets just say the Chinese government rather have 1 billion people employed at slave wages than 1 billion people plotting how to overthrow the said government, so they will keep buying useless american paper

ei.sdraob

Dannyboy83 wrote: »

Assuming the USA doesn't grind to an immediate stand still/enter a time freeze, I can't really see how China can overtake all that development and technology in the West within our lifetime, but as he said himself, nobody believed the British Empire would collapse 100 years ago, and it happened.

simple, they will buy them with Americans own money, that what they are doing now, acquiring raw resources

the only thing safe would be anything defense related

as for technology, the dont respect IP laws so they quite literary take/steal as much know how and IP as possible

the rest can be leapfrogged by making few strategic investments

notice how sizable amount of US academia and students is composed of Chinese

mike65

Just as warfare has gone asymetrical, I think economies like the USAs and Europes could be vunerable to a less developed competitor pulling a move which suddenly shifts the goalposts. China is buying up anything and everything that'll feed growth, no matter where it is or who owns it. East Africa is becoming a dependency.

the_syco

jimmmy wrote: »

They have more graduates now each year than the entire population of Ireland.

How many of those graduates have degree's recognized by businesses in the US or Europe?

jimmmy wrote: »

McWilliams seemed to hint at that as well eg he expained how the Chinese were starting to play hardball with the Australians, where they get a lot of their raw materials from...

They are doing so currently with the US. The chinese are not using the raw material, but are restricting the amount that the US can buy, thus limiting the industry there. Forget the part. Think it's copper.

Joey the lips

Thanks for posting this i think its a brilliant and interesting program

jimmmy

the_syco wrote: »

How many of those graduates have degree's recognized by businesses in the US or Europe?

Not that relevant, as most Chinese cannot immigrate in to Europe. How many Irish graduates have degrees that would be recognized by businesses in China ?

jimmmy

ei.sdraob wrote: »

lets just say the Chinese government rather have 1 billion people employed at slave wages than 1 billion people plotting how to overthrow the said government, so they will keep buying useless american paper

If you were a chinese worker, would you be happy to see your hard earned savings being used to be lent to bail out well paid people in western governments ? Do you think we in Ireland and the west can borrow from places like China for ever ?

gizmo555

Dannyboy83 wrote: »

but as he said himself, nobody believed the British Empire would collapse 100 years ago, and it happened.

If McWilliams said this, then as usual he's talking equal parts hype and exaggeration, and presenting commonplace ideas as unique personal insight.

For example:

. . . Admiral Fisher, later First Sea Lord, in a 1901 letter. In a 1917 letter, reprinted in his Memories (1919), an (unnamed) Privy Councillor wrote to Fisher: 'I remembered your old saying "Some day the Empire will go down because it is Buggins's turn."'

http://en.wiktionary.org/wiki/Buggins's_turn

Or, more classically,

`My name is Ozymandias, King of Kings:
Look on my works, ye mighty, and despair!'

Diarmuid

Dannyboy83 wrote: »

the USA still leads in everything except GDP (only marginally overtaken by Europe which has twice the USA's population)

It's probably more accurate to quote the GDP/head
US = $47,440
EU = $36,812

FTA69

Similarly China 120 odd years ago was a despondant place completely under the control of the USA, Japan and European powers; the idea that it would grow to become an economic monolith was simply laughable. Us here in the West tend to take a very myopic view of history, and sometimes assume that western powers have always been culturally, militarily and economically superior. We haven't. Nobody expected the Arabs to rise as a world power that would overthrow the Romans and Persians, but yet they did.

Write off China at your peril.

the_syco

jimmmy wrote: »

Not that relevant, as most Chinese cannot immigrate in to Europe. How many Irish graduates have degrees that would be recognized by businesses in China ?

Most of them I'd say

Interesting enough, I know there is one college in China which has formal links to Carlow IT. They are taught to the same standards as in Carlow IT, and receive a degree from Carlow IT. This enables them to get work in the USA or the EU, as a degree from Carlow IT is seen as good, in both places.

whynotwhycanti

The chinese are taking over and there is nothing we can do about it. So what we if we don't recognise their degrees over here or any other western countries (which i am pretty sure is not the case), it doesn't matter especially for skilled qualification i.e. engineers, scientists, medics, accountants.

The US is 19trillion dollars in debt and increasing. China has been making extremely smart and coy investments around the world, buying mines, huge amounts of gold and silver, opening up trading realtions with differetn governements. They have been patient and are smart as hell adn are going to make their move soon. The main issue with the US and perhaps somebody could tell me if it was mentioned in the programme, is the devalueing of the dollar. The Fed is printing out fiat money like there is no tomorrow and the world is coming aware of this. Russia, China and a few other big countries were out there only the other week lobbying for a new world currency to replace the dollar. If the dollar contiues to weaken and gold continues to surge, the dollar will become so devalued that it will collapse. If the dollar collapses, the days of America being the superpower of the world are over.

I'm not saying i want this, its just as it is.

ei.sdraob

Diarmuid wrote: »

It's probably more accurate to quote the GDP/head
US = $47,440
EU = $36,812

GDP is a useless figure, here is why

GDP = private consumption + gross investment + government spending + (exports − imports)

in USA the GDP is being distorted hugely by ginarmous borrowing

anyways:

* private consumption is down
* gross investment is down
* government spending is up
* imports down
* exports down more

jimmmy

FTA69 wrote: »

Write off China at your peril.

Very true. At this stage most western manufacturers are getting stuff made there , branding it, and finding it is better quality ( and a lot cheaper ) that anything they ever made themselves , it is scary. What happens when western governments go to borrow more money off the Chinese and the Chinese say sorry, no can do ? How soon will that day come ?

Thirdfox

People aren't worried about the Japanese? Who own as much US debt as China (around 21% to China's 23%).

Speaking as a Chinese - we look at the developments as a "re-rising" - over the last 5000 years China has been through multiple rises and falls. The 19th - early 20th century was a low point, now we're going through our cycle again.

I'm working here in Ireland to foster better relations and stop people (perhaps from both sides) from going crazy over China's rerising.

As for US Treasury bonds - China has moved around 25% of its US bills into other currencies. It has also called for the IMF bond to act as a replacement reserve currency to the dollar (a call supported by Joeseph Stigeliz - recent Economics Nobel prize winner from Chicago).

"China" (or rather the CCP), does not want to repeat the problems of the past when one empire fell and another took its place. I believe that the CCP does not seek hegemony unlike the US but just wants to be allowed to do its stuff, within its own sphere of influence. Of course, those intentions could change in time if excess power goes China's way. But hopefully we can move away from the days where one superpower dominates global politics and towards multilateral power sharing - US, EU, China/ASEAN, AU and the other BRIC countries etc.

edit:
Apparently we in Ireland hold 1.63% of US debt too (approximately 54 billion dollars)

jimmmy

Thirdfox wrote: »

Speaking as a Chinese - we look at the developments as a "re-rising" - over the last 5000 years China has been through multiple rises and falls. The 19th - early 20th century was a low point, now we're going through our cycle again.

I'm working here in Ireland to foster better relations and stop people (perhaps from both sides) from going crazy over China's rerising.

Given the vast sums the west is borrowing from China + the oil producing nations etc , do you think the west will ever repay this debt ?
When do you think China will stop lending to the west ? What will happen then ?

Thirdfox

I believe that things will rebalance in time - how violently that rebalancing takes place is up to the leadership of the countries involved. I don't think we should apply the generic label of "the West" to so many individual countries with individual interests and agendas.

China's consumption will rise as the middle classes grow in size - though I hope this can be carried through responsibly (imagine every Chinese person driving a Humvee!) This will lead to countries that can supply China/India and the other growing countries with trade income. Also, the flow of capital is only just one of the income streams for a country - for the US/Germany/Japan (who own 90% of the world's patent rights) IP is a massive invisible income generator. You hear the Irish government talking about the knowledge economy - (that's what I'm trying to expand on in Ireland) - that seems to be the short/medium term industry the "West" should concentrate on (along with the financial sector).

But in the long term - your guess is as good as mine - China is still (though this is (fast?) changing) acting under the principle "stand in the background, do not demonstrate your strength and have asymmetrical advantages to the dominant power". Who knows if China is going to make a "grab for power" as it were. I personally don't think so, even just from the cultural history of the Chinese people.

jimmmy

Thanks for the reply. I wonder if say Ireland will ever repay this debt ?
Or if America will, given the scale of it ?
No household or business that borrows vast sums can continue doing so forever.
Assuming for example America continues to borrow as it is at the moment - which has accelerated since the 1970's era - when do you think China and the other debtor nations will stop lendingto it ?

I forgot to ask....do you think there will ever be serious enough civil unrest in China - eg the labourer fed up with his standard of living - to threaten Chinas progress as an economy ?

Thirdfox

The first question, I'm not involved enough in economics to give an informed opinion on it (I like to look at socio-political/legal aspects of the development). Just from what I read though - as long as America is no.1 then its word is worth money - whether others will ever call for that pound of flesh ultimately (or whether it would be needed) that's a different question. Debt isn't necessarily bad - it depends on what you do with the money (case in point - our government borrowing 700 million a week to pay for services/wages = very bad news...long term useful capital projects can be bought on borrowed money though).

As for your second question - I've been asked this quite often. I don't think the problem is going to be with peasants unhappy with their material wealth but rather the expanded middle class saying "we have enough money, and now we want greater freedom of speech etc" - hence you see the CCP taking pre-emptive action against corruption (President Hu stated that corruption was one of the biggest problems facing the stability of the country (i.e. the CCP)). It will be interesting to see what will happen - normally tackling corruption requires quite a free press, more democratic elections...but those things also sap the CCP's control and power. And this is the one key issue that could bring down the government (and while many Chinese intellectuals, though perhaps not fond of the CCP, prefers it over the anarchy that could potentially happen with a sudden collapse in CCP power - see Russia post USSR, and why many people think that the students were misguided during the Tiananmen protests). Can the CCP self-regulate? Can it tamp down corruption at the local level? This will define what happens to China over the next 50 years.

Oh and as a side-note to those who didn't know, there are elections in China at the local level. All candidates are from the CCP but there are certainly "factions" within the CCP that have their left/right wing interests (within the general framework of the CCP). Some people seem to have the impression that the CCP is one giant body that thinks and acts as one...this is quite untrue - the political manoeuvrings/backstabbing/grooming that takes place within, say, Fine Fail or Fianna Gael are present in the CCP too...behind closed doors (or are open secrets). This is the main beacon of hope I have that the CCP will expand on as it experiments with further democratisation of its political process.

johnathan woss

Thirdfox wrote: »

Oh and as a side-note to those who didn't know, there are elections in China at the local level. All candidates are from the CCP but there are certainly "factions" within the CCP that have their left/right wing interests (within the general framework of the CCP). Some people seem to have the impression that the CCP is one giant body that thinks and acts as one...this is quite untrue - the political manoeuvrings/backstabbing/grooming that takes place within, say, Fine Fail or Fianna Gael are present in the CCP too...behind closed doors (or are open secrets). This is the main beacon of hope I have that the CCP will expand on as it experiments with further democratisation of its political process.

Good point.
The difference in local candidates in China is probably similar the difference between local republican and democrat candidates in the USA, or the local FF and FG candidates here in Ireland.

Sad but true.

DJDC

Its going to be a really interesting next 20 years or so in China to see how it reacts to its own changing society and also outside pressures. Most Chinese I meet are usually very supportive of the CCP with the main reasoning being with such a massive population, centralised control is needed otherwise anarchy will ensue. For me and most political observers the main threat to China is from within and not from outside influences. This will either be of a political nature e.g. military taking over or in the form of ethnic seperatism. Han Chinese are not a unified people and more similar to Caucausians rather than French, German etc. The indigenous peoples of Hong Kong look completely different from those in Manchuria for example. There is a significant danger there that when the economy stops growing at 5% that unemployment and rural poverty may lead to ethnic divisions especially on the fringes of the country in Xinjiang and Tibet. Chinas massive population is what gives it so much power but could also be the thing that leads to its downfall.

Also as ThirdFox said it is silly to think that Japan can be ignored in all of this. They are the second largest economy in the world and still bigger than China. The animosity between the two countries is still significant after Nanjing etc. so I can't see Japan allowing China to become a dominant force without a fight.

Thirdfox

Oh yes, the antagonism between Japan and its neighbours has been rising in the past few years (though right now thankfully things seem to have calmed down somewhat). There has never been the same kind of closure post WWII like the Germans in Europe. Nationalism and jingoism is spreading in the East Asian countries (specifically Korea, China and Japan). I wrote an article on this topic some time ago back in China about how cross border dialogue was needed to defuse any potential future conflict (whether on the battlefields or economic).

I've had the privilege of living with a Japanese roommate in China for a year of study and we discussed these issues calmly and reasonably. But there are worrying signs that as China grows more powerful:
1) more Chinese youth want to seek closure (through some sort of eye for an eye action...or boycotting Sony like a few years ago)
2) more Japanese youth see China as an enemy who (1. doesn't understand that Japan has paid her war dues through loans and capital projects 2. tells lies and exaggerates about what Japan actually did during the war - my roommate for example doesn't believe that the Rape of Nanking happened - say that to an ordinary Chinese person in Beijing and you might get beaten up).
and the same in Korea, etc etc

WWII in Asia has a huge amount of information that we in the "West" often do not know about. For example - just as the Americans took Von Braun back to the US to obtain German rocketry information. They gave the "doctors" of Unit 731 amnesty in return for all the research they did on live Chinese people in relation to germ warfare, chemical weapons etc that they could never do themselves. I give the example above as a way of explaining how many Chinese people think about the "West" nowadays. Good trade partners, yes, but do they really have our best interests at heart?

I'm a big believer in the power of dialogue - once everyone faces up to the things that they did in the past the sooner we can move forward, instead, these issues are still festering in the minds of people and colour their reaction to current events (remember when the Americans/NATO bombed the Chinese embassy during the Bosian war? I doubt many Irish people remember this news... but for many Chinese, it was just another example of 1) the "West" humiliating China or 2) the "West" testing China's resolve to protect its citizens).

All of the above has almost nothing to do with China giving loans out to the US and co. Sorry for the off-topicness!

Thirdfox

johnathan woss wrote: »

Good point.
The difference in local candidates in China is probably similar the difference between local republican and democrat candidates in the USA, or the local FF and FG candidates here in Ireland.

Sad but true.

Well I wouldn't say the difference in opinion in the CCP would be as extreme as the Democrats and Republicans in the US (they're opposite polar opposites from my experience in the US) But within the general "vision" of the CCP there are many competing "visions" And you have your hawks and doves etc etc. It's politics as usual, with just one huge party - that also has the same goal as the democrats or republicans: "keep in power". It's just that the system in China right now allows them to commit more errors and remain in power than with the US. But, it does not allow for an unlimited number of errors. And that's why the government is pumping 600 billion dollars into the social welfare net (education/health/roads etc) to return to a semblance of a "communist" state :P (shouldn't healthcare be free in a socialist state? We're got more socialist healthcare here in Ireland funnily enough).

(I am pretty sure that by now most people can see that I'm generally in favour of the CCP and its gradual move towards reforms - while I may be socially biased towards it I would hope that what I say here doesn't seem like complete hogwash to the neutral observer).

democrates

China is one of the countries making sense and among others have been making ever stronger noises about moving away from the dollar as the worlds reserve currency. It's no surprise that Stiglitz is in support of an IMF bond based on a basket of 30 currencies and gold, since he wrote a great book all about how Keynes tried to establish exactly that at Bretton Woods but his plan for global economic equilibrium was shot down by the Americans in favour of the dog eat dog model. A summary.

That the USA has a sole veto in the IMF may explain why their is some prevarication on the part of G20 countries who agreed to fund the SDR's, and why independant moves are afoot.

Wall St. are a bunch of cowboys and Washington are in their pockets, Europe is a mixed bag with Ireland a banana republic as the Boomtown Rats sang. All countries and trading blocs have their agendas, the jury is out on the EU, support for nama sounds discouraging but I suspect as the only plan presented there was little choice but to green light it for the sake of market confidence.

The supreme spectacle in this pump and dump of the global economy is that the only lesson many 'leaders' seem to have learned is that banks are too big to fail and must be bailed out (we're slaves to private interests), markets need regulation, and we must tighten our belts to regain competitiveness.

That's re-arranging the deckchairs on the titanic, we need a radical rethink because resources are dwindling as population growth and globalisation drive consumption and pollution ever higher, every major ecosystem has been in accelerating decline since at least the 1970's. Climate change is another potential threat.

Co-operation is the only thing that can deliver an ethically defensible and sustainable future. How did we ever get duped into believing that all children must be raised to follow a narrow prescription: compete, engage in all out global economic war? It's absolutely nuts, until you realise that it suits one purpose very well indeed - the concentration of wealth with the elite.

Poor countries have traditionally been artificially suppressed by rich countries, and since Bretton Woods the IMF has been instrumental in carrying this mission out as described by Noam Chomsky etc in exhaustive detail. It's utterly obscene what they've done, but again it suits wealth concentration. Now lets be honest, citizens in rich countries have been quite happy to maintain their relative luxury whilst throwing hands in the air (and in fairness money at charities) over third world poverty.

Most don't realise just what our leaders do in our name, but some do, Irish farmers insisted in the run-up to lisbon that the government guarantee it will use its veto at the WTO to reject fair trade in the stalled Doha round. They want to keep the subsidy/tariff regime which puts millions of third world peasant farmers out of a livelihood. Handy, this creates a supply of cheap labour for the giant corporate machine, from Nike to Coca cola, their sins are well documented.

Meanwhile our unions in their fancy georgian offices, or skyscraper, fight to protect workers pay and conditions, but this is faux protectionism, peeing in the breeze of global competition. The employers continue to close up shop and move abroad to avail of those ex-farmers who'll work all year in those corporate fiefdoms called export processing zones for a fistful of dollars.

In theory this all proves that the markets are the only thing allowing 'the rise of the rest', since redistribution of wealth on a global scale could never be agreed at the UN. After all, half of us are up to our necks in debt for overpriced property as these asset bubbles have turned us into debt slaves, how can we contemplate lower wages, especially when we all want higher wages?

We need to get out of this boom bust rollercoaster of doom, Keynes proposal stands alone as a long term leveller at the international level with its negative feedback loop. We in the rich countries have to agree to such global plans that will transition us to long term equilibrium, peace, and survival. It's about you and me agreeing that we'll forego excesses like suv's, multiple cars in one household, multiple holidays each year, second homes and so on in order that the poor of the world can raise their standard of living. That we'll co-operate on where production happens so that we get efficient scale economies and sane transport, and to ensure employment is shared around.

If we try to compete our way to peace, and to consume and pollute our way to sustainability, we will fail. Co-operation must become the overarching technology if man the thinker is to become human the carer. If you read this whole post fair play

Thirdfox

I deserve a pat on the back

Overall - I agree that humans need to learn to cooperate better (whether that means the dissolution of the idea of statehood or otherwise).

If Hollywood is to be trusted on this - all it'll take is an alien invasion for us humans to forget about our petty differences and rise together to create a harmonious new future etc. etc.

democrates

Lol, well done, and that's just what Reagan said about aliens, so long as it's not the Vogons informing us that earth is to be destroyed to make way for a hyperspace bypass :eek:

I was at the festival of world cultures earlier this year, bear with me, and as part of it went to shoot the Yuanxiao Jie on Dun Laoghaire pier, just as the dragons began to make their way back from the bandstand some guy shouts "idiots", sounding pretty angry. Couldn't see him in the crowd, but as we made our way back he shouted it again, so I moved in the direction it came from, third time lucky and having ID'd the culprit with his backpack shouted back "what's your problem?", one guy in the crowd chipped in "yeah!", no answer from angry dude, within a minute he was about to shout again but when he glanced around I was right behind him by then and eyeballed him, he kept his mouth shut and disappeared.

I don't know what a guy with that chip on his shoulder expected to achieve at a festival of world cultures, but he frightened the children I saw it on their faces and that's what got me the most. What also gets me is that in the whole crowd, no one else seemed ready to challenge him, they'd all look around when he shouted but did nothing. I expect there's a line and if he'd crossed that then people would have stepped in, but that high threshold of tolerating wrongdoing is a problem that manifests itself in every sphere of life.

We let corporations and political puppets walk all over us. Too sheepish by far, but I disagree with a French observation that the Irish have no sense of outrage, we do, it's just that too many have boiling frog syndrome, too dozy to deal with problems until they get really serious, or it's too late. Worldwide the same phenomenon allows corruption and greed to flourish at the expense of the common good, we need to move toward zero tolerance and take control of our destinies. Amen!