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2006-03-23 China-Japan-Koreas

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Posted by Damn_Proud_American 2006-03-23 00:17|| || Front Page|| [9 views since 2007-05-07] Top

#1 Another reason why NORTH KOREA = IRAN'S Mullahs are demanding to be invaded by Dubya in glorious "quagmire". Can't have implosion and revolution iff China and its PLA have to save the Mullahs from themselves and Dubya.

Posted by JosephMendiola 2006-03-23 00:25|| 2006-03-23 00:25|| Front Page Top

#2 China is still going strong. This is just a sign that the breakneck growth is becoming maturity. China's boom is due for a bust, but it's still 3-4 years away. Nobody I know is losing business to Vietnam or Bangladesh.

Posted by gromky 2006-03-23 00:53|| 2006-03-23 00:53|| Front Page Top

#3 Li and Fung does mostly clothing and accessories. Plus, I doubt the cost squeeze is across the board. If an illegal Chinese immigrant in NYC can generate a profitable garment at $8 an hour, her somewhat lower caliber counterpart in China can probably do the same at $4 a day.

Reflation is actually a sign that the overbuilding in China is finally done and over with. The overbuilding was what led to deflation. The really odd thing is that deflation (oversupply) coincided with explosive growth. Now that the period of oversupply is over, we should start to see really massive growth in the Chinese economy - I expect the Chinese central bank to start raising interest rates big time, which may ripple over to Treasury rates.

Note that Li & Fung stated that energy and raw materials costs are a major reason for the increase in Chinese costs. But these costs are the same in China and elsewhere. China's growth has a long way to go yet. When it starts approaching Thailand's wages, it will start losing production to the Thais. But it isn't yet at that point. The Southeast Asian countries to which Li & Fung is referring are Vietnam and Cambodia. Chances are they will now start their rapid growth era based on China's cast-offs, just as China's growth is based on the cast-offs from Thailand, Malaysia, Singapore, Hong Kong and South Korea.

Posted by Zhang Fei 2006-03-23 00:58|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2006-03-23 00:58|| Front Page Top

#4 Heck, even if it's inevitable, China could slow or hold it off enough to minimize or even avert substantial decline in the national economy. I read in the Wall Street Journal some time ago that the government had started to "cool down" the economy in hopes of lowering the growth rate to sustainable levels.

Posted by Edward Yee 2006-03-23 01:00|| http://edwardyee.fanworks.net]">[http://edwardyee.fanworks.net] 2006-03-23 01:00|| Front Page Top

#5 gromky: This is just a sign that the breakneck growth is becoming maturity.

I don't think it's even begun, yet. Chinese wages are way below Southeast Asian wages. The Chinese consumer is starting to become a huge player, from almost nothing a decade ago. Car sales in China were 4m a year ago, compared to 1m in India, which actually has more people than China. On a per capita basis, Chinese car sales are already roughly half of Thailand's. That's a impressive record, when you consider the severe deflation in Chinese costs over the past several years.

Posted by Zhang Fei 2006-03-23 01:07|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2006-03-23 01:07|| Front Page Top

#6 Zhang Fei,

"If an illegal Chinese immigrant in NYC can generate a profitable garment at $8 an hour, her somewhat lower caliber counterpart in China can probably do the same at $4 a day. "

You're forgetting about time to get product, which with shipping and customs takes close to 4 weeks. This is PAINFUL for inventory management. Also in many goods it's becoming more expensive to ship to goods than the price savings (automobiles for one). If China isn't significantly cheaper than mexico then China is in serious trouble for US manufacturing business.

Posted by Damn_Proud_American 2006-03-23 01:33|| 2006-03-23 01:33|| Front Page Top

#7 Also,

"Reflation is actually a sign that the overbuilding in China is finally done and over with. The overbuilding was what led to deflation. The really odd thing is that deflation (oversupply) coincided with explosive growth. Now that the period of oversupply is over, we should start to see really massive growth in the Chinese economy - I expect the Chinese central bank to start raising interest rates big time, which may ripple over to Treasury rates. "

You're confusing goods price deflation due to oversupply of workers with goods price deflation due to oversupply of goods. There was no oversupply of goods, china was selling what it was making. The inflation is due to pricing pressure from a more demanding labor market in china, not because all the sudden chinese goods are selling where they weren't before.

Posted by Damn_Proud_American 2006-03-23 01:36|| 2006-03-23 01:36|| Front Page Top

#8 China's own consumption can cushion lots of the slow down in growth and increases costs of production.

Posted by SPoD 2006-03-23 01:37|| http://sockpuppetofdoom.blogspot.com/]">[http://sockpuppetofdoom.blogspot.com/] 2006-03-23 01:37|| Front Page Top

#9 Yes it can cushion but this is the boom bust cycle. Overbuilding during boom times leads to bust times. The greater the overbuilding the greater the bust. China WAY overbuilt. Just look at their bad loans... crazy that they have so many considering their growth and explosive economy recently. There's no controls over how money gets distributed in the chinese economy... it's gonna be painful. Mark my words.

Posted by Damn_Proud_American 2006-03-23 01:40|| 2006-03-23 01:40|| Front Page Top

#10 The 'severe deflation' referred to is price deflation (decreasing prices) that was bound to come to an end at some point. I doubt it signifies anything other than a shrinking pool of cheap available labor. I'd argue its good news, because it means labor is gaining control over the price of labor, i.e. people will no longer take any job offered. Its a sign China is progressing down the road to a middle class that wants control over their lives.

I not aware of significant asset deflation in China, which is the deflation that brings debt and other problems.

Posted by phil_b">phil_b 2006-03-23 01:54|| http://autonomousoperation.blogspot.com/]">[http://autonomousoperation.blogspot.com/] 2006-03-23 01:54|| Front Page Top

#11 DPA: If China isn't significantly cheaper than mexico then China is in serious trouble for US manufacturing business.

Wage rates in many of the Southeast Asian countries are significantly more expensive than China, yet they continue to get tons of American manufacturing business. Mexico just isn't in the running for a lot of manufacturing activities - its labor force is illiterate, skills are lacking, investment regulations are convoluted and costly, labor laws are nutty, etc. This is why hard disk companies like Maxtor and Seagate manufacture in Malaysia and Singapore, both of which have higher wage rates than Mexico. The attraction of China as an investment destination lies in a cheap and well-educated work force. The workers don't generally speak English, but they are intelligent and extremely trainable. This is why countries across Latin America are losing their manufacturing industries to China. The sad reality is that China doesn't compete with the US - it competes with Mexico. And Mexico loses on both quality and price.

Posted by Zhang Fei 2006-03-23 01:59|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2006-03-23 01:59|| Front Page Top

#12 plus the Chicoms play the currency differential. My husband's in mfg. Wouldn't be the 1st time things are made here for a US customer.

Posted by anonymous2u 2006-03-23 02:30|| 2006-03-23 02:30|| Front Page Top

#13 The bad loans are another problem that has to be dealt with. I think that is a seperate issue and problem. Outside banking experts have to be brought in and given the power to set things to rights.

Posted by SPoD 2006-03-23 02:49|| http://sockpuppetofdoom.blogspot.com/]">[http://sockpuppetofdoom.blogspot.com/] 2006-03-23 02:49|| Front Page Top

#14 I'd love to go to the Beijing Olympics, so I hope the revolution can wait until after then.

Posted by Jake-the-peg 2006-03-23 05:14|| 2006-03-23 05:14|| Front Page Top

#15 ZF: I thought China had about 1 1/3 times the number of people that India did?

Posted by Phil 2006-03-23 11:01|| 2006-03-23 11:01|| Front Page Top

#16 There's no controls over how money gets distributed in the chinese economy

Actually there are controls on how wealth is distributed, DPA. Most of those controls involve making sure that the money's direction of flow is towards the pocket of a politburo Mandarin.

Posted by Zenster 2006-03-23 11:41|| 2006-03-23 11:41|| Front Page Top

#17 Jake-the-peg
If you get there for the olympics, may I recommend the street food vendors close to Tiananmen Square, for their exotic cuisine.
How exotic?
Well how about 4 seahorses on a double kebab, frog legs ditto, river beetles, locust, silkworms, lambs testicles on a kebab, as well as penises etc and all ridiculously cheap
Excellent after a night carousing the karaoke joints where a stubbie of beer will set you back $1 and the company of a hostess for the night will cost $20.

Posted by tipper 2006-03-23 12:16|| 2006-03-23 12:16|| Front Page Top

#18 Zenster,

I meant controls put in place to protect against bad loans ;)

Posted by Damn_Proud_American 2006-03-23 21:30|| 2006-03-23 21:30|| Front Page Top

#19 ZF: I thought China had about 1 1/3 times the number of people that India did?
Posted by Phil 2006-03-23 11:01|| Front Page|| ||Comments Top

that was pre - bird flu

Posted by Frank G">Frank G 2006-03-23 23:13|| 2006-03-23 23:13|| Front Page Top

00:05 JosephMendiola
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