Over at Zero Hedge today there is an interesting article on the Chinese economy which may possibly the prelude to some larger changes across the world :
Say goodbye to China’s “export economy” paradigm. In a stunning development for trade hawks, and pretty much anyone who follows the biggest liquidity bubble in history, China Daily has announced China is about to announce a record trade deficit (yes, not surplus, deficit) for March. This makes the whole CNY undervaluation debate pretty much moot, as even China now moves into the ranks of net importers.
Chinese imports look likely to be growing at around 90% in year on year terms which will use up rather a lot of the surplus dollars they have stashed away from running a trade surplus for many years. It will be interesting to see how this move to purchasing goods rather than US treasuries affects the US financial markets.
Quoted in the article is also an interesting example of the American system being more interested in protectionism than free trade :
After China’s exports rebounded in December, US legislators and economists have been demanding the Barack Obama administration label China a currency manipulator in a US Treasury report due out in mid-April, which will make it possible for Washington to slap duties on Chinese imports.
“China’s trade surplus with the US has been turned into a key excuse by American economists to pressurize the Chinese government to revalue the yuan,” but, ironically, the calls have been growing stronger even as the “surplus keeps falling”, Chen said.
Considering the amount of imports into the US from China the net result of that policy would be increased prices for US goods and hence increased inflation. Interesting to note though how far the US is willing to go to keep the whole show on the road for a little while longer.
As an aside to the above, I often find the comments on Zero Hedge articles most amusing and have added some snippets of comments from the article above :
They have their heart set on becoming the leading global economy. Dumping all their U.S. treasury holdings is a small price to pay to crash a seemingly “invincible” economy. They will never have a better oppurtunity to bring us to our knees considering the war and economic spending binge we are currently on. This is why deficits and debt are as much a national security threat as nuclear weapons and terrorism.
Nobody Nobody can consume goods like Americans – they will have a tough time convincing the Chinese proletariat the benefits of getting into debt for immediate satisfaction.
That is correct nobody can consumer like Americans. Even in this depression the zombies look for pleasure at the malls using their credit cards to further induce the temporary dream state. Imagine the chaos China is in for once the domestic retarded here in America learn to stop going to Crate & Barrel and Chili’s between reality shows.
They don’t have to consume like Americans – The population difference can easily make up what each consumer in The US consumes.
Ever see a chinese in a casino? They are the biggest gamblers and risk-takers in the world. And there are 1.3 billion of them. They will consume like locusts.
Or save like the Japanese.
BINGO!!!
I think the only solution is to drink more beer.
Finally, a voice of reason.
Whichever scenario eventually comes to the fore it looks likely to cause yet more unrest in financial markets in the coming months.
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