The U.S. is monetarily bankrupt. But still hasn't learned their lesson. http://www.chinadaily.com.cn/opinion/2010-09/07/content_11265416.htm
That doesn't matter; the effect is, that if the US perpetually owed China money, this is actually to China's considered advantage. Even if the US never repaid China a dime, the fact that China is the creditor that holds the biggest stake, they can in effect, dictate financial terms to the US. So the best position for China would be to have the US owe money, but never be able to repay it. This is the same way that credit card companies get rich off the public. The perpetual interest is the greatest yoke to bear. The only time it can actually work to the debtor's advantage, is when the creditor is also broke and in desperate need for cash; that is, willing to accept less than what is owed because they need the money so badly. However, in this case, with China already holding a surplus of nearly 2 trillion US dollars reserve, that isn't about to happen any time soon. The only leverage that the US has at the moment is that it remains by far, China's biggest market. China still does not have the domestic consumption that would independently drive or sustain its economy with the degree of growth to prevent a recession. However, once Chinese consumption begins to rival that of the US, the US then will cease to economically matter.
and to add/make clear of ralph's statement.... China's expansion into the next superpower is not a question of 'if'.
Broke and jealous. I know jealousy can be biting. china understand that. but more of this and america won't get anymore sympathy from china. China needs to catch up with the US militarily.
I'm not so sure about the broke and jealous part. The US certainly has a cash flow problem, but it far from being broke, at least not by a long shot. If the US were actually dead broke right now, China wouldn't be happy at all as the Chinese economy would literally collapse overnight. That is, imagine if the imports that were coming out of China and being bought up by the US came to a sudden complete stop; ie, zero Chinese imports into the US, what do you think would happen to China? Literally millions of people would suddenly be thrown out of work. The PRC is probably one of the oddest "success" stories in that much of it's economic power rests in being able to sell its cheap labor (and the products it produces from that cheap labor) to the world. If the world (ie largely the US) stops buying, then China becomes a laid off worker who unfortunately also has one of the world's largest populations to feed. That's the major reason why many economists say that China has to sustain a minimum growth rate of at least 8% a year in order to remain socially stable, providing enough jobs to keep the people working, fed, and presumptively happy. The potential for labor related social unrest is not lost on Chinese authorities. They routinely send in armed troops to quell even small labor related outbreaks of discontent. Spoiler: Sidebar... Contrary to popular misconceptions in the US and much of the world, the 1989 events in Tiananmen Square was precipitated in large part by the spread of labor and social discontent to other major cities throughout China. The "democracy" movement in Beijing exposed the gross dissatisfaction across many venues of Chinese life, and people were beginning to take to the streets, spurred on by the events at Tiananmen. This prompted authorities to use an extreme show of force in Beijing. It wasn't so much that the students were a threat to them from a military standpoint, but they were a huge political threat. The people were unhappy and were willing to voice that anger. Hence, the students then also had to be the unfortunate example to show the nation that the party was still very much in power and could not be questioned. If China's biggest customer (the US) suddenly couldn't afford to buy China products, the effect would ripple back up the entire supply chain, and it ends at the hungry mouth of the Chinese worker. An interesting historic analogy to this was the US stock market crash during the late 1920's, coupled with the farming disasters of the 1930's. Because of unemployment and poor crop planning, the US was actually on the verge of a disaster. The New Deal by FDR, followed by the huge production needs of WW2, returning millions of Americans back to work, was what eventually saved the US from total economic collapse. None of this is lost on China. An 8% annual growth, is already considered astounding by world standards. That the PRC must maintain this at a minimum in order to avoid disaster, one then begins to realize how precarious this success story really is.
Finally a smart person that knows what he is talking about. The foolish ones have no idea, but in reality the USA and US DOLLAR is still the WORLD CURRENCY. The US has military power far stronger than CHINA, but people forget the ILLUMINATI talk that is, the WESTERN COUNTRIES, like UK will back the USA! CHINA is a country that suppresses its people. EVERYTHING is controlled by the state, so there is virtually no free enterprise. CASH FLOW? CASH FLOW an ISSUE? Like I said, go look up the DEBT clock and DEBT for each and every country. No one borrows w/ the intent to pay back ! Many here are blinded and fed by mouth the media crap, but few realize what's going on. CHINA is still considered an underdeveloped country w/ political issues that super cede its aggregate economic numbers. It's property bubble is my next concern. KEKE>
US has been shipping out jobs for years and will continue to do so as all companies in US want to make money ... sad ... vicious cycles... in china a worker can work 12 hour shift and sleep 12 hours and work again for 365 days a year - chinese new year.... US downfall too quickly is not good for china also... china rising too quickly not good for china also as many are still poor
Honestly, the money that the US borrowed are never intended to be paid back. And I believe both China and the US knows that. But US is not the only country that borrows money and never pay back their debts. Almost all countries around the world does it. That said, I'm sure there's some strings attached to the loans that China gives to the US. Also, most modern day countries including China does not want to see US economy collapse, at least not anytime soon. As most of the modern day countries are so economically intertwine with one another that it would do more harm than good should any of those countries economy collapse. Part of the problem for US is the limited number of years the president can serve. Because of this, most of them find ways to help pocket themselves with money rather than actually try to do anything good for the country. While some of those that actually wants to help the country can't, because the previous president's action screws up so many things and the affects of those actions were not present until the new president takes it's place. Whether people wants to accept this or not, US have reached a point where their economy can no longer grow any further (unless something drastic happens). All developed countries will one day reach this stage, where they can grow no further and can only maintain its current state waiting for other countries to catch up or go downhill. And when they reach this point, more likely than not they will enter a war/conflict of some sort (in order to create more jobs and cut down the population). Regardless of what happens, China will continue to grow. As many big companies invest in China for their cheap labor. But as time goes on, you may see more of these big companies divert their resources from China and invest in India instead (because of cheaper laborers). These are only my opinions and thoughts, and I am not an expert. But I am interested in seeing happens to China and the rest of the world when China's current leader retires later in the future.
Technology makes a big issue about 'workers'. It is the pure reason why workers are gone w/o jobs. Think about it, robots have taken over human beings in so much respects !
One has to recognize that China has roughly four times the population of the United States. But what exactly does that mean? Well for starters, that is equivalent to the United States, all of the European Union, with Mexico, North Korea, and Vietnam thrown in for good measure. Now stop for a minute and look at the countries that I had just named. In economic terms, what exactly are they? Well, the US and EU are the consumers nations, while the rest are the poor destitute suppliers of cheap labor. The only thing separating the people between them are their national borders. If these borders did not exist, those in poorer nations would easily and almost immediately migrate to the richer ones. That's only human nature. Now, China remains a totalitarian nation. It has never been about fairness. China has used regional segregation in the past as a manner to control internal economics and could easily do so again. In other words, China could easily revert back to a system of internal borders. It did this during its three years of man made famine (when millions of rural Chinese were sacrificed to keep the party and urban Chinese alive). For those of us that are older and have actually seen China around the time that it first opened, things like internal travel documents, ration coupons, right of residency documents and identity cards are not something that isn't possible, it's history. Thus, China can revert to a two tiered society at any time that it wishes, simply by political edict and force of arms. If no one buys from China, it will simply buy from itself. Half the nation will enjoy wealth, while the other half toils for that wealth. Was this the promise of communism? No, but then again, communism never existed in China. It was a dictatorship, and now it's an Oligarchy, and it remains purely totalitarian. In fact, this is the type of self reliance and sufficiency that North Koreans have been dreaming about (their Juche) for years. Of course, the Chinese misery index would dramatically rise if the party did this. Those idiot peasants that were suckered by Mao's message may easily rise again and overthrow this latest dynasty. -shock That said, your comment of India et al as cheap labor substitutes for China is not missed, but unlikely to happen (to any degree that would matter) in the next generation. The reason is not just cheap labor, but logistics. There are millions of cheap starving laborers in Haiti, North Korea (Democratic People's Republic of Korea), and The Congo (Democratic Republic of the Congo) right now; why hasn't the world come knocking on their door with thousands of jobs? A look back at China's experience when it first opened up, and the complaints then, may help explain this. Chinese business first cut it teeth with great agony in selling to the world. Chinese factories then were inferior, its workers lazy, and its products were laughing stocks that needed strict protectionism in order to compete. That's why back in the early days of economic opening, Japanese cameras could only be taken into China if you paid a duty of four times the camera value. That is, if the camera cost USD$ 100, you must pay an import tax of USD$400 in order to bring it into China. Why? Because China needed to protect its camera manufacturing industry. If Japanese cameras were allowed to be easily imported into China, no one would ever buy another Chinese made camera again. Workers in state "factories" went to work to sleep and then left early. They were being paid to perform a pantomime of labor. That is, they pretended to have a job and the state paid them. It was a far better way than calling it welfare; it made the people feel better emotionally and China could be proud of it's "production" figures. When international companies first went into China, they were appalled by what they saw. Ten of thousands of unskilled and untrained "workers" had to be thrown out, and thousands of sham factories were shuttered. Much of the unrest, riots, and labor motivated deaths that followed were covered up by PRC authorities. Thus, it took years of strong arm tactics and social pain to get Chinese manufacturing to where it is today. Business also needs reliability and consistency not just in cheap labor, but in the logistics of infrastructure, transport, political and financial climate. The easiest analogy would be the difference between a hooker and a wife. They both nominally supply the same thing, but one does it with a lot less danger than the other. Hence, successful long term business is very much like a marriage. The Haitians, North Koreans, and Congolese, despite their attractive labor cost features right now, in business terms, are not suitable marriage prospects. Also, India's recent experience with the Commonwealth Games is a glaring example of the saying, "...not ready for prime time." Its delivery of the venue was fraught with missteps and heavily ladened with doubt. Any potential business that may have been contemplating India, has already gotten the message to keep their money out until that house in order. Hence China, for the next generation at least, has very little competition to worry about.
In the span of less than one year since the last post in this thread, and in light of the financial sea change apparent in the world today, I wonder how previous respondents feel in regards to road ahead for the Chinese economy vis a vis post US downgrade?
LOL... You have a grudge. What exactly are you wanting to ask? China can throw tantrums all they want, they can't do anything about the US' deficit, nor will it mean much. Their economy is heavily pegged to importers, if the UK and USA suffers, they too will suffer.
Here's an interesting take on CNN: [video=youtube;kqcpObqAcQI]http://www.youtube.com/watch?v=kqcpObqAcQI[/video]
US is probably just going to continue with this trend debt and recent news was saying even 2014 usa going to still have 8% + unemployment
lolo i dont think the US will get bankrupted. as much as they borrow it wont default as the dollar is the most common currency and its a developed country. With such a large population it will be able to pay its debts through taxes and everything
