China Destabalising the World

China has pegged its currency for the last few years to 8.30 yan to the Dollar meaning that they are keeping it more favourable than it really should be for Americans to buy Chineese goods. The US keeps asking them to re-evaluate the exchange rate because after about three years of 9% growth compared to the US's steady 3-4% growth the currency has to be different.

The way I see it, China is building its riches by taking the wealth out of the Dollar, and when the time comes, they'll sell dollars and buy Euros in their bank stocks so that they truely screw the dollar just at the point when they've finished sucking all the blood they can.

Really clever economics by China but they are fucking up the global economic balance as the Euro keeps getting stronger and stronger compared to the dollar and europeans don't want that.

The global economy is in a bit of a mess at the moment.

Sorry about the rant. just saw this article and thought about it, wondered what you all thought of it?

http://news.bbc.co.uk/1/hi/business/4034335.stm

 

I hope your claim that China is "destabilising the world" was primarily meant as a witty remark or a reserved observation, not a general "damning outlook" on China. While I have no illusions about the true nature of the Chinese government and their system, objectively we can only argue that it seems that China poses the single biggest threat to the balance of power or rather US hegemony in the world today (the phrase "destabilising 'the World' " has moralistic overtones, especially in contemporary discourse).

I didn't quite understand what did you mean by "China is building its riches by taking the wealth out of the Dollar" (Maybe the fact that, by following the American pattern of devaluation, it annuls the competitive advantage of cheap American goods? Although, as far as I know, the US is more of a spender than a seller in the world economy)?
Unfortunately I don't have enough time to read it at the moment, but (from what I have read) issue 103 (summer 2004) of International Socialism (by SWP) seems very insightful (the focus of the issue lies on the question "China's Century?'', which is quite illustrative).

In his last(?) book "Socialism or Barbarism" Istvan Meszaros quotes an article from the Financial Times which states that if the present (already long-term) trend was to continue by 2020 China's economy would be three times that of the US. Besides, the Chinese population is greater than the American by 1000 000 000 people! So, in every sense of the word, China is a big issue.

Love,
Dan

 

Sorry, I seem to have overlooked the effect on Euro that you were mentioning, of course the devaluation of other currencies can have a serious negative effect on the level of EU competitiveness. Tough luck. Were you expecting altruism in (international) capitalist economic affairs?
P & L,
Dan

 

No, but basic fairness isn't too much to ask. If someone mugged you on the street corner, would you accept that he's just a capitalist looking to make money and give him your wallet with a smile on your face? You can't expect altruism in capitalism, right?

There need to be some basic international economic laws. It just is simply not fair for the Chinese government to leech off American and European currencies while the Americans and Europeans have no recourse available.

 

But isn't the 'invisible hand' supposed to be the mechanism of the capitalist market? I am not in favour of China gaining tremendous power BUT how else did America gain its dominant position in the world market? Is it not through careful economics too? Did the world economics not get upset each time there is a change in the hegemonic state? Including when America became one? There is always some country pegging their currency against another especially the dollar. It just so happens that the current one has a very large economic behind it.

The market will itself reach an equilibrium when demand and supply eventually equals each other. From the current situation, it just so happens that it is not at equlibrium yet. China still has enough resources to demand US dollars and the market will supply to meet that demand.

 

Jesus...
Firstly, basic international economic rules do exist (just look at the regimes such as WTO and IMF). Of course, they are not equal for everybody (even if they were equal, laws alone can't produce equality), so for instance (just one example!) trade tarrifs are four times higher for underdeveloped countries.

Talking about "basic fairness"( ) , I think it really isn't fair 11 million children under the age of 5 die of hunger every year. Read my post Capitalist Barbarism in the Globalization forum. Then talk to us about "fairness".

 

Americans talking about capitalism that beat themselves and about basic fairness. I like the idea!

Well, basic fairness is too much for you to ask, if you dont have anything in exchange. :H That's capitalism. It's not mugging anyone. It's making you buy land mines, and then step on them.

By the way, NPQ estimates that by the year 2007 China's economy will overtake England and by the year 2008 it will surpass Germany.

 

Global Threat - China

I really don't think we can object to China trying to muscle in on the global economy in a big way. After all, Europe and USA have capitalised the world's economy in a big way for decades and also rigged it to make sure their companies and trading barriers etc have been protected.

Perhaps now we see the wind of change, the decline of old established economies making way for the new world. It's no good having a go at China, its only trying to do its best for its people. They are going to be the worlds driving economy in a few years time and they will be the most influential and leading country within 50 years. Have no doubt. Nothing that Europe or USA can do to stop this.

There is a new world order coming. You can batten down the hatches and shout as loud as you like but its going to happen. Take a few moments to look ahead - how about 2038. What would the news be like then?


New York Times
China sends troop to quell unress in the Ukraine

China, the world's leading superpower today sent troops into the Ukraine in an effort to contain unrest in the region. The President of the USA in an effort to better relations with the Peoples Republic, offered to support China by contributing a military force that would represent around 20 per cent of the 200,000 troops that China would deploy. Europe as the worlds second largest economy was asked to send its own contingent of rapid deployment divisions.

Meanwhile the Chinese stock market outperformed all expectations as the RMB rose to a new level against the ECU.

Chinese Premier Ying Tso Chang speaking from the Kremlin in Chinese controlled Russia, announced a new council of leaders for the development of trade between Russian and Europe.

Chinese Language is now the most popular choice for schools throughout Europe and reports indicate that English will soon cease to be the most influential and most used language in years to come.


Imagination running wild? Who knows.

 

Absolutely! And China's economic policies go against the idea of the "invisible hand" by setting artificially low prices on their imports.

Statements like these are NOT based in rational economic policy. They're based strictly in knee-jerk resentment of America. While you're entitled to your opinion, it sounds like all you're saying is "You're an American, therefore you aren't allowed to condemn or try to prevent other countries from committing the unfair economic practices that America benefitted from." Justifying present injustices with past injustices is never a good idea. Read The Crucible sometime for an insight as to why this is.

You clearly aren't talking about the same economic laws that I am. I'm talking about the ones that would have relevance in this thread: for example, making it internationally illegal to peg a currency to a foreign one.

Completely irrelevant straw-man.

I disagree. America has very little control over Chinese economic policies. A better analogy would be your neighbor buying land mines, and testing them out in your lawn.

I have no problem with that, and in fact, I agree with you that China will be the world's new superpower within a few decades. However, China's ascension does not have to come at the expense of the rest of the world. What I do have problems with are the unfair trade practices China currently conducts against the United States and Europe. If China wants to freely trade its products, great, more power to them and I wish them the best of luck in the world market. If China wants to dump its excess products in America and Europe at artificially and unfairly low prices, then I have a big problem with it.

 

Originally Posted by gentle revolutionary
Talking about "basic fairness"( ) , I think it really isn't fair 11 million children under the age of 5 die of hunger every year.


[QUOTE
Completely irrelevant straw-man.

QUOTE]

A fascinating moral ladder!
So "Chinese" economic policies (as if it's sth. new) are tragic and tear-jerking, while 11 million children under the age of 5 who die every year of hunger are irrelevant. What a sicko... I could puke at the moment. People are sooooooooooo...

 

I was trying to be as respectful as I could before, but now it's clear that you're an idiot. This thread has nothing to do with hunger, so stop polluting it with this irrelevant nonsense. If you want to make that thread, go for it. But stop trying to change the subject on THIS thread just because the adults here are having an economic discussion that goes over your head.

Do you go into every thread you read and write "You're all sick! How can you people be talking about [fill in the blank] when 11 million children are starving?"

Moron.

 

OK, I wasn't begrudging China an ecconomic boom that will bring them wealth and prosperity like the west has done over the last two centuries. Good luck to them. Finally the west will have to deal with a more equal power balance around the world.

I was merely making the obbservation that at the moment China is seriously begining to destabalise the global economy that has been in a relatively steady state for the past 50 years.

By holding their currency at 8.30 yuan to the dollar they are making all their products artificially cheap to the US market. If their exchange rates were allowed to move freely, then the yuan would have been at that level maybe 5 years ago but as the chineese economy has grown it would have moved to somewhere closer to 5 yuan to the dollar.

This means that 5 years ago the US could afford to buy lots of Chineese goods but as China's economy grew the US would have had to rein in its spending, the Chineese economy would have slowed and things would have started to balance out more smoothly. Peging the yuan to the dollar is simply a way of sucking more dollars out of America than it would have been possible to do if the exchange rates were freely flexible.

As for the effect on the Euro, the current slide of the dollar is a blessing and a curse. Because of the huge debts in both its federal budget, and the trade gap in the US (particularly with China) the dollar is falling like a stone at the moment to try to make it more competative for exports to try to balance that.

The Euro is taking the brunt of this in the short term because it makes the Euro very strong and uncompetative on the export markets. But in the mid term it means we have a stronger currency and people buy into it by selling the dollar and buying the Euro. eventually Europe will gain but initially it will hurt a lot.

For America, eventually it will lose out but in the very short term it might bring some balance back.

And for China it is win win all the way. By the time the Euro sorts itself out the Chineese economy will already be massive.



At the moment going on GDP China is already the second largest country economy after the US.

US GDP = $10.5 trillion.
EU GDP = $ 9.5 trillion, (Germany largest at about $2.1trillion)
China GDP = $6.5 trillion.
Japan GDP = $3.5 trillion.

With the growth rates though, China will overtake the US by 2012 if things stay the same as they are now. I personally doubt that though. The US economy is in serious long term trouble.

 

China Blues

But the very nature of China and the way it operates dictates that it will be at the expense of the rest of the world. In the west we are more caring and concerned about global warming, the social welfare of our people and we protest when we think things are wrong. China looks after its people in a different way. If you don't conform then you are in trouble but China is determined to push forward for one goal - the benefit of the Chinese people.

Only a hundred years or so ago from the sweat shops of the Industrial Revolution to the cotton fields of the USA we relied on human misery to produce goods at cheap prices and to dump those goods on countries around the globe. Do you think they will have any second thoughts about repaying the favour?

China with its sweat shops has no other option at the moment than to let its huge population and cheap labour give it a foothold in the world economy. There is no way they will pay their workers a decent wage or health benefits etc but in time as they become more established and learn from Hong Kong they will introduce these higher standards of living. There is only so much to go around and this will have a side effect on the economies of Europe and USA.

The USA is already suffering from high imports as is most of Europe and the UK. We don't make things like we used to because we cannot compete. Things will not get better but in time they will get much worse. The UK has to be part of Europe to avoid being sidelined in the future as a small and insignificant country, which against China with its huge population is hardly surprising. The USA, whilst a superpower at present will see its mighty industrial base eroded by China and it will become dependent upon China.

The reason why China will continue to dump on America and Europe is simple. Whilst we pursue our relentless quest for material goods at a cheap price, and whilst importers continue to bring in Chinese goods in large quantities, the bandwagon will continue. One morning we will all wake up and it will be too late.

Now consider this. Europe and USA spends billions in supporting third world countries and massive charities help feed the poor in many nations around the world. As our resources and spending power dwindles and China's population benefits and its wealth grows, do you think that the same level of support will come from the Chinese?

It's a changing world and both Europe and the USA better have a contingency plan!

 

And just an afterthought

Does anyone here actually understand the Chinese? Has anyone visited the Pearl River Delta and seen the enormity of what is happening?

Chinese Proverb: An ant may well destroy a whole dam.

 

Of course my previous statement "above" isnt based on rational economic policies, assuming that one should have long been aware of the fact that there exists no “rational” economic policies. Policies are always “rationalized”. But that’s a further subject in philosophy and economics. So now let’s take a look at some basic economics.

Talking about fair trade, fair business. What does capitalism claim? In order to make fair trade, trade must be conducted at markets that are liberal. Freed from a governing force other than supply and demand. Now let’s take a look at the business conducted at the so-called liberal markets.

What are the conditions for a liberal (and thus fair) market place?

A market should have:

• Uncountable amounts of buyers
• Uncountable amounts of sellers
• Right to equal markets information
• No limits on what you produce
• No limits on what you buy
• No limits on the import and export (circulation) of the goods
• And a homogeneous network of goods distribution

Name me one liberal market… Not even one?


Even in England, the birth place of “liberal markets”, you can not find any liberal markets. Adam Smith himself admits that there isnt such thing as liberal markets, they are rather idealized. If markets arent liberal, then they are the subjects of something, they are dependent to something. And what is it called together with its artikel bitte? Das Kapital.


Who accumulates das Kapital? Fair people?

“Artificially low prices” A very romantic sentence in deed.

Making it illegal to peg a currency to a foreign one? Okay, say Hi from me!

Exactly what kind of economic laws are you talking about? Because your law just restricted Int’l Money trade. How will you stop governments from buying each others currency? China, US and the EU peg their currencies. Every government has an “invisble hand” (independent Central Banks) that buys and sells foreign currencies to regulate the prices. And that is considered normal, although overlooked by almost everybody.

By preventing “pegging”

I presume you sugget we go back to the gold (and the Pound) standard. I also presume, that you want the US Dollar to be the standard which can only be printed by the USA. I also presume that you’ll want to show the Federal Reserve as a guarantee to “camouflage” the US inflation caused by debts.

What just happened to liberal markets?

There is no fair trade. You should see this. Wild American environment policies make it the number one polluter in the world. The pollution USA generates is 26%, while USA population consititutes only the 4% of the world population. The USA alone is responsible for the quarter of the pollution in the world: The USA is the smoker in the elevator. Does it have anything to do with this thread and fair trade? Before you decide, I suggest you find and read the old volumes of the magazine The Economist. Where American and British “organic” scientists are suggesting the export of pollution to the periheral countries, such a Angola, Kenya, Taiwan and etc. American Bureau. Of Statistics and bullshit estimes that a citizen in West costs more than a citizen of a peripheral country. Therefore pollution of the peripheral is justified.


Now talk about fair trade.

 

Pfrrt! Their just winning at the game...

 

First time I read this I intended to respond in a similar manner, but, not having enough time until now, I realized it really isn't necessary. It's quite futile to fight an "active will not to know" until people are compelled to invent new approaches and, consequently, new socio-economic forms.
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"In the west we are more caring and concerned about global warming, the social welfare of our people and we protest when we think things are wrong. China looks after its people in a different way."

No, the governments aren't really so much more "caring", but they are clever enough to realize that, after about 170 years of the labour/socialist movement (I'm refering to the Paris Revolution in July 1830) & dozens of uprisings and revolutions (there were for instance 3 revolutions only in the 20th century Germany, and almost a fourth happened in the early 50s), it is impossible to mindlessly exploit the workforce of the developed countries.
Furthermore, it is precisely the existence of sweatshops and brutal exploitation in the Third World (colonialism in the past, neocolonialist "globalization" today) which allowed for the advancement of the Western living standard (see World Systems Theory for instance).
Lastly, it should be noted that the traditionally union-busting WESTERN TRANSNATIONAL CORPORATIONS are bitterly opposed to the intention of the Chinese government to introduce the only, national trade-union in Chinese workplaces (see Chinese wildcats, Freedom anarchist fortnightly, London, 27 November 2004).

"Only a hundred years or so ago from the sweat shops of the Industrial Revolution to the cotton fields of the USA we relied on human misery to produce goods at cheap prices and to dump those goods on countries around the globe."

What on Earth makes you think this doesn't exist any more? One of the basic effects of globalization is the transfer of industrial production (the "dirty" work) from the core to the periphery. This often means having corporations such as Nike who exploit child labour or the Coca-Cola Company which killed strikers in Columbia and certain African countries.

"Now consider this. Europe and USA spends billions in supporting third world countries and massive charities help feed the poor in many nations around the world. As our resources and spending power dwindles and China's population benefits and its wealth grows, do you think that the same level of support will come from the Chinese?"

Again , I point to my article (http://www.hipforums.com/forums/showthread.php?t=45319):

"The U.S. Senate passed an executive order in 2000 for $75 million in aid for the poorest countries of the world, which is one tenth of the price of a B-52 bomber. The same order appropriated $1,3 billion for the Columbian army, which is one of the worst violators of human rights in the world, as Pilger states in his above-mentioned book."

ONE OF THE BASIC (and most despicable) FACTS about the present global capitalist economy is the fact that there is a net flow from the periphery to the core, i.e. MONEY (not to mention resources and raw materials such as Iraqi oil or Indonesian and Brazilian timber) IS ACTUALLY BEING SHIFTED FROM THE PERIPHERY TO THE CORE. THE POOR COUNTRIES ARE GIVING AWAY TO THE RICH FAR MORE THAN THEY ARE RECEIVING. The so-called "debts" (originating from the early postcolonial period of national liberation struggles after the WWII) have actually been repaid looong ago. The problem is that this is usury, plain & simple. They aren't really repaying debts, but paying the enormous interest rates. Here's a short summary of the debt crisis(which is only one of many symptoms of capitalism) :

-five-fold increase of debt in 1970s for non-OPEC underdeveloped countries
-steep rise in interest rates through the US anti-inflation policy (1980s)
-restructuring of loans in the 1980s – re-negotiation- resulting in much higher interest rates

- the newly negotiated loans actually increase the level of debt

- in six years from 1990 to 1997 underdeveloped countries paid out more in debt service then they received in loans – total transfer of money from the poor South to the rich North - $77 BILLION



Besides, even if they were "spending billions in supporting third world countries" (poor chaps) I subscribe to Oscar Wilde's statement in "The soul of man under Socialism":
"Their remedies do not cure the disease: they merely prolong it. Indeed, their remedies are part of the disease.(…)It is immoral to use private property in order to alleviate the horrible evils that result from the institution of private property." This is what makes "liberal" boneheads such as Bono disgusting.

Love,
Dan

 

OK, I concede. They have been forced to care.

Hang on. I never said it didn't exist. I was merely pointing out that go back not too far in history and the west were the biggest culprits - my point being, who are we to judge China.

With regard to support, aid, charity etc yes I tend to agree that the Western governments could do more and follow the example of their peoples who do in fact donate more to charity and third world causes than most countries outside the west. Please don't scream that everyone else is poor because they are not. Arab countries and plenty of other wealthy states around the globe could do more to support their own people let alone donate further afield.

Sometimes you have to wonder - if the boot was on the other foot then what aid or support would we get?

Maes - Some very good points you made but then all governments act this way right? Turkey had a huge protection tariff against imports not so long back but wanted more opportunities to export without tariffs being placed on it. Turkey is not exactly a glowing example of free world trade is it.

Selam to you by the way I am not trying to slag off Turkey, merely an observation.



En Buyuk Besiktas - Baska Buyuk Yok

 

Selam Cobalt Blue. Abi ligi takip etmiyosun galiba, BJK 11. sýrada filandý en son. Ben þahsen Galatasaraylýyým ama UEFA kupasýndan sora býraktým bu iþleri

Neyse baþkalarý da anlasýn diye ing. devam ediyim.

It's true that the period called "ithal ikame donemi" wasnt very successful for Turkey (during which we tried to protect national industries) but it's even worse now.
Today's post-industrialised countries have long been shielding their "infant industries" from more competitive imports. In a simple historical example: That was the main reason for Anglo-Dutch wars. Even today, Turkey can not sell Textile goods freely to the USA, Bush has set import tariffs against European steel, Europe tried to set quotas for American beef, during the Uruguay Round 3rd world countries with no tech. superiorit at all, begged 1st world countries to buy their agricultural goods. These are the defects of the "so called free" markets.

To make it short, countries that have the upper hand, always protect their own markets and force you to open your pre-mature markets so that they can easily conquer. It's basically what Ricardo says by "comperative advantages". But there is no comperative advantages. Poor is almost "sentenced" to grow agricultural goods or labour intense goods (not technology intense) while the rich enjoys the capability of producing the both. They only make you produce the labour intense goods because they are the ones with relatively lower profit margins.

But above all, I'm not saying I'm against free markets or I am for them. All I say is that they do not exist. There aren't any liberal markets in the world and there can not ever be.

The best we can do is to re-allocate distribution to achive the universal right to equal opportunities for everyone.
That is, a smaller Gini Co-efficient.