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Jim Rogers on Chinese Currency and Trade War: My Thoughts
By Economic Forecasts & Opinions
In a Business News Network interview on Mar. 18, Jim Rogers, famous investor and creator of the Rogers International Commodities Index (RICI) speaks about the recent currency and trade confrontation between the US and China:
"If [you] slap somebody in the face, they are going to take a defensive attitude to save the face…I do not know why the United States is doing this in public, ..that never worked, especially with Asians."
Rogers – Float to Grow
Rogers thinks the U.S. should try to explain to the Chinese that it is to their benefits to allow some flexibility in their currency. For instance, yuan's appreciation will in turn lower the cost of China’s imports and its supply chain.
He acknowledges that the Chinese understand that their currency policy will need to change eventually in order to become a major player on the world stage. Although the yuan has appreciated some in the past few years, but it is just not up to the expectation of the U.S.
Rogers estimates Chinese renminbi (yuan) could replace the dollar as the next reserve currency of the world in the next 10 to 20 years.
My Take - Yuan Appreciation Could Increase U.S. Deficit
It is consensus that the United States has strong economic fundamentals attracting high rates of capital investment. On the other hand, the U.S. has a chronically low household saving rate, and recently a negative government saving rate as a result of the budget deficit.
As long as Americans save relatively little, foreigners will use their savings to finance profitable investment opportunities in the United States; the trade deficit is the inevitable end result.
As pointed out in my previous article, renminbi appreciation will unlikely achieve the intended effect of reducing the bilateral trade deficit, and could instead have a negative impact. Unless there is a significant shift in the domestic consumption/demand levels, the U.S. will need to procure either still from China, or from some other sources, but now at higher prices due to the yuan revaluation.
Rogers – A Non-American Style China Real Estate Bubble
Currently, the excessive liquidity trapped in the reserves is essentially causing various bubbles developing in many Chinese coastal and urban real estate sectors. Rogers sees the real restate bubble in China is one of price instead of credit. As such, a bubble burst will likely have a much more muted effect in China than the housing crisis in the U.S.
Rogers – Long Loonie, Short U.S. Bond
Rogers believes the Canadian dollar (loonie) is "one of the soundest currencies in the world on a fundamental basis.” He has owned the Canadian loonie “for years” as a long-term play, with his recent dollar positions as a short-term momentum play.
He also says the only other bubble in the world he sees right now is in the U.S. long bond market, and he expects to short that market in the "foreseeable future."
"The concept of how anybody would lend money to the United States government for 30 years, in U.S dollars, is just incomprehensible to me...even at 6%, it's just staggering."
My Take – Many Bubble Candidates Ahead of China
I've dismissed the so-called "Chinese real estate bubble crash" catastrophic scenario in several of my articles. Admittedly, China's real estate sector is currently in the overheating zone; however, a U.S.-style bubble is less likely primarily due to a much lower buyer leverage as compared with the U.S. and a market structure null of debt securitization.
As for a bubble burst, there is currently no shortage of highly qualified candidates in the Western Hemisphere, with more up-and-comers waiting in the wing. For instance, Europe's PIIGS countries (Portugal, Italy, Ireland, Greece, and Spain), the U.S. and the Great Britain, based on recent rating agencies' warnings, just to name a few.
Rogers – Protectionism = End Game
"Nobody has ever wanted a trade war, as it is the end of the whole game and disastrous for everybody's concerns."
Rogers thinks current protectionism originated in the U.S. has a contagion effect, which will likely exacerbate global geopolitical and trade tensions. He cautions that just as the U.S. protectionism in the 30's did not help with the Great Depression, the current protectionist measures will unlikely have that much positive effect on the economy.
My Take - Serious Trade War Brewing
A synchronized recovery in China and the U.S., as we are presently witnessing, will undoubtedly heighten the competitive currency devaluation. It appears Washington will argue in perpetuity that the renminbi is undervalued as long as U.S. imports from China exceed our exports to China.
Meanwhile, Paul Krugman’s call of labeling China as a “currency manipulator” is being increasingly speculated to be included in the Treasury Department’s semi-annual report on foreign-exchange-rate practices, due to be released in April.
Tensions and trade feuds are bound to persist since the U.S. places more emphasis on the short-term "fixes" through price and the yuan exchange rate; whereas the Chinese put more emphasis on medium and long-term structural and institutional change.
??????????????????? (One's attitude determines how one sees things) ~ Chinese proverb
Video Source: You Tube
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China's real numbers are a closely guarded State secret.
The Central Government is making plans for five years from now, when the world is very different.
The currency of a country that only respects property rights when it is convenient to do so can NEVER be a global reserve currency .
Indeed. Too bad for the once great US.
yes. that is the risk . but what to own? gold? In a world where the US govt infringes on rights one has to be concerned about confiscation or a 90% GOLD profit tax.
I suppose you could own it in storage outside of the US. Easy to sell if that policy looms large. The Perth Mint is my choice but that is not an endorsement, merely an opinion.
Enough of this conceit: "I have live and worked in Asia/China/Indonesia/ Thiland etc... for 10, 20 or 30 years etc...". It disguises finite experience for the truth of a state of evolving affairs. How good are any of these people at understanding TOTALITY? I mean we are talking about China! What are the criteria for being an expert, a chinese person? I frankly doubt that as well; at best a person like that would be very good at correcting misconceptions. But, what types of illusions are maintained disguised as knowledge. Iremember a pair of Japanese students telling me in the early eighties that homosexuality was a: "Western weakness". In fact, if a person had lived in China his whole life I would have a very strong "trust but verify" perspective on what was said. I could even understand arguments that would disqualify opinions based on experience. I have lived 37 years in the West and is highly educated in its history and philosophy. Now, obviously more knowledgeble than the average person I would not dare flaunt that as being an expert.
By your line of "reasoning", no one anywhere at anytime can have an opinion about anything or even offer an account of what one observed. If that is the case, might as well close down ZH. Incidentally, all of the commentors you criticize offered opinions only; none presented himself as an expert.
Firstly, I understand that people tend to engage in bouts of self-loathing or national self-promotion (i.e., the other side of that emotional coin). That people are overly optimistic about themselves and their investments is natural and to be expected from most people (i.e., it is a human bias/trait). Secondly, I like Jim Rogers as an unbiased commodity investor, but not as a useful idiot and/or China shill. That noted, it always amazes me how quick people are to avoid basic trends, reality, history, etc. In my mind, some key basic reality facts and/or trends are:
1) Regarding China’s recent ‘success’, as so well pointed out by Millivanilli: “China's emergence has been based off of horribly unfair trade agreements, cheap labor, and intellectual property theft.”
2) The standard deviation of Northeast Asian I.Q. is not as great as that of Europeans (most studies showing this are of Japanese compared to Europeans). Therefore, while as Modern Money Me... pointed out that there may be: “in a population of 1.3 billion, there are more Chinese with an I/Q greater than 120” than Americans, they lack many, if any, in the highest I.Q. side of the distribution compared to Europeans (even though their mean may be slightly higher). Which is probably one reason why copying/stealing intellectual property is so culturally acceptable, but not so much in most European cultures. Hating Europeans and loving Chinese doesn’t change this fact.
3) No matter how much Jim Rogers protests, we are likely to shift from a ‘globalization’ paradign to a protectionist one. For example, unemployment is high and still growing in Europe and the U.S. In short, the reality of unemployement alone is not conducive to allowing the labor arbitrage and intellectual theft to continue. This is not something Jim Rogers or his budy Soros might sympathize with, but it is a reality that will likley become a strong trend as the next year or so unfolds. I read somewhere that even if China took every single manufacturing job on the planet, there aren’t enough just for them (something like 100 to 150 million).
4) It was not in the U.S. interests to allow China into the WTO as it did. Especially knowing they would sytematically undervalue their currency and peg it to the U.S. dollar (chalk it up to idiot Krugman type economists egging it on at the time – please note, I believe he won his nobel for trade theory); let alone allow them to steal intellectual property as they do and continue to do. Also, sure American companies steal intellectual property (e.g., Microsoft vs. Apple), but it is a matter of degree, not nationally culturally accepted SOP. I hate it when people bring up one case and apply it to a ditsribution, and step back and think the argument is over.
5) The U.S. has massively overpromised and overspent since around the time Nixon ended Brettan Woods, and that is likely coming to an end soon and in a bad way (i.e., the end game is coming in the next few months to few years).
6) “Neither a borrower nor a lender be.” I just like that one and thought I’d throw it in.
In summary, no matter how much I want us all to get along and do well, it is very likley that neither the U.S. or China is likley to do well over the next five to ten years, but for different reasons (although tied to similar drivers). China won’t do well because their primary drivers are ending (exporting their macroeconomic problems (e.g., unemployment), stealing intellectual property, pegging their currency to the U.S. dollar, buying U.S. Treasury bills, notes, and bonds, etc.). Sure they can can do better than the U.S., but likely not because of export led growth. The U.S. won’t do well because it soon will no longer be able to print money (digitally or othewise) to fund the socialization of the country, and its missing a key piece of its economic base it will have to build in order to survive economically. No sorry folks, generally, the U.S. will need to produce more and China less. How exactly that happens isn’t clear at this point, but that it will happen is likely. How a China acheives huge export led growth through the likely changes coming soon is unlikley; and internally it has way too many people relative to resources to just think purely internal demand will do it. As an American, I can state that yes we have been stupid in our dealings with many countries (China being just one); and expecting essentially socialist warlords to play by western norms and rules was idiotic. But, no, if the Chinese were as smart as some think, what is about to happen wouldn’t be happening.
The future is not yet written, but based on the trends and facts in place today, it doesn’t look good for almost any country. It is my personal hope that, and as the Chinese are often quoted as saying: “may they live in interesting times” (i.e., the Chinese communists and U.S. socialists).
Yeah, those curbs on "third mortages" have nothing to do with a crazy bid on RE.
That sounds a little like Iran's ambition in 1978.
I do appreciate Rogers' tireless pointing out US problems are the fault of the US. All this blame others bullshit is just pathetic. The United States electorate and households have no one to blame but themselves for decades of taking the easy way out.
Something that affects us all... from the Chinese perspective ....
[Most prescient...in 2005]
The piece below is from the China Daily. I thought you would be
interested to see the picture from the Chinese point of view...
[EDIT: This was printed first on SI.]
It's time to take seriously a US-led global recession by Lau Nai-keung
2005-10-06 07:37
I think it is time that we should take a serious look at the possibility
that the US is going to take us down towards a worldwide recession in one or
two year's time.
It is well known that the US is the world's biggest economy, taking up about
30 per cent of global GDP, but it is now also the world's biggest debtor
country. According to the most authoritative person on this subject, the US
Comptroller General David Walker, who audits the federal government's books,
the tab for the long-term promises the US Government has made to creditors,
retirees, veterans and the poor amounts to US$43,000 billion, US$145,000 per
US citizen, or US$350,000 for every full-time worker.
And this figure does not even take into account all the personal debts such
as credit card bills and mortgages. With a low interest rate of 1 per cent
running for the past three years in a row, savings plummeted to just 1.8 per
cent last year, below 1 per cent since January and at zero in the latest
estimate from the Bureau of Economic Analysis. In 2000, household debt broke
18 per cent of disposable income for the first time in 20 years. Credit card
debt alone averages US$7,200 per household.
The US Government indebtedness is financed this way: The US now runs a trade
deficit roughly 6.5 per cent of its GDP and the gap is widened every day.
Its citizens are spending ever more on foreign goods, and with the US dollar
as the international currency, the US Government just prints money to
finance the deficit. And with this money, central banks in the surplus
countries purchase most of the US Treasury bonds as currency reserve.
By now, Japan is the largest creditor of the US Government, and the Chinese
mainland has been a fervent buyer for the last few years. As for Hong Kong,
most if not all of our reserves are in US dollar denominated assets. The US
Government in turn uses this foreign borrowed money to finance as much as 90
per cent of the federal deficit which stood at US$412 billion last year. The
federal deficit is expected to be running at about US$2 billion a day at the
moment.
Put it simply, the Americans have been living way beyond their means for
much too long. On top of this, the Bush Administration is cutting tax at
least three times while fighting an expensive war in Iraq, which has already
cost the country US$700 billion, and currently progressing at US$5.6 billion
per month. Now the US economy is dependent on the central banks of Japan,
China and other nations to invest in US Treasuries and keep American
interest rates down. The low rates keep American consumers snapping up
imported goods.
Any economist worth his salt knows that this situation is unsustainable.
This includes the country's economic guru driver Alan Greenspan, who
recently warned his countrymen that the federal budget deficit would hamper
the nation's ability to absorb possible shocks from the soaring trade
deficit and the housing boom. Now he may have to add two more worries:
soaring oil prices and cyclones.
The US is now clearly in huge trouble, economically, socially, politically,
and internationally. The Bush Administration bungled big in cyclone
Katrina's aftermath in New Orleans, and then a minor rerun from Rita in
Houston, and this will trigger the general outburst of people's
dissatisfaction with the government, leading to great internal turmoil
lasting for many years. In all likelihood, long-term interest rates are
going to rise, and the greatest property bubble the world has witnessed is
going to burst in the next one to two years.
The countdown is in progress, and there is no way that anybody can do
anything to reverse it either by short-term measures such as fiscal and
monetary policy, or through long-term reform of tax policy, entitlement
programmes and even the entire federal budget. This is as inevitable as
gravity, and it will take place under a new and inexperienced chairman of
the Federal Reserve Board. I do not want to sound alarmist, but I see very
bad omens.
To make things simple, let us just examine some key economic issues raised
by some economists:
What if the dollar plummets? Do stocks follow? How about pensions?
What if interest rates soar? How would all the new homeowners, who stretched
to buy with adjustable and interest-only loans, cover their mortgages?
How would consumers with record credit-card debt make their payments? Would
they stop buying? Stop taking vacations? What will happen if they go
bankrupt? New rules going into effect later this year make it harder on such
debtors.
How would a government, which depends on the taxes of a strong economy to
operate, keep all its promises?
To us, the good news is that when the country is in deep trouble, the US
will not have the energy to pick on China. Even when it is necessary to
start another war to divert people's attention, it would pick one much
smaller in size and weaker in strength, like Iran. This will provide a much
more amicable environment for China to make good use of its "period of
strategic opportunity" till 2020 for the country to pass through a turbulent
zone between per capita income of US$1,000-3,000.
But in the short term, now the US not only sneezes, and all symptoms
indicate that it is going to suffer from a SARS-like trouble, the whole
world should take extra precaution not to get infected. One thing is for
sure, some time in the not too distant future, every central bank and
institutional investor is going to dump US dollar and US Treasury bonds.
Once, when a country like South Korea dumps the dollar, the still unsold US
Treasuries in the asset column of Asian central banks - US$2,000 billion
according to some estimates - will collapse. The cheapened dollar will cause
a sudden jump in the US inflation, which forces the Fed to jack up interest
rates. A giant leap in inflation will cause a severe recession, or perhaps a
depression, in the US. These countries' exports to America will dry up,
which in turn will spread the global economic downturn like wildfire.
After the stampede, everybody is going to get hurt, not least the central
bank of China, and the Hong Kong Monetary Authority, which are major US
creditors and with the US as their number one export market. The recent
currency reform of the RMB is most timely, and it is about time we should do
something about the Hong Kong dollar. At the same time, China should make
extra efforts to rekindle internal consumption, and diversify its market
really fast before the great US bubble bursts.
(HK Edition 10/06/2005 page2)
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Read that China Daily article over and over, can't find anything that ZH or TD or any gold bugs here would disagree with. It was written in 2005 though, its like someone predicting Sep 11 2001 in 1998 when the US was at the height of the dot-com bubble and Greenspan was King Solomon.
So what is your point? That America should listen to China? Isn't it supposed to be the other way round, we lecture they take notes and bow in approval (oops sorry, only the US Prezidente bows, and only to a Japanese emperor).
edit dupl
edit dup post
Have to wonder though--what will drive Chinas economy?
They wont have us to sell to-at least not near as much-cuz-we're hooped--
But really--what is there for a growth engine?
They're already overbuilt as far as domestic affordbility goes--
Nothing I see--short of a war--
Nice summary thanks.
"For instance, Europe's PIIGS countries (Portugal, Italy, Ireland, Greece, and Spain), the U.S. and the Great Britain, based on recent rating agencies' warnings ..."
Do we really need their warnings? (Your house is on fire but it's not really on fire yet)
We will have to see how well the Canadian economy does after the real estate bubble pops
The Euro has now resumed it's downtrend on the daily chart and a US dollar rally is coming.
Equity markets can't ignore this for long.
From mid 2009 onwards I warned of an impending USD rally and Euro weakness.
http://www.zerohedge.com/forum/latest-market-outlook-0
gold bow tie sucks
The rise of China but 'Merica is going to jump on and try to piggy back. Giddyup China!!
Before the crash I used to watch JR on Fox Saturday mornings. For years he forecast the demise of Fannie and Freddie. He also ranted about the corruption of Franklin Raines. I could go on and on. The fellow guests and host always treated him like a crazy uncle. At least they weren't as rude to him as Cnbs was to Peter Schif.
Anyway, Jimmy is a patient man and I wouldn't take the other side of any trade with him..
I wonder how much he really made shorting Fannie...
Raines never did make it to jail let alone a courthouse...
He is a named defendant in a lawsuit but the American taxpayer gets to pay for his attorneys, and the likelihood of the suit being substantially promising to justice is remote, or rather, rigged.
I stand corrected.. He may see the inside of a courthouse.
"pomising to justice is remote ... " Swamp, you are an optimistic.
"He also says the only other bubble in the world he sees right now is in the U.S. long bond market, and he expects to short that market in the "foreseeable future.""
I'm with ya Jimmy; the time will come...
I've recently moved from a large asset management firm in the US to a large asset management firm in China. I enjoyed Jim's interview, but the one thing that bugs me about these western interviews/articles about China is the concept that "we just need to explain this to China". As if China doesn't already understand it, and more ironically, as if those in the west actually have a clue.
Some of the sharpest minds on the planet are.. guess where... in China. This includes everything from technology to, yes, economics. If anything, China needs to explain how the world works to the US. Which country is on a generations long-decline?
Welcome to Asia. "Recently" does not an expert make. Let it breathe.
As one with three decades in and around China, I have a slightly different view. There are good points and bad points about China. Yes, they save. Yes, they are willing to work hard under conditions the US outlawed a century ago.
On the other hand, they have absolutely no respect for intellectual property rights of any sort, and feel completely at ease stealing whatever they wish.
China's software industry was built to a large extent off of the theft of the source code for Windows from the hotel room of a visiting Microsoft executive in the 1990's. They combined this with code from open source systems such as Linux, and their domestic industry was born. China's space program is based almost entirely on theft of US technology. Its budding aerospace industry is built on theft of technology from US and European aerospace firms. Pharmaceuticals are regularly reverse engineered, as are computer hardware products. Almost nothing---maybe nothing at all---that China has incorporated into its development was home grown.
This penchant for theft is even widespread in the private sector. For a laugh, Google 'Geely' and take a look at its luxury concept car, something the firms' CEO says with a straight face, "is purely a creation of our own internal design team". Put the photo next to a pic of the Rolls Royce Phantom V. Then zoom in on the hood ornament. Quel coincidence!
Sometimes China lacks the skill to copy accurately. Sometimes they just couldn't be bothered. Remind yourself of that next time you are flying. Look at that engine on your left and consider if the knock off replacement parts for that Rolls Royce or P&W engine were constructed to the same tolerances demanded by the OEM.
The Chinese "miracle" (a word tossed around in Asia almost as much as genius is in the West) owes itself partly to savings and hard work, but much more to the fact that China sat idle for the last two and half millennia while the western world did most all of the discovery and invention. Buying/stealing off the shelf stretches the meaning of the term "miracle".
Of course in a population the size China has, the emergence of their own Gates, Kilby, Tesla, Maxwell, Bernoulli, Edison, Einstein, Hedy Lamarr (yes, that one) is an odds on possibility. When it happens, however, there is probably a long line of folks waiting to steal whatever they develop as payback.
Chinese are credited with always taking the long term view. This is wise. I remember Japan was going to rule the world a while back, and that didn't quite work out as forecast. Given that, I am willing to wait to see if this newly emerged China has staying power, or if it will do what China has long done best: be its own worst enemy.
On the other hand, they have absolutely no respect for intellectual property rights of any sort, and feel completely at ease stealing whatever they wish.I don't think this statement would be understandable to many Chinese. See To Steal a Book Is an Elegant Offense: Intellectual Property Law in Chinese Civilization (Studies in East Asian law, Harvard University) - In China and many other cultures, copying someone's work is considered to be a compliment. Intellectual property laws are pretty much an anomaly when taken in the context of world history, and have existed for a very short time. They are an artificial construct which may make sense to people whose lives are centered around buying the greatest quantity of brightly colored plastic toys possible, but whether or not they really serve "the common good" is at this point open to discussion.
Why don't more people know the history of the US regarding intellectual property? From a Wired article by Lawrence Lessig:
People will "steal whatever they wish" if they don't think they are stealing, and it's hard to make a convincing case against it to someone whose culture teaches that it's a good thing!
A small quibble: The Wired article glosses over the Edison patent issue. The Motion Picture Patents Company collected royalties not just from the sale of movie cameras, projectors, and other devices based on Edison's patents, but also demanded a share of all revenue derived from any movies made with this equipment, in perpetuity. For a modern parallel imagine Mr Lessig handing over to Apple a portion of all payments received for articles typed on a Mac. Edison got away with this in the East mainly because his co-investors included several powerful politicians and judges. Extreme interpretations of intellectual property protection sometimes produce confiscatory (or piratical to use a romantic term) results of their own.
Suffice it to say that every hotel in China frequented by foreigners is bugged (with the possible exception of The Peninsula in Beijing because it is owned by the People's Liberation Army). Your bedroom, the bar, the restaurants.... China is Big Brother.
If you've been in Asia for 30 years and that is the worst you can come up with, then I say, "I won't argue with you, but you haven't been in America for a while." All that bad behavior and more is prevalent in the US as well. China certainly does not have a monopoly on bad behavior.
How many iPhone clones are out there? Copying is often the first step in the learning process. Once you've learned, you can make things better. Just look at Hyundai. Better yet,
China Vies to Be World's Leader in Electric Cars
http://www.nytimes.com/2009/04/02/business/global/02electric.html
Current US monetary and fiscal policy aside, which is bad enough, the US is also not investing enough in education. When I was in graduate school a decade ago, I was the only American in the entire research group. And this was a field of critical technological importance at a top US university. 75% of the students were from China, 20% from India. Many of those students, including some professors, have now moved back to China and India because of the opportunities there (and also because it was hard for someone from China or India to get jobs in anything remotely related to defense in a post 9/11 world). A friend of mine is chairman of a library board at one of the University of California campuses and says his budget has been cut by 66%. His wife's department at the same university had to turn off the phones in their offices to cut costs. Meanwhile, we have
China's bid for world domination
http://news.bbc.co.uk/2/hi/uk_news/education/7098561.stm
The trajectory is clear. The reverse brain drain is well under way.
I know well that the level of education and discourse in the US has declined in the years since I departed. At the same time, having had a close look at Chinese higher education, the numbers of graduates do not impress. They are churning out degrees at the pace and quality of their lead paint toys.
India is churning out a lot of folks who are both intelligent and well educated. We'll see where it takes the country, as they have a lot of cultural hang-ups to overcome yet. Still in the long run Indian intellect and education is something I would bet on.
Chinese education, on the other hand, leaves a lot to be desired. Until proven otherwise, China is merely a comet...here today, then gone and forgotten for another millennium. Ride it, but don't marry it.
Based on the large number of highly educated Indians working in the Chicago area, much larger than any other group, I am starting to believe that India, and the various colonies of ethnic Indians, will dominate the world rather than China.
"Higher education" isn't what it's cracked up to be.
"Higher education" isn't what it's cracked up to be."
OK then, give you that one but that leaves the remaining billion or so that still have more ambition equipped with higher IQs and more talent than North America.
There are no iphone clones, per se. The iphone competitors use different software and different hardware.
There is a difference between trying to the to the same feature set, and out and out copying the product.
As an expat businessman in Asia for 25 years, all spent 'watching China', I totally agree with this view.
In a population of 1.3 billion, there are more Chinese with an I/Q greater than 120, than there are Americans(~300 million). The number of Chinese migrant labors also equal the number of Americans.
Those smart technology minds sure have figured out how to reverse engineer computers and pirate software. Does your firm use licensed s/w or pirated? I thought so.
Spoken by one who obviously knows nothing of the history of tech in the US - they all ripped each other off for years, then they were granted patent rights and things got really interesting...
So your saying CHINA is intentionally engaged in trade war with the US already. We are just chumps who think "they don't understand what's going on"
Yeah, that's my take on this also.
You sound as if you are reading from a company handbook. China is filled with graft and corruption. When you can formulate and then articulate your OWN ideas, I'd gladly take a look.
China's emergence has been based off of horribly unfair trade agreements, cheap labor, and intellectual property theft. Good luck getting porn in the PRC!!!
No more filled with corruption than the United States.
Intellectual property theft like -
grafting of fruit trees, porcelain manufacture, tea growing, gun powder or silk farming?
China is filled with graft and corruption.
Oh? and the USA is vanilla white?
Corruption is a delicate issue. Many times, it is in the eyes of the beholder. Same behaviours are depicted as the ones by smart business people when happening in these places and as corruption when happening in those places.
In the Western world, many social undesirable traits have been exported like corruption. People starting wars to make money as it happened for the US administration (they had personal interests in waging the lastest wars) is depicted as smart moves. It is not corruption because it does not hit US people.
Yep, up to now, China can not export much of its corruption. Maybe this time will come. I wonder if chinese triggering wars for personal benefits will be depicted as corrupted and charged as that or as good business people.
On what the US emergence was based off? Let me guess: innovation and hard work no? This is the main mantra repeated in the US.
Unfortunately, for exterior people, when they study the US history, they might legitimately come with a very different and truer version.
As to porn, you are wrong. There is plenty of porn in China. They are hungry for that.
Believe it or not, I didn't formulate my views AFTER moving to China. I actually put some thought into it beforehand. For my children's sake, I want them to grow up speaking Mandarin because that will be the language of world commerce in 20 years. Resources like ZeroHedge, The Big Picture, Naked Capitalism, and Calculated Risk are aweome. It is impossible to live with your eyes open and NOT see what a slow motion train wreck the US is in. Although I was hopeful when Obama was elected, the subsequent (severe) disappointment, including his continued support for Bernanke and Geithner, made the choice to leave much simpler.
Some of my thoughts from March through August of last year (before I decided to move) can be found here:
http://economicdarwinism.wordpress.com
+1
Great piece. Gotta love JR's comment on 30 yr Treasury's. Ya think he believes USD is about to take a more serious dive?
The fact of the matter is China will likely take steps to squeeze US because they could afford to take some risks given the kind of momentum their own country has to survive minor export shortfalls. My God, they have the developing population already in place. As for the US, well, if we import less thru rising inflationary expenses (precipitous falling USD), we're screwed with a thing called Stagflation!!!