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Washington & China to Meet on Trade, Economic Recovery & the Zen of Cultural Learnings of America for Make Benefit Glorious Nation of China
Perhaps Borat put it best. Great Success!
China remains a growing and evolving power within the global economic community. China’s size, beyond mere physical and social parameters, shows considerable potential going forward in a challenging global economic environment.
The Chinese will be in Washington in a series of talks discussing the global economy, trade, currency and sustained growth.
How well these talks go (or not), some feel will have a profound effect on the US economy “recovery” (notice my use of quotations) and how many US jobs, with unemployment currently looming at around 9.5%, are created.
China’s Growing Global Competitiveness by the Book
The Global Competitiveness Report of 2008-2009, as published by the World Economic Forum with direction from German economist and forum founder Klaus Schwab and Harvard University’s competitive strategy guru Michael E. Porter, utilizing the 12 pillars of economic competitiveness - ranks China for the first time in the top 30 of 134 nations as analyzed in the Global Competitive Index (GCI) report. While the prior year’s 2006-2007 Business Competitive Index (BCI) as originally developed by Porter, ranks China within the middle at 57 out of 116 countries and takes a macroeconomic approach to assessing a nation’s competitiveness. The United States is ranked first, (of course, what else?).
The World Economic Forum defines competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country,” productivity parlaying into a level of sustained prosperity for a given economy. You can imagine how hard it is to value competitiveness when the world’s markets are strained as they are, or skewed toward appeasing the public’s notions of “recovery” (there’s that word again…).
Porter, in The Competitive Advantage of Nations (1990) addressed international competitiveness not in terms of static trade or economic performance but “in terms of the raising of incomes over time through trade and the attraction of foreign investment…” Further, competitiveness is “determined by the productivity that a nation achieves in using its human, capital and natural resources.” Clearly, countries like China had dominated in theses arenas as of late, despite coming under much scrutiny and controversy by the United States, among others.
China’s rank within the GCI is improving- and while within the top 30, benefits greatly from its large and rapidly growing foreign and domestic market size offering considerable economies of scale. Macroeconomic stability, a surplus government budget with manageable debt levels as well as innovation, patenting, R&D spending and higher educational centers/research all on the rise, make China a considerable force in the global arena. However weary financial markets, restrictive investments/cash flows, and inadequate securities, financial and accounting standards/regulations maintain China as a challenge with vast room for improvements.
China’s improved competitiveness will sure be challenge in the current worldwide financial markets (despite recovering Dow 9,000) in turmoil, North Korea playing “the Duke” John Wayne (or "the Nuke" if you will) with missile tests and nuclear threats; and as leading competitive nations, namely the United States, Japan and greater Europe struggle too to innovate and differentiate to maintain dominance as key competitive nations.
Back in January, 2009 at the Davos World Economic Forum, Chinese Premier Wen Jiabao made a statement regarding China’s economic growth- “It will be a tall order… but I still hold the conviction that with hard work we will be able to attain this goal” in relation to China’s 2009 GDP growth falling slightly to 8% from a 9% forecast; this seems a “typical” response, given the times and the overall Chinese mindsets.
Not to mention it reads great coming out of a fortune cookie.
While optimistic, some American economists who are more linear in their thoughts given the current state of the world financial markets as may see this as cockeyed or skewed. Since the Chinese markets right now are driven by the production of goods consumed elsewhere, and the financial and economic outlook recovering from turmoil, I believe the demand for these Chinese produced goods will decline- bad for China’s coveted GDP.
While “hard work” is an admirable virtue, the solution is not as easy in this complicated, dependent global economy in which China hopes to prosper within. The statement looks to a more philosophical, paradoxical, “saving face” approach of which the Chinese are known- again, something you’d hear coming out of a prophet.
I do believe it is possible for a sustained GDP growth rate in China for 2009- although not as high as desired or explained, given the growing and expanding Chinese domestic market. But this growth and wealth is largely dependent on an overall global market (currently) mired in economic uncertainty, distrust and turmoil.
If China does not adhere to these growth statements, it may possibly fuel to the negative beliefs that China is perhaps just a “flash in the pan” when it comes to sustained economic and competitive prosperity; if only to be the victim of being optimistic. There’s a fine-line between optimism and failure here. The overall implication will be that China has more room to grow socially, politically and financially to realistically and effectively compete in the global economy.
The Trade Deficit
A few years ago Henry Paulson used talks to urge China to let its yuan to rise in value against the dollar, making it relatively cheaper for the Chinese to buy US products. US manufacturers having since blamed an undervalued yuan for record US trade deficits with China - and, in part, for the subsequent decline in US jobs. While the yuan has strengthened over 20% since 2005, its been little changed since last year, the Chinese are beginning to fear that a strong yuan will threaten its exports- hundreds of billions worth, mainly to the United States.
Not to mention that a relatively weak US dollar, impairs China’s considerable investments in US debt. But that’s another story, for another time.
With the talks starting tomorrow, the Obama administration intends to remain focused on the trade gap- stressing that China can't rely on U.S. consumers, with rising household savings rates and shrinking consumer spending, to pull the global economy out of recession as they may have done in the past.
In a story written by the Associated Press- "Perhaps the most important message we are going to have for the Chinese is that there has been a fundamental change in the U.S. economy," said a senior administration official, “who briefed reporters on the meetings under rules that did not permit use of his name. " Further the official states- “the U.S. economy is going to recover, but it is going to be a different type of recovery than what the Chinese have seen in the past."
I love how the Obama administration is telling us it’s going to be “different” but does anybody really understand, or have a clue as to how? Back to my quotation marks around “recovery” explain to us “how.”
Maintaining Our Competitiveness
I think Washington must set the example with China by supporting US companies and institutions to explore and promote the American business spirit, mindsets and ventures in China (and abroad, of course). While some would argue a bit flawed, these American qualities bring experience, a proven track record for overall profitability and a beneficial precedent.
We as Americans have set the trends (for better or worse) since our inception over 200 years ago, pioneering a capitalist structure we have brought to others, but that has never been quite replicated or replaced elsewhere. Although not perfect, we will perhaps always be the top trendsetters (in rank anyway) for the standards in which counties effectively compete on a global scale, maintaining our top GCI and BCI positions.
I believe we can fight our own recessions by effectively helping other economies like China in expanding their capital beyond mere monies or profits. With the right approach, virtue and open mindsets, both China and the United States can learn from each other to battle the pending economic storms and challenges that lay ahead from social, political and economic standpoints.
We just have to figure out “recovery.” By figuring out “how.” We have to get to "Great Success..." Together.
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Will they make sexy time?
Timmmah - door to door bond salesman
LOL
Well, let me get the popcorn and beer ready for the kickoff! Rah-Rah-Sis-Boom-Bah
Enough will the little pep talks. Let's just cut to the chase with the last paragraph.
"I think Washington must set the example with China by supporting US companies and institutions to explore and promote the American business spirit, mindsets and ventures in China (and abroad, of course). "
When did mission statement for the government change from "We the people..." to "supporting US companies and institutions"? It would seem that the Chinese govt. doesn't need any examples on how to support businesses because they do it quite well. As far as mindsets and spirit, it would seem that the US govt. should pay attention to those qualities here in this country before tackling a billion more.
We just have to figure out “recovery.” By figuring out “how.” We have to get to "Great Success..." Together.
No, "we" don't "have" to do anything. I'm recovering, slowly but surely everyday. Since you didn't define "Great Success", I guess I, as an individual, will define it for myself.
I have taken some time to reacqaint myself with the words and definitions of what it means to be an American. For example, some definitions of "Liberty":
Maybe those are some of the products and mindsets we should be trying to export to other countries, instead of maximing overall profitability and expanding capital.
DebtorShredder- I appreciate your well-thought, quite literal responses.
While there's a lot of good in China's intentions and results- there's still a bit of, well, lack of transparency/accountability in a lot about what they do or don't. While they've demonstrated quite a lot, there's still more to be seen. Read this as you may.
And while our Constituion has not changed, our role, position and fight as a viable part of the ever increasing global community has changed- and our business efforts are a reflection of our people. Right or wrong.
Obviously, there's a seemingly lack of "great success" on both sides, afterall, we wouldn't be in talks if all was well- and all is not well.
Success is indeed how you define it, but it's also what you make of it all the same.
Maybe those are some of the products and mindsets we should be trying to export to other countries, instead of maximing overall profitability and expanding capital.
"I believe we can fight our own recessions by effectively helping other economies like China in expanding their capital beyond mere monies or profits. With the right approach, virtue and open mindsets, both China and the United States can learn from each other to battle the pending economic storms and challenges that lay ahead from social, political and economic standpoints."
Perhaps we do agree, albeit in different paragraphs and words...
I'm being literal because, without it, words lose meaning. You throw them around like a two-year old toddler handles toys in a play room. An amalgam of buzzwords, consisting of accountability, transparency, global community, and viable are not impressive.
"...and our business efforts are a reflection of our people. Right or wrong."
Wrong. If you think that business efforts are a reflection of people, than you sir, have alot to learn about how to measure a person. Character, integrity, and virtue are but a few of the ways I see. So, perhaps we don't agree.
By any chance, do you work at Goldman??
"...and our business efforts are a reflection of our people. Right or wrong."
Wrong. If you think that business efforts are a reflection of people, than you sir, have alot to learn about how to measure a person. Character, integrity, and virtue are but a few of the ways I see. So, perhaps we don't agree."
Do you believe we've reached this vortex of economic and social dysplasia by accident? Business and the way it's conducted is a direct reflection upon it's leadership, morals,character and integrity of it's people. I suggest you reread the thread and reconsider your less than thoughtful response.
Greed, corruption and excess in business has gotten us where we are today and that's a direct reflection of..........people. And on a long enough timeline, you should know the rest.
If you are lost, all roads lead to the same place.
Is your identity based on your place of employment? Do you wake up and say, "I'am IBM"? Of course not. So how can a business reflect who you are and what you stand for? Maybe you haven't questioned yourself about what you do stand for. The mirror is a lonely place because the answers are not always gratifying. But it's honest and open everyday.
Greed, corruption, and excess benefit leaders, not followers. By relinquishing self-determination to a few entities that have been permitted to exist in this country, we have ceded personal control and allowed them to dictate how life should be lived. Should govt.'s listen to it's citizens or should citizens listen to their govt.? How do you feel when policies are crafted that seem to ignore the will of the country? Powerful or powerless?
A suggestion would be that next time you allow someone to lead you, you are happy with the direction they take.
I guess a rat in a hat says it all. Looking in the mirror, how's that working for you??
Compared to your paper bag, better, but I'm still looking for improvement.
Thanks for asking.
I guess I'm a rat in a hat too.
I agree that words indeed have meanings, and they must. Otherwise, we can change the meaning of our communication ex post facto. We know that nobody ever really does that!
The thing is, we have nothing to gain but prolonging the relationship that is a knife to our throat by 'learning from' china when they feed us lies. If they were actually a collection of entrepreneurs competing for price structure with each other (and unsubsidized) then they could come to the table. I am a fan of outsourcing, but I am not a fan of the violent, virulent defense of trade agreements that only WE are expected to honor.
Now, this brings up another point, we are not perfect either, but instead of just saying "hey nobody's perfect, you lose a little we lose a little, and we won't talk about it." (ie subsidizing sugar growers, and certain kinds of local production etc,) we should fix it, so we have a damned leg to stand on, and then, encourage china to hang out too. Instead of china and the US both being knives to eachothers throats, we could potentially sustainably contribute to eachothers economies.
Now, it's a game of musical blackmail (thats a reference to musical chairs) and right now, they're about to sit in 'our' chair. So, do you want to turn the tables and give the US the upper hand in this back and forth for now, only to continue fighting it out later, or should we both agree to follow the rules we've already agreed to follow?
Compromise is not this holy happy maker folks like to pretend it is. I'm about to speak generally now, (not in any way insinuating that the status quo of trade policy in the US is a shining example of honorable behavior.) If you are right, and the other guy is wrong, you have only lost something, and gained nothing by giving a little in negotiating with the target. They, on the other hand, who had nothing have gained some of what only belonged to you before. What's your best alternative to the negotiated agreement? Walk.
PS Almost forgot to add: They should also say the same shit about us when we devalue the notes we sold them.
Yes, the tone in this was slightly different to regular posts, this seemed to be a US flag waving monologue. Lest we forget that democracy on a political level in the US has been dead for many years, with a bi-partisan approach to politics that caused this mess in the first place. (And who won? - China)
China within the last 15 years has come out of a socialist/ communist political structure which embraces Capitalism (and a little democracy, even though on my many vistits to China it has been suggested that I NEVER talk politics ONLY business). Embracing capitalism has obviously been very good for China, you only have to go there to see it, the peasants have moved into factories (earning very good money for there families), there is now a burgeoning middle class, and of course the elite - which is practically based on everyone (and their families) that have been in government over the 20 years. The arguement that without the US buying their goods China will fail completely is both arrogant and idiotic, China ARE and WILL BE the dominant force, in Asia, Middle East, Australia, South America and Africa. Whilst the US have been out bombing the Middle East and ignoring everywhere else, with a mantra akin to Caesar, Capitalism has been growing so very STRONG in China!
Capitalism in the US however has lurched into the last bastions of civilization (modern day Rome), where the political, government, banks and businesses wrought every cent out of the general masses to pay for their cocaine bingeing, champagne drinking, Bentley driving, worth driven, political shenanigans (with little or no real business to speak of). The ripping of the American dream - just a home to live in, a place to dwell, a place to bring up a family and children was increasly monetized to a degree where only the bonuses of bankers won.
The paint covering the cracks and the Geitner/ Obama smile (Bernanke - frown) is getting thin, we will see what Thursday brings.
Naughty sugar high. Somehow I wish "made in China WTF" guy held those negotiations. The least it would be funny to read about the stellar achivements of those talks.
Spirit? Mindset? You mean we're going to teach them to sell fraudulent insurance and worthless mortgages to gullible Europeans?
The Manipulation Olympics
I give the edge to the team from China - you just can't beat 'Outright Slavery' with the 'Jobless Recovery' technique.
The Chinese are coming here to unload some of their US Dollars on hookers and alcohol.
Their first question will be "Where are the outlet shopping malls?"
Funny how the meeting is this week when the $199B bond sale is on, roll up, roll up please buy some more, we are good for it, honest!
I'd also like to know when this was scheduled! A 150 person junket scheduled the afternoon before?
And when did zero hedge become the US gov's PR department? 2000 words on why the US is the best country in the world, and why all other nations should aspire to be just like them.
Yes, the tone in this was slightly different to regular posts, this seemed to be a US flag waving monologue. Lest we forget that democracy on a political level in the US has been dead for many years, with a bi-partisan approach to politics that caused this mess in the first place. (And who won? - China)
China within the last 15 years has come out of a socialist/ communist political structure which embraces Capitalism (and a little democracy, even though on my many vistits to China it has been suggested that I NEVER talk politics ONLY business). Embracing capitalism has obviously been very good for China, you only have to go there to see it, the peasants have moved into factories (earning very good money for there families), there is now a burgeoning middle class, and of course the elite - which is practically based on everyone (and their families) that have been in government over the 20 years. The arguement that without the US buying their goods China will fail completely is both arrogant and idiotic, China ARE and WILL BE the dominant force, in Asia, Middle East, Australia, South America and Africa. Whilst the US have been out bombing the Middle East and ignoring everywhere else, with a mantra akin to Caesar, Capitalism has been growing so very STRONG in China!
Capitalism in the US however has lurched into the last bastions of civilization (modern day Rome), where the political, government, banks and businesses wrought every cent out of the general masses to pay for their cocaine bingeing, champagne drinking, Bentley driving, worth driven, political shenanigans (with little or no real business to speak of). The ripping of the American dream - just a home to live in, a place to dwell, a place to bring up a family and children was increasly monetized to a degree where only the bonuses of bankers won.
The paint covering the cracks and the Geitner/ Obama smile (Bernanke - frown) is getting thin, we will see what Thursday brings.
I have been watching you guys throwing bricks on Goldman for weeks. Come on guys, wake up, Goldman has helped U.S to squeeze other countries like China in the global market (commodity, currency, you name it). Now you start to blame it collected few extra billion $$ from tax payers. Be realistic, guys!
Yes Goldman squeezes China and makes money from speculating and increasing commodity and currency prices, does it do it for the good of whole of America? Or JUST for the company (which uses tax loopholes, to pay LESS than 15% of tax per year)and its 28,000 employees that it pays $700K bonuses to? Who inturn have multiple loop wholes in tax payment and a tax advisory department that they can go to seeking ways of paying less.
The point is, Goldman is not good for the US, it is only good for itself and its employees!
Good thing Clinton is in the cabinet, the Chinese know that she'll take a bribe.
Will any of the 150 delegation be staying behind as advisers to help run the US economy?
Off topic: cool website name for all you "icanhascheezburger" fans.
http://icanhastarp.com/
USD Collapse Imminent
http://www.safehaven.com/article-13990.htm
You know if I had 2.2 trillion invested in an experiment gone awry, I would probably want to come have a look at the results
myself.
The American economy needs to get the Chinese to invest back in the states.
Travis,
To me it feels like you are parroting propaganda instead of giving a critical report of what is happening.
At first glance China is a story of success. However, how much of this success is a result of an artificially undervalued currency and abuse of the printing press? Credit growth seems to be out of control in China, that is not a sign of a sustainably growing economy. Lending somebody the money to buy the own products like it was done is not necessary a good investment, but it yields the power of the creditor over the lender. This will be worth watching.
The paragraphs after “Maintaining Our Competitiveness” sound like pure propaganda without substance. The Forex market has a different viewpoint on this; the US$ is not exactly an example of strength. Moreover, replacing high-paid manufacturing jobs with low-paid service jobs that do not compete internationally is not an indication of an economy in the top position either.
Gunther
" I think Washington must set the example with China by supporting US companies and institutions to explore and promote the American business spirit, mindsets and ventures in China (and abroad, of course). While some would argue a bit flawed, these American qualities bring experience, a proven track record for overall profitability and a beneficial precedent "
You, Sir need, to take some sociology classes, or some PolSci classes , because it is apparent that you lack of any perspective what a country, any country should represent and promote on its foreign policy agenda. It is not promoting the business interest of a selected few, or enforcing an ethical or political belief system on other sovereign nations, nor should foreign policy agenda be focused on improving the profitability and global market share of private interest. Those countries who engaged in this sort of foreign policy were defeated back in 1945, and they were described as fascist. The only goal of any foreign policy agenda is to promote the interest of ALL its citizens trough diplomacy and sustainable political and economical measures. And furthermore not be ethnocentric and lack respect to other sovereign nations. You, Sir, either don't posses the understanding of this issues, or you choose to simply ignore the historical examples of failures of such policies. And i don't know what is more disgusting to me; you're lack of knowledge on the topic you're writing about, or your choice not to address the blatant disastrous irrationalities, and unsustainability of the system you so much advocate.
Hey Chinky- irrational, unsustainable whatever you want to say about it- it works. And it's been the envy of China to even come close. When China stops slavery- and all the bullshit against humanity crimes they're known for over there- maybe then they'll get the right to figure out a better way. I don't Travis has to understand all the issues- just realize they're there and they are.
Are the frauds by banksters against tax payers crimes against humanity? In these cases tax payers are made slaves without a clue.
Please stick with exposing HFT and other dark arts of Wall Street. You are clearly out of your depth here...
A well written piece.
please do get off from the ideological superiority bandwagon .... it was proven false so numerous time in the history of mankind that it's ridiculous to even list a few examples ... this is a cyclical move which states the end of global dominance for paradigm of infinite growth with limited resources, or as people call it; capitalims on steroids ... and this piece is everything, but is not well written ... the matter a fact it's so false in so many ways i can't figure out why was it even posted ...
At least it wasn't written in broken English! Someone has a chip on their shoulder.
well I'm so fucking sorry for English not being my first language, you little Nazi grammar fuck, but at least i can say that i know six languages fluently, something i am sure you can't..... and i misspelled one word and one word only ... so go fuck yourself, if you can't find a contra-argument which has some value based on the topic which is discussed here.
I'm impressed. At least I now know you DO KNOW how to curse in English quite well.
You sir appear to be missing any appreciation of this oh so important American "spirit"
Behave. Outright insults are really not welcome on Zero Hedge. Humorous critique: much better.
Be nice, anonymous.
+1
FYI A thirty-year-old border patrol officer didn't lose his life yesterday by trying to stop someone from fleeing America. All aboard... Does anyone have two tickets out of this hellish society? While it ain't perfect, name one society that is. Then and only then, you and I can sail off into the sunset to that destination.
True we are not defined on what we do, but how we do it. Many have lost their way, but hopefully in good time they will find their path to a more promising existence. We are on this earth for a finite time to learn from our mistakes. No one is perfect. We can all learn from each other. Calling someone egocentric or bashing someone's editorial is not the best path to our coexistence. Anyway keep up the good fight; after all isn't that what free speech is all about?
So what's the game plan w/ the chinese. Are we going to ask them to return the lost manufacturing jobs ?
Travis, looks like you struck some nerves in just reporting an upcoming meeting.
I'm a bit surprised by some of the overreactions of a few of the participants in the thread. I don't believe you reported in an egocentric flag waving manner and feel that the responses tendered were overdone and biased. Personally I found the tone of the piece refreshing and in line what ZH represents and doesn't represent. They tried to kill the messenger in spite of not understanding the message.
Ummmmn, I think its this bit:
"We as Americans have set the trends (for better or worse) since our inception over 200 years ago, pioneering a capitalist structure we have brought to others, but that has never been quite replicated or replaced elsewhere. Although not perfect, we will perhaps always be the top trendsetters (in rank anyway) for the standards in which counties effectively compete on a global scale, maintaining our top GCI and BCI positions.
I believe we can fight our own recessions by effectively helping other economies like China in expanding their capital beyond mere monies or profits. With the right approach, virtue and open mindsets, both China and the United States can learn from each other to battle the pending economic storms and challenges that lay ahead from social, political and economic standpoints.
We just have to figure out “recovery.” By figuring out “how.” We have to get to "Great Success..." Together."
I am hearing the star, spangled banner?
Don't know what you hear. If you think we can get out of this mess by ourselves then you hear nothing.
I would point out that the "capitalist structure brought to others" has usually been at the point of a gun. The use of military might makes the US a "trendsetter" alright; it just that the rest of the world would rather not follow that "trend".
Era of American entitlement is over, unless they want to use some military power but even that is dubious when it comes to its real effectiveness.
China is not interested in getting to know American "spirit" or whatever the fuck you call it. China is intersted in owning you and they will, with time. They are patient.
Timmy will suggest that we begin to name our children "eight", in deference to Chinese superstitions.
Markets will love you long time..
Disclosure : I'm not American.
Thanks, Travis, for trying to move the tone at ZH up a notch.
ZH seems to have a rather merciless bunch of commentors (I love it!).
It is great to see words like virtue and 'together' starting to show up.
It is probably just me, Travis, but this post sounds more like a call for help than a diatribe or rah-rah American propaganda. Every ideal that honest Americans live and die for is being bashed by the American triumviratus (FED, GETCO, PIMCO). It must be hard.
I wrote a while back (in a different context) "Despite all the current madness - May all freedom loving people in the world be able to remain friends with freedom loving Americans." I would suggest that people all over the world have great respect for the honest and hard-working Americans (and their ideals)! I would also suggest that their is not much love left for US foreign policy or the 'Federal Reserve Notes' (aka US dollars) printed by the triumviratus.
all the best from
Namke von Federlein
Apocalypse Now- OK, I like much of this article especially the part about the Chinese wanting to save face relating to their up and coming position in the world and the one liner that their 2009 GDP growth forecast falling slightly from 9% to 8% reads great coming out of a fortune cookie.
I don't usually give constructive critiques, but the maintaining our competitiveness section is both confusing and questionable, as if Travis was an Ambassador to China and had to make some final statement about how we can all just get along and sing cumbia (dialogue can be constructive). What does the first paragraph of the section even mean? - it states we have a proven track record for overall profitability and a "beneficial precedent"? Then later in the last real paragraph it states we can fight our own recessions by effectively helping other economies like China in expanding their capital beyond mere monies or profits (seems contradictory from first). I would agree that human rights are more important than solely profit if that is the point that was being made. The history of the world has been marked by the struggles between civilizations for resources, and that has been a zero sum game like our markets resulting in most of the wars (about resources despite what leaders might tell their followers). Fortunately economists came up with country competitive advantages, so each country can specialize in something (cheap labor & efficient production - China / ingenuity & optimism - US). Global trade can align objectives and avoid world wars, unfortunately with a global depression we could gravitate toward military strategies to secure resources. My 2 copper pennies.
The Chinese are in DC because the US titantic is going down and taking everyone with it. They are in worse shape - they've got over a billion people, a lot of them are stupid too. That's a lot of mouths to feed. I expect they will start eating one another.