China Thread

[Pacer92]

why would anybody be interested in the South China Sea

its such a back water.

dear God, are we really worried about China passing us when their military uses faxes?

and China certainly never pulls any political gamemanship


i like how when presenting the "other side" you conveniently leave out the rest of the article.

I like how you complain regardless of what source or quotes I use...

If i post an alternative source it's not legit. If I post MSM, it's not the right quotes for you...

Cry me a river, dude...

 

[LouderVol]

I like how you complain regardless of what source or quotes I use...

If i post an alternative source it's not legit. If I post MSM, it's not the right quotes for you...

Cry me a river, dude...

not legit? I never commented on their legitimacy.

I just read the rest of the article and commented on that part as well. as a for instance that article I posted about us raising the tariffs 522% on Chinese steel I didn't just stop at that, and neither did the article. I pointed out how that increase was only on a relatively small percentage of steel and not all steel lessening the effect and the Yay America factor. the quotes you posted from your article only target America while the article continues on and goes over the American side, in which there was a more peaceful way of dealing with these issues than intercepting. The phone call system CUES. the Chinese admit they didn't use this established method and went straight to interception and they offer no validation. That doesn't excuse us from flying close to their coast line but considering the Chinese wouldn't give a distance we MAY not have been within their national territory to begin with.

 

[Pacer92]

not legit? I never commented on their legitimacy.

I just read the rest of the article and commented on that part as well. as a for instance that article I posted about us raising the tariffs 522% on Chinese steel I didn't just stop at that, and neither did the article. I pointed out how that increase was only on a relatively small percentage of steel and not all steel lessening the effect and the Yay America factor. the quotes you posted from your article only target America while the article continues on and goes over the American side, in which there was a more peaceful way of dealing with these issues than intercepting. The phone call system CUES. the Chinese admit they didn't use this established method and went straight to interception and they offer no validation. That doesn't excuse us from flying close to their coast line but considering the Chinese wouldn't give a distance we MAY not have been within their national territory to begin with.

I linked a western article with western spin. Again, we are deemed the victim and not the aggressor, when in reality, we are in their sphere conducting recon flights, but then say "not fair" when we are intercepted..

The same thing with Russia....

 

[LouderVol]

I linked a western article with western spin. Again, we are deemed the victim and not the aggressor, when in reality, we are in their sphere conducting recon flights, but then say "not fair" when we are intercepted..

The same thing with Russia....

never said anything about the intercepts being wrong, just pointed out we have a phone call system set up with the Chinese specifically for this situation, and they didn't use it. they escalated beyond that, now they might have been justified in the intercept but I want to know why they didn't use the more peaceful and cheaper alternative available to them. and yeah if we were in the wrong area, we shouldn't have been then thus I have no problem with the intercept. this wasn't a case of getting within 25 feet.

this is a non story when other countries do it to the US not sure it needs to be a story for the Chinese except for the increased attention on the SCS right now.

 

[Rasputin_Vol]

In historic move, U.S. lifts arms sales embargo to Vietnam

 

[AM64]

In historic move, U.S. lifts arms sales embargo to Vietnam

Funny how politics and bullies (China) make strange bedfellows. The Philippines want US support, too - guess maybe they should have thought further down the road before kicking us out. China might have thought a little differently in the first place with major US bases still in the Philippines.

http://www.nytimes.com/2016/05/20/world/asia/benigno-aquino-philippines-south-china-sea.html

The area is important enough that we need to support both to nip Chinese aggression before it continues to grow.

China is building a base in Djibouti - Red Sea and Suez canal. With that, the South China Sea, and their presence in the Panama Canal, it looks like China has designs on control of world wide shipping - at least the major choke points. Very doubtful militarily because they are too isolated to be more than a temporary nuisance unless they co-opt regional populations.

 

[volprof]

Funny how politics and bullies (China) make strange bedfellows. The Philippines want US support, too - guess maybe they should have thought further down the road before kicking us out. China might have thought a little differently in the first place with major US bases still in the Philippines.

http://www.nytimes.com/2016/05/20/world/asia/benigno-aquino-philippines-south-china-sea.html

The area is important enough that we need to support both to nip Chinese aggression before it continues to grow.

China is building a base in Djibouti - Red Sea and Suez canal. With that, the South China Sea, and their presence in the Panama Canal, it looks like China has designs on control of world wide shipping - at least the major choke points. Very doubtful militarily because they are too isolated to be more than a temporary nuisance unless they co-opt regional populations.

Your last point is really interesting, and one reason why some analysts have stated that China will never become a superpower, at least not one on the level of the United States. The thinking is that China just inhabits too bad of a neighborhood and has too much history between it and its neighbors to ever be able to gain the ally network necessary for a superpower. (The Russians are essentially in the same boat; what allowed the Soviets to build a vast ally network - and will not allow Russia or China - is that the Soviets had the special privilege of peddling something new and "promising": the international worker's revolution. Neither Russia nor China have any such ideological appeal.) Inversely, one thing that makes the US so attractive is its distance from the "action," the supercontinent of Eurasia. The US is far enough removed from Eurasia and has so little history that many of those nations are much more receptive to us that they are to the Russians or Chinese. We're just perceived as far less threatening. Eurasia, of course, is really the only thing that matters, as the Western Hemisphere is (and will always be) a geopolitical backwaters.

The vaunted "Pivot East" will never happen, for this reason and for a few others.

 

[AM64]

Your last point is really interesting, and one reason why some analysts have stated that China will never become a superpower, at least not one on the level of the United States. The thinking is that China just inhabits too bad of a neighborhood and has too much history between it and its neighbors to ever be able to gain the ally network necessary for a superpower. (The Russians are essentially in the same boat; what allowed the Soviets to build a vast ally network - and will not allow Russia or China - is that the Soviets had the special privilege of peddling something new and "promising": the international worker's revolution. Neither Russia nor China have any such ideological appeal.) Inversely, one thing that makes the US so attractive is its distance from the "action," the supercontinent of Eurasia. The US is far enough removed from Eurasia and has so little history that many of those nations are much more receptive to us that they are to the Russians or Chinese. We're just perceived as far less threatening. Eurasia, of course, is really the only thing that matters, as the Western Hemisphere is (and will always be) a geopolitical backwaters.

The vaunted "Pivot East" will never happen, for this reason and for a few others.

I do think there are a couple of economic games the Chinese can play through regional influence and canal management. If fee collection is scrutinized, the Chinese management firm may still kick back to Chinese shippers; otherwise, who says everybody pays the same to pass. Things can always be "managed" to see that Chinese ships pass more quickly than others. Those would allow Chinese shippers to deliver quicker and at lower cost.

Pilferage probably isn't a real problem with container ships, but Vietnamese fishing boats have been harassed and cargoes and gear either stolen or dumped in the South China Sea. Pirates have been state sanctioned before, so no reason to think that all the boats hanging out in the newly built ports are completely legitimate in a broader sense. Unless they are actually caught on the open sea, there would be little means to prove wrongdoing. It could be the safe haven strategy of the Korean and Vietnamese wars all over again - wouldn't want to upset the Chinese after all.

 

[norrislakevol]

In the end, China starves without us. They would never do anything to piss off their number 1 customer to the point it would cause them trouble. Without the U.S. buying their cheap Chinese junk they are toast.

 

[Rasputin_Vol]

In the end, China starves without us. They would never do anything to piss off their number 1 customer to the point it would cause them trouble. Without the U.S. buying their cheap Chinese junk they are toast.

They are a nation of 1.2 billion people. They could easily replace American demand for their goods with domestic demand.

 

[norrislakevol]

They are a nation of 1.2 billion people. They could easily replace American demand for their goods with domestic demand.

I must disagree. Their commie economic system is shakey at best. Plus, think of the millions of jobs lost without us. They would have a revolt on their hands and that is what that government fears the most.

 

[Rasputin_Vol]

I must disagree. Their commie economic system is shakey at best. Plus, think of the millions of jobs lost without us. They would have a revolt on their hands and that is what that government fears the most.

Again, they could easily replace American demand by not just focusing on domestic demand and putting Chinese to work to fill that demand, but they could also spread/expand their influence in southeast Asia (you have 600+ million people in Indonesia, Thailand, Vietnam and Malaysia) and south Asia/Middle East.

And that commie economy in China is no more shaky than the duct taped/chewing gum bubble economy we have here. It won't be to far in the future when a trip to Walmart will end up being like going to Rodeo Drive for the average American to buy these so-called cheap Chinese goods.

 

[LouderVol]

Again, they could easily replace American demand by not just focusing on domestic demand and putting Chinese to work to fill that demand, but they could also spread/expand their influence in southeast Asia (you have 600+ million people in Indonesia, Thailand, Vietnam and Malaysia) and south Asia/Middle East.

And that commie economy in China is no more shaky than the duct taped/chewing gum bubble economy we have here. It won't be to far in the future when a trip to Walmart will end up being like going to Rodeo Drive for the average American to buy these so-called cheap Chinese goods.

no the domestic population can not. They don't have the capital we do. If they could survive the 5-10 year time frame it would take to shift their manufacturing infrastructure and workforce around they might be able to support themselves. but again you 1.2 billions buyers you have 1.2 billion makers. even with China cutting off employment after 50 or so they have a HUGE workforce.

and they are having huge issues as it is right now keeping that workforce making stuff to supply the world. They are making stuff there is no demand for, or so much of it to drive down costs because they can't afford to have people not working even if there is no demand. The steel market is a great example. They are making so much steel in China they are driving down the global value of steel to below cost. They say they aren't taking a hit at home but if you believe that I have a bridge to sell you.

It all goes back to what I said early on, China is having to out build/spend their issues. Once they can't China is going to implode and make that stock market crash last year look friendly. When it comes to US domestic policies Ras you seem to think less government is more. China is the worst case example of more and more government involvement. Two areas to look at are the stock market manipulation, I don't remember the US gov straight up banning owners from selling; and steel where the government is keeping the industry from shutting down plants.

and that's with the whole world, including domestic China, as their buyers. If they get rid of us how many foreign corporations are going to stay in China?

 

[Rasputin_Vol]

no the domestic population can not. They don't have the capital we do. If they could survive the 5-10 year time frame it would take to shift their manufacturing infrastructure and workforce around they might be able to support themselves. but again you 1.2 billions buyers you have 1.2 billion makers. even with China cutting off employment after 50 or so they have a HUGE workforce.

How much longer are they going to accept our hyperinflated Federal Reserve notes in exchange for their finished products? Not much longer when you consider that they are trying to unwind from all of their USD based assets right now. What are you talking about with this 5-10 year shift in manufacturing? The same widget that comes of the assembly line that was intended for Walmart here in the US would be the exact same widget you would see on Alibaba. There wouldn't be any significant transition other than replacing US demand with domestic or regional demand.

and they are having huge issues as it is right now keeping that workforce making stuff to supply the world. They are making stuff there is no demand for, or so much of it to drive down costs because they can't afford to have people not working even if there is no demand. The steel market is a great example. They are making so much steel in China they are driving down the global value of steel to below cost. They say they aren't taking a hit at home but if you believe that I have a bridge to sell you.

That is more of a reflection on the health of the world economy than China's economy. The US and the rest of the world are stagnating or regressing. While you focus on the drop in demand of goods, I look at the fact that China, right now, has more manufacturing potential than any other country on the planet. While the US moved away from manufacturing widgets, China over the last 20 years has invested heavily in building it's domestic manufacturing infrastructure. If anything, the 10 year shift you talked about in the first paragraph would actually more apply to the United States. We would have to invest the next 10-20 years to catch up with China's manufacturing base infrastructure.

It all goes back to what I said early on, China is having to out build/spend their issues. Once they can't China is going to implode and make that stock market crash last year look friendly. When it comes to US domestic policies Ras you seem to think less government is more. China is the worst case example of more and more government involvement. Two areas to look at are the stock market manipulation, I don't remember the US gov straight up banning owners from selling; and steel where the government is keeping the industry from shutting down plants.

The entire world economy is going to roll over, not just China. But when the dust settles, China would be left with all of their manufacturing assets and positioned better than any other to restart at a faster pace. Meanwhile, when the dust settles here in the US, we will be left with no manufacturing base because we've lived on an economy running off of service industries, consumer consumption and financial gimmicks... and no mining or domestic energy policy.

and that's with the whole world, including domestic China, as their buyers. If they get rid of us how many foreign corporations are going to stay in China?

China will be the tallest man standing when all of the dust settles.

 

[norrislakevol]

Agree with you Louder, Rasputin, you do make some good points though.

Many years ago pretty much all the worlds large economies were at least somewhat tied together. A strategy called "mutually assured economic destruction". A big boy goes down and we all suffer. This is another reason that a nuclear war will likely never, ever happen between the worlds super powers....because it could crush everyone.

Make no mistake, China's economy is a paper tiger. A big, inflated, but weak tiger. Building ghost cities and buying hundreds of thousands....even millions of cars and parking them on huge lots just to keep GDP up is not the wisest of plans. It's sort of like sticking your finger in the dike to hold the water back. You know 100 percent for certain that you can't hold all that water back forever. Once the dominoes start to fall in China then it will rapidly fall to pieces for them. Stock markets across the world will crash, and there will likely be a severe recession. The good news for north America is that there would be demand for goods that may not be coming in from over seas anymore, and with demand there is opportunity to make a buck or two. Wise entrepreneurs will take advantage of this and it will create a bunch of jobs in the U.S, Europe, Canada, and Mexico.....Unless some of the fragile socialist economies in Greece and Spain collapse, then Europe could be in serious trouble.

 

[Rasputin_Vol]

Agree with you Louder, Rasputin, you do make some good points though.

Many years ago pretty much all the worlds large economies were at least somewhat tied together. A strategy called "mutually assured economic destruction". A big boy goes down and we all suffer. This is another reason that a nuclear war will likely never, ever happen between the worlds super powers....because it could crush everyone.

Make no mistake, China's economy is a paper tiger. A big, inflated, but weak tiger. Building ghost cities and buying hundreds of thousands....even millions of cars and parking them on huge lots just to keep GDP up is not the wisest of plans. It's sort of like sticking your finger in the dike to hold the water back. You know 100 percent for certain that you can't hold all that water back forever. Once the dominoes start to fall in China then it will rapidly fall to pieces for them. Stock markets across the world will crash, and there will likely be a severe recession. The good news for north America is that there would be demand for goods that may not be coming in from over seas anymore, and with demand there is opportunity to make a buck or two. Wise entrepreneurs will take advantage of this and it will create a bunch of jobs in the U.S, Europe, Canada, and Mexico.....Unless some of the fragile socialist economies in Greece and Spain collapse, then Europe could be in serious trouble.

How would that be good news for America when we have lost a significant portion of our manufacturing?

Not only that, but demographics don't work in our favor, either. We have aging populations in North America and Europe with low birth rates while Asia is younger and growing (except for Japan).

The country that is most poised to hit the ground running after the reset is China.

And while we mock and laugh, China will be left with a bunch of ghost cities, cars and real assets/finished product along with all of that manufacturing capacity and infrastructure. Meanwhile, we will be left with "ghost shopping malls", no domestic energy policy to fuel the glut of channel stuffed cars we would have here and a greatly diminished manufacturing base.

 

[SpaceCoastVol]

They are a nation of 1.2 billion people. They could easily replace American demand for their goods with domestic demand.

Then why don't they? Maybe they need $.15/ hour living wage laws.

 

[LouderVol]

How much longer are they going to accept our hyperinflated Federal Reserve notes in exchange for their finished products? Not much longer when you consider that they are trying to unwind from all of their USD based assets right now. What are you talking about with this 5-10 year shift in manufacturing? The same widget that comes of the assembly line that was intended for Walmart here in the US would be the exact same widget you would see on Alibaba. There wouldn't be any significant transition other than replacing US demand with domestic or regional demand.


That is more of a reflection on the health of the world economy than China's economy. The US and the rest of the world are stagnating or regressing. While you focus on the drop in demand of goods, I look at the fact that China, right now, has more manufacturing potential than any other country on the planet. While the US moved away from manufacturing widgets, China over the last 20 years has invested heavily in building it's domestic manufacturing infrastructure. If anything, the 10 year shift you talked about in the first paragraph would actually more apply to the United States. We would have to invest the next 10-20 years to catch up with China's manufacturing base infrastructure.


The entire world economy is going to roll over, not just China. But when the dust settles, China would be left with all of their manufacturing assets and positioned better than any other to restart at a faster pace. Meanwhile, when the dust settles here in the US, we will be left with no manufacturing base because we've lived on an economy running off of service industries, consumer consumption and financial gimmicks... and no mining or domestic energy policy.



China will be the tallest man standing when all of the dust settles.

Not denying they may cut the cord, or at leas that they want to. and you are telling me that the 30-40% of that 1.2 billion that was forced to move from their farm to an overnight city is going to replace the double income American family? they are struggling to feed themselves and find jobs and yet suddenly they are going to have enough money to offset the loss of the American people? China needs more demand, not less. maybe in Dave's utopia it would make sense to get rid of the US and take care of their people, but where does that money come from? Are Chinese familys in 500 sqft unconditioned concrete boxes going to buy TVs, computers, headsets etc etc like an American family will? China will have to produce new products for the Chinese than it does America. Especially when those big companies leave when their biggest maker no longer sells to their biggest buyer.

And China almost increased in steel production by 600% in the last two decades. Has the world's economy gone up by that much? No. And the rest of the world's production has actually matched inflation. China is bucking that trend. once the world stops buying China steel that manufacturing aspect is gone and China is left holding a really big bag because they won't let their factories shut down. If China stops selling to the US you aren't going to see America change. you are going to see some other borderline nation get an influx of work from those off shore companies still selling to America. and in the two cases thats 5-10 years of growth in America and 5-10 years of decline in China. Chinas economy almost matches ours because their population is four times ours. So they have less total value over more people than us. The average Chinese person has much less buying power than the average American, using simplified math its a 4 to 1 advantage for America. and all you are doing is giving more Americans jobs and taking away from China.

if the world economy collapses the communist Chinese government will not survive. its based more on absolute control than our system, in the chaos that follows a mass collapse they won't maintain control. they barely are now. Hong Kong, Xiajiang and Taiwan. heck they probably lose control over Tibet too. Communist regimes don't survive cracks like that. To use a comparison they are the concrete to our steel. they may be stronger but once they are cracked they lose all strength.

I am willing to bet dollars vs pennies that America comes out better than China from China not doing business with America. I don't really think it will help us, but it will certainly hurt them.

 

[Rasputin_Vol]

Not denying they may cut the cord, or at leas that they want to. and you are telling me that the 30-40% of that 1.2 billion that was forced to move from their farm to an overnight city is going to replace the double income American family? they are struggling to feed themselves and find jobs and yet suddenly they are going to have enough money to offset the loss of the American people? China needs more demand, not less. maybe in Dave's utopia it would make sense to get rid of the US and take care of their people, but where does that money come from? Are Chinese familys in 500 sqft unconditioned concrete boxes going to buy TVs, computers, headsets etc etc like an American family will? China will have to produce new products for the Chinese than it does America. Especially when those big companies leave when their biggest maker no longer sells to their biggest buyer.

And China almost increased in steel production by 600% in the last two decades. Has the world's economy gone up by that much? No. And the rest of the world's production has actually matched inflation. China is bucking that trend. once the world stops buying China steel that manufacturing aspect is gone and China is left holding a really big bag because they won't let their factories shut down. If China stops selling to the US you aren't going to see America change. you are going to see some other borderline nation get an influx of work from those off shore companies still selling to America. and in the two cases thats 5-10 years of growth in America and 5-10 years of decline in China. Chinas economy almost matches ours because their population is four times ours. So they have less total value over more people than us. The average Chinese person has much less buying power than the average American, using simplified math its a 4 to 1 advantage for America. and all you are doing is giving more Americans jobs and taking away from China.

if the world economy collapses the communist Chinese government will not survive. its based more on absolute control than our system, in the chaos that follows a mass collapse they won't maintain control. they barely are now. Hong Kong, Xiajiang and Taiwan. heck they probably lose control over Tibet too. Communist regimes don't survive cracks like that. To use a comparison they are the concrete to our steel. they may be stronger but once they are cracked they lose all strength.

I am willing to bet dollars vs pennies that America comes out better than China from China not doing business with America. I don't really think it will help us, but it will certainly hurt them.

I think that you will see a significant decline in the standard of living in the US when the dust settles and the amount of consuming that we are doing right now will be diminished over time. There is no room for growth in this US economy because the majority of our society in the next 10-15 years will be Baby Boomers or older Gen-Xers who are out of the range of starting families (which has traditionally driven this economy through new home construction and the consuming of cars and household goods). Add that too an unskilled workforce that largely majored in liberal arts but no trades and you have a recipe for us being at best, the new China or Mexico. The US will be the ones now producing low skill level trinkets and widgets and exporting most of that output to overseas because the local workers can't afford them.

 

[LouderVol]

I think that you will see a significant decline in the standard of living in the US when the dust settles and the amount of consuming that we are doing right now will be diminished over time. There is no room for growth in this US economy because the majority of our society in the next 10-15 years will be Baby Boomers or older Gen-Xers who are out of the range of starting families (which has traditionally driven this economy through new home construction and the consuming of cars and household goods). Add that too an unskilled workforce that largely majored in liberal arts but no trades and you have a recipe for us being at best, the new China or Mexico. The US will be the ones now producing low skill level trinkets and widgets and exporting most of that output to overseas because the local workers can't afford them.

I agree when the world economy collapses there will be a decline in the standard of living here. but I think that is largely needed. we have too many people living outside their means. I don't think we end up on China/Mexico level but there general population will see a drastically different lifestyle. which again will be healthy for our nation.

right now getting back to healthy for China would be going back to an agricultural economy. they have too many old land owners sitting around for that to be healthy. and its not the 10-15 of baby boomers but closer to that 30-40% I mentioned earlier.

The last nation wanting to rock the boat should be China.

 

[AM64]

They are a nation of 1.2 billion people. They could easily replace American demand for their goods with domestic demand.

How? The workers can't afford what they manufacture - and perhaps don't need much of it. Henry Ford once pointed out the necessity of workers earning enough to buy what they produced. But too many people keep forgetting that without decent incomes there is no market for goods.

As production here continues to collapse or be outsourced, there won't even be a market for Chinese goods. We've evolved into the piranha model for business - voracious meat eaters in a closed pond. When the piranha finish off everything else, what's left but cannibalism? The same with business models that fail to recognize they have to give something back to keep their own markets going.

 

[Rasputin_Vol]

How? The workers can't afford what they manufacture - and perhaps don't need much of it. Henry Ford once pointed out the necessity of workers earning enough to buy what they produced. But too many people keep forgetting that without decent incomes there is no market for goods.

The paradigm we have now will end eventually. We cannot continue to have Starbucks baristas and Appleby's servers driving our employment numbers and expect them to payoff their student loan debt and buy homes/start families. And likewise in China, they can't continue to run a country with slave labor and expect to maintain order without civil unrest and some evidence of a growing middle class.

As production here continues to collapse or be outsourced, there won't even be a market for Chinese goods. We've evolved into the piranha model for business - voracious meat eaters in a closed pond. When the piranha finish off everything else, what's left but cannibalism? The same with business models that fail to recognize they have to give something back to keep their own markets going.

What you are describing right now is exactly how I have been describing the US economy right now... and it can't continue like this for much longer.

 

[red butler]

How? The workers can't afford what they manufacture - and perhaps don't need much of it. Henry Ford once pointed out the necessity of workers earning enough to buy what they produced. But too many people keep forgetting that without decent incomes there is no market for goods.

As production here continues to collapse or be outsourced, there won't even be a market for Chinese goods. We've evolved into the piranha model for business - voracious meat eaters in a closed pond. When the piranha finish off everything else, what's left but cannibalism? The same with business models that fail to recognize they have to give something back to keep their own markets going.

Of course the Chinese worker can't afford Chinese goods priced in US dollars. But you're thinking under the current monetary framework where the dollar is king. There's evidence that the world is shifting away from the dollar.

Let's use your Henry Ford example and compare it to today. When Ford launched his model t in 1908 the world was on the gold standard and the British pound was the world reserve currency. Over the next several years the US became a manufacturing juggernaut and England racked up massive debts in WWI. By 1925 the dollar had overtaken the pound and the British empire had peaked around 1921. When the US overtook Britain, our workers absorbed the demand as England declined. Today China is the emerging manufacturing juggernaut, we're involved in wars with no end while racking up massive debts. China may be able to transition the demand in the same manner we did. I don't think that is inevitable because their centrally planned economy and government is more corrupt than ours.

For historical perspective, the monetary system has changed 3 times since the model-t (modified gold standard, Bretton Woods agreement, and the petrodollar). Fortunately the dollar has remained on top but after roughly 45 years the petrodollar could be at the end of its lifecycle evidenced by every central bank in the world trying desperately to devalue its currency. I'm not saying the US won't remain on top if the dollar loses its place. We still have a military no one can touch, an educated workforce, a semblance of a free market economy, and a lot of other things going for us. But we are facing massive challenges that are being glossed over as we kick the can down the road with our head in the sand.

 

[AM64]

Of course the Chinese worker can't afford Chinese goods priced in US dollars. But you're thinking under the current monetary framework where the dollar is king. There's evidence that the world is shifting away from the dollar.

Let's use your Henry Ford example and compare it to today. When Ford launched his model t in 1908 the world was on the gold standard and the British pound was the world reserve currency. Over the next several years the US became a manufacturing juggernaut and England racked up massive debts in WWI. By 1925 the dollar had overtaken the pound and the British empire had peaked around 1921. When the US overtook Britain, our workers absorbed the demand as England declined. Today China is the emerging manufacturing juggernaut, we're involved in wars with no end while racking up massive debts. China may be able to transition the demand in the same manner we did. I don't think that is inevitable because their centrally planned economy and government is more corrupt than ours.

For historical perspective, the monetary system has changed 3 times since the model-t (modified gold standard, Bretton Woods agreement, and the petrodollar). Fortunately the dollar has remained on top but after roughly 45 years the petrodollar could be at the end of its lifecycle evidenced by every central bank in the world trying desperately to devalue its currency. I'm not saying the US won't remain on top if the dollar loses its place. We still have a military no one can touch, an educated workforce, a semblance of a free market economy, and a lot of other things going for us. But we are facing massive challenges that are being glossed over as we kick the can down the road with our head in the sand.

Actually, I never considered any currency. Simply the fact that what the Chinese laborer is paid will not enable him/her to buy what he or she makes and that the products they make are undoubtedly not what they need to buy anyway. Some Nike sneakers might work out for the average laborer, but what about the newest generation iPhone or 60+ inch HD TV?

I'm an engineer, and I tend to look at things a little differently. For example, a lot of physical laws (momentum, inertia, little things like that) tend to apply generally in other ways. My thermodynamics professor used to like to say the first law was that you can't get something for nothing (heat and energy conversion), and the second was that you can't get as much as you think you can (losses). If you find it cheaper to manufacture in a foreign market because the inequities in standards of living more than pay importation and transportation costs then you are starving your own economy and markets will suffer. The lower cost labor cannot afford the product even without the added transportation etc. - all a recipe for failure in both economies given enough time. Outsourcing to China is simply a variant on trying to get something for nothing. Or trying to skim profits from a failed model which will collapse with time, but there will be those at the top of the pyramid who plunder and benefit. We once had the common sense to regard the middle class as the goose laying the golden eggs, and didn't eat the goose.

 

[Rasputin_Vol]

Actually, I never considered any currency.

The currency is the most critical element in all of this.

Right now, China is deliberately manipulating its currency to make it weaker than other currencies to help with their ability export. But eventually, the race to the bottom that all of the world's central banks are engaged in right now will end, and all of these countries will have to reset their currencies. At that point, China's currency will be the strongest out there. A strong currency helps the local economy buy imports and that will just feed the Chinese dragon even more because they will now be able to buy all of the raw materials it needs for its booming manufacturing/industrial base to supply its emerging middle class. Now granted, I don't think the average middle class standard of living will equal the average Americans right now, but you will see a significant portion of the population enjoying a much better standard of living.