SA must 'dump US, choose China'

Funnily enough the Chinese are offering $200 Billion to help the US stock markets.

I'll stay with the US, you can invest in China, vxv, we'll see who wins
at the end. :)
 
We are going to see a massive shift in the shape of the global economy over the next decade.

"We are going to see Asia move much more central into the global economy and they are going to become much more influential in determining what happens in the global economy," he said.
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With everything manufacturing and the like moving to China I think I'll hedge my bets there thanks very much. It never ceases to amuse me all the pro-USA comments when these matters are discussed, yet these self same commentators- all their "toys" computers etc... all made in China, they refuse to comment.

I am not kidding when I say there's quite a few south african expats in China now... something's happening for sure,.
 
Turiko said:
With everything manufacturing and the like moving to China I think I'll hedge my bets there thanks very much. It never ceases to amuse me all the pro-USA comments when these matters are discussed, yet these self same commentators- all their "toys" computers etc... all made in China, they refuse to comment.

I am not kidding when I say there's quite a few south african expats in China now... something's happening for sure,.
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Made with US IP and on behalf of US companies, unless you buy Sinotec
and Sansui. :)
 
Speaking at a Cape Town Press Club function in the city, Investec Asset Management strategist Michael Power said the crisis was a warning that the United States' economic module, heavily dependent on borrowing, would no longer be an option for SA.
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Bold statement coming from one of the countries leading Asset Managers, so maybe we should listen and hear they are on about.

"We need to start questioning ourselves whether we are following the right module," he said.
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We always need to do this, but the current system has been okay for most.

With a current account surplus of $300bn and household income savings of around 45%, Power said China was the best module from which South Africa should learn.
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I agree, but is China not also going to take a knock? Seeing as though their economy has been driven by demand from countries like the US?

China would emerge as the strongest economy in the aftermath of the current financial turmoil.

"We are going to see a massive shift in the shape of the global economy over the next decade.

"We are going to see Asia move much more central into the global economy and they are going to become much more influential in determining what happens in the global economy," he said.
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I'm inclined to believe him here as well.
 
I have no shares in any american companies. As for consumer electronics, regardless of what you buy it's made in China. Historically when it comes to audio-visual products I've always bought Japanese brands, and these too, say "MADE IN CHINA" all over them. The quality is still what I expect though.

I would never buy Apple though, that's like buying a brand name spade at 10x the price to do some serious gardening when a plain inexpensive spade will do. I am sorry I refuse to let Steve Jobs get rich on my account just because it says whooooo "Apple" on it and it is worth less than half of the selling price in terms of raw materials and labour.

We also manufacture our own "brand name" at work. It looks great and is a market leading product, except we don't make people pay for the name.
 
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A bit off topic, but I always have my doubts about how much you can read into an article when the author makes a blunder about talking about the "Chinese module" instead of model. After I commented on it on Fin24, they did change it to model, but there's still one module left. (see also the second quote in Sox's first mail.)
 
PeterCH said:
Made with US IP and on behalf of US companies, unless you buy Sinotec
and Sansui. :)
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While the products coming out of China may be made with U.S. IP, this is solely because of the US patent system. (You name it, *someone* in the US will claim that it's "their" IP, even when prior art can easily be proven.)

Many US companies have an R&D dept. in China - Microsoft aren't the only ones who do this. Do you think they hesitate to patent the results under US patent laws?
 
Charlie. said:
While the products coming out of China may be made with U.S. IP, this is solely because of the US patent system. (You name it, *someone* in the US will claim that it's "their" IP, even when prior art can easily be proven.)

Many US companies have an R&D dept. in China - Microsoft aren't the only ones who do this. Do you think they hesitate to patent the results under US patent laws?
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hitting the nail on the head there Charlie :)

(You name it, *someone* in the US will claim that it's "their" IP, even when prior art can easily be proven.)
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The US has "paper companies" i.e. companies that are started and launched, they go off and patent a whole bunch of **** and then sit back and wait to pounce on people who "infringe" on their patents and then make money from the lawsuit. They produce no products, they contribute zero to the GDP, they exist solely as trolls in the patent world.

When I used to work at Motorola PCS many years ago... they OUTSOURCED the design of the newer phones to Acer in Taiwan. The manufacture was done by their regular Chinese contract manufacturer.

America has an unhealthy obsession with three things:

1) Patents and patent lawsuits
2) General lawsuits for stupidity
3) Copyright and DRM

Companies such as Philips have relied on the Chinese to manufacture their goods since the '80's already.
 
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Here's one for you:

The Making Of America 2.0
No, even $700 billion won't be enough. But despite the size of the bailout, the United States still rules the markets.

Michael Hirsh
NEWSWEEK
When it comes to predicting the financial crisis, Harvard's Kenneth Rogoff, the former chief economist of the International Monetary Fund and a chess grandmaster to boot, has been right on the money. Last March, after the markets stabilized in the wake of the collapse of Bear Stearns, I asked Rogoff if he thought that would be pretty much it: were we in the clear? No way, Rogoff replied without hesitation. "This is going to end up in Congress's and the president's lap. It's not going to wait until the next administration." Rogoff forecast another big fallout from the devastation caused by failing subprime loans and mortgage-backed securities—and a giant government bailout. "Home prices are continuing to fall. The credit markets are stressed. This is a multi-trillion-dollar problem. It's beyond the Fed's balance sheet to handle it."

With a track record like that, I figured it would be worth another chat with Rogoff. How about this time? I asked him Thursday after the Senate approved a modified $700 billion rescue plan. If the House goes along, will it be enough? "It definitely will not," he replied. "This is going to be a first step. We're going to end up with far more expansive and extensive measures. What has been accomplished already is incredible, but I suspect that we're going to end up intervening much more directly in the mortgage market, propping up housing prices … I think this will cost us one to two trillion dollars by the end. That's a typical 6 to 10 percent of GDP [gross domestic product] for a crisis of this size."

Given such a grim prognosis, you might think that Rogoff has joined the growing throng of pessimists who are predicting yet again (as they did in the 1930s, '50s, '70s and '80s) the end of American financial hegemony and the eclipsing of American power. Even a gibbering lunatic like Iranian President Mahmoud Ahmadinejad sounded almost credible the other week when he declared, in his U.N. General Assembly speech, that "the American empire, in the world, is reaching the end of the road."

Instead, Rogoff sees great opportunities ahead for America, and the more I think about it, the more I tend to agree with him (I should also point out that Rogoff held these same views before he became an adviser to John McCain). Yes, the current crisis signals an end to the remarkable free ride we Americans have had for decades, when we financed our rampant, zero-savings consumerism with boatloads of borrowed investment money from abroad. "I think this is the end of that era of a 6 to 7 percent current-account deficit," says Rogoff. "The financial sector was key to that dynamic. For sure it's going to drop to half that level. [The current-account deficit] might even go back to 1 percent."

So consumption will decline. There will be an economic slowdown of unknown severity. But overall that's a healthy deflation of an economic bubble that the subprime disaster was only a symptom of: as a country, we need to stop buying things we can't afford. And Washington—the next president and Congress—will have to make some very responsible choices about how to regulate the new landscape that has emerged on Wall Street without overdoing it (the impulse will be to place a regulatory chokehold on banking since it's now clear to everyone that underregulation got us into this mess). " There's no doubt that the U.S. financial model has been undermined," says Rogoff. "The question is, are we going to come up with better regulation and produce an American finance 2.0 that's more robust and better than the first one and keeps the financial sector as the flagship of the American economy? Or we going to regulate it into a coma?"

There is ample time to get that balance right. Even amid the current worldwide crisis of confidence in America—which extends not just to the subprime fallout but to the widespread mistrust of the Bush administration over its foreign policy and fiscal irresponsibility—interest rates have remained low and the dollar strong. Those are sure signs that other countries simply have no choice but to continue to invest here and depend on the dollar. If the world really felt that America's time was pass ing, "the dollar would be tanking and our interest rates would be soaring," says Rogoff. "Whatever the newspapers are saying, foreign investors have not given up on us."

True enough. It's also true that other financial-market centers, like London, Hong Kong and Singapore, are looking to grab as much new business for themselves as they can while the former titans that ruled Wall Street—like Goldman Sachs and Morgan Stanley—are focused inward in cleaning up their balance sheets and remaking themselves into more conservative commercial banks.

But let's be blunt: there is no other country or market that is even within sight of replacing the United States and the money masters of Manhattan island. The rising power of China or Russia or the European Union has always been more alleged than real. The EU actually has bigger banking and financial problems than we do—one reason the euro hit its lowest point against the dollar in 13 months on Thursday—and Europe remains a hopelessly fractious cacophony of voices.

As for China, the never-relenting hype about its imminent rise to superpowerdom would make P. T. Barnum blush. The Beijing Olympics in August were an impressive shout to the world: we're ready! But as Washington Post editor John Pomfret, one of the journalism world's most astute observers of China, wrote last July, the Chinese really aren't ready. "For four big reasons—dire demographics, an overrated economy, an environment under siege and an ideology that doesn't travel well—China is more likely to remain the muscle-bound adolescent of the international system than to become the master of the world."

To the north, Russia is riding high now thanks to soaring energy prices. But with Vladimir Putin's KGB pals in charge of increasingly powerful state companies, Russia is scarcely even an open-market economy any longer. Fascism, anyone? As for Singapore—yes, it's a very impressive little place. But it's a city-state that owes its calm prosperity to the U.S. defense umbrella in Asia, as does Japan.

Let's reiterate that latter point, because it's an important one. When times really get tough, when there are belligerent rising powers or threats, the dollar is still the world's safe haven because America is still the only reliable great power out there. Set aside for the moment the deeply unpopular invasion of Iraq. Every foreign government knows that America is still the main stabilizer of the international system—American power overlays every region of the planet and supplies the control rods that restrain rogues, hostile states and arms races from East Asia to Latin America, enabling globalization to proceed apace. This status quo is unlikely to change over our lifetimes.

Sure, we've suffered a lot of self-inflicted damage over the last eight years. Conan O'Brien didn't have to explain himself when he joked the other day, after the Dow's record one-day 778-point drop, that "as a result, President Bush was able to cross off the 10th and final item on his administration's bucket list." So devoid of credibility and influence is Bush today that the bailout package seemed to move forward in spite of, rather because of, his support. So, yes, as a country we've slowed to a crawl in the great global race. But we're still lapping everyone else. We've got time. And there's no reason we can't start to get it right come Jan. 20.

URL: http://www.newsweek.com/id/161990
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Charlie. said:
While the products coming out of China may be made with U.S. IP, this is solely because of the US patent system. (You name it, *someone* in the US will claim that it's "their" IP, even when prior art can easily be proven.)

Many US companies have an R&D dept. in China - Microsoft aren't the only ones who do this. Do you think they hesitate to patent the results under US patent laws?
Click to expand...

The tech know how is in the US. While China is a one party dominanted corrupt state which is awaiting a meltdown. I'm not talking about patents, I'm speaking of people behind the tech which gets mass produced cheaply in China. They're not Chinese.
 
A Long Wait at the Gate to Greatness

http://www.washingtonpost.com/wp-dyn/content/article/2008/07/25/AR2008072502255_pf.html

By John Pomfret
Sunday, July 27, 2008; B01

Nikita Khrushchev said the Soviet Union would bury us, but these days, everybody seems to think that China is the one wielding the shovel. The People's Republic is on the march -- economically, militarily, even ideologically. Economists expect its GDP to surpass America's by 2025; its submarine fleet is reportedly growing five times faster than Washington's; even its capitalist authoritarianism is called a real alternative to the West's liberal democracy. China, the drumbeat goes, is poised to become the 800-pound gorilla of the international system, ready to dominate the 21st century the way the United States dominated the 20th.

Except that it's not.

Ever since I returned to the United States in 2004 from my last posting to China, as this newspaper's Beijing bureau chief, I've been struck by the breathless way we talk about that country. So often, our perceptions of the place have more to do with how we look at ourselves than with what's actually happening over there. Worried about the U.S. education system? China's becomes a model. Fretting about our military readiness? China's missiles pose a threat. Concerned about slipping U.S. global influence? China seems ready to take our place.

But is China really going to be another superpower? I doubt it.

It's not that I'm a China-basher, like those who predict its collapse because they despise its system and assume that it will go the way of the Soviet Union. I first went to China in 1980 as a student, and I've followed its remarkable transformation over the past 28 years. I met my wife there and call it a second home. I'm hardly expecting China to implode. But its dream of dominating the century isn't going to become a reality anytime soon.

Too many constraints are built into the country's social, economic and political systems. For four big reasons -- dire demographics, an overrated economy, an environment under siege and an ideology that doesn't travel well -- China is more likely to remain the muscle-bound adolescent of the international system than to become the master of the world.

In the West, China is known as "the factory to the world," the land of unlimited labor where millions are eager to leave the hardscrabble countryside for a chance to tighten screws in microwaves or assemble Apple's latest gizmo. If the country is going to rise to superpowerdom, says conventional wisdom, it will do so on the back of its massive workforce.

But there's a hitch: China's demographics stink. No country is aging faster than the People's Republic, which is on track to become the first nation in the world to get old before it gets rich. Because of the Communist Party's notorious one-child-per-family policy, the average number of children born to a Chinese woman has dropped from 5.8 in the 1970s to 1.8 today -- below the rate of 2.1 that would keep the population stable. Meanwhile, life expectancy has shot up, from just 35 in 1949 to more than 73 today. Economists worry that as the working-age population shrinks, labor costs will rise, significantly eroding one of China's key competitive advantages.

Worse, Chinese demographers such as Li Jianmin of Nankai University now predict a crisis in dealing with China's elderly, a group that will balloon from 100 million people older than 60 today to 334 million by 2050, including a staggering 100 million age 80 or older. How will China care for them? With pensions? Fewer than 30 percent of China's urban dwellers have them, and none of the country's 700 million farmers do. And China's state-funded pension system makes Social Security look like Fort Knox. Nicholas Eberstadt, a demographer and economist at the American Enterprise Institute, calls China's demographic time bomb "a slow-motion humanitarian tragedy in the making" that will "probably require a rewrite of the narrative of the rising China."

I count myself lucky to have witnessed China's economic rise first-hand and seen its successes etched on the bodies of my Chinese classmates. When I first met them in the early 1980s, my fellow students were hard and thin as rails; when I found them again almost 20 years later, they proudly sported what the Chinese call the "boss belly." They now golfed and lolled around in s****y saunas.

But in our exuberance over these incredible economic changes, we seem to have forgotten that past performance doesn't guarantee future results. Not a month goes by without some Washington think tank crowing that China's economy is overtaking America's. The Carnegie Endowment for International Peace is the latest, predicting earlier this month that the Chinese economy would be twice the size of ours by the middle of the century.

There are two problems with predictions like these. First, in the universe where these reports are generated, China's graphs always go up, never down. Second, while the documents may include some nuance, it vanishes when the studies are reported to the rest of us.

One important nuance we keep forgetting is the sheer size of China's population: about 1.3 billion, more than four times that of the United States. China should have a big economy. But on a per capita basis, the country isn't a dragon; it's a medium-size lizard, sitting in 109th place on the International Monetary Fund's World Economic Outlook Database, squarely between Swaziland and Morocco. China's economy is large, but its average living standard is low, and it will stay that way for a very long time, even assuming that the economy continues to grow at impressive rates.

The big number wheeled out to prove that China is eating our economic lunch is the U.S. trade deficit with China, which last year hit $256 billion. But again, where's the missing nuance? Nearly 60 percent of China's total exports are churned out by companies not owned by Chinese (including plenty of U.S. ones). When it comes to high-tech exports such as computers and electronic goods, 89 percent of China's exports come from non-Chinese-owned companies. China is part of the global system, but it's still the low-cost assembly and manufacturing part -- and foreign, not Chinese, firms are reaping the lion's share of the profits.

When my family and I left China in 2004, we moved to Los Angeles, the smog capital of the United States. No sooner had we set foot in southern California than my son's asthma attacks and chronic chest infections -- so worryingly frequent in Beijing -- stopped. When people asked me why we'd moved to L.A., I started joking, "For the air."

China's environmental woes are no joke. This year, China will surpass the United States as the world's No. 1 emitter of greenhouse gases. It continues to be the largest depleter of the ozone layer. And it's the largest polluter of the Pacific Ocean. But in the accepted China narrative, the country's environmental problems will merely mean a few breathing complications for the odd sprinter at the Beijing games. In fact, they could block the country's rise.

The problem is huge: Sixteen of the world's 20 most polluted cities are in China, 70 percent of the country's lakes and rivers are polluted, and half the population lacks clean drinking water. The constant smoggy haze over northern China diminishes crop yields. By 2030, the nation will face a water shortage equal to the amount it consumes today; factories in the northwest have already been forced out of business because there just isn't any water. Even Chinese government economists estimate that environmental troubles shave 10 percent off the country's gross domestic product each year. Somehow, though, the effect this calamity is having on China's rise doesn't quite register in the West .

And then there's "Kung Fu Panda." That Hollywood movie embodies the final reason why China won't be a superpower: Beijing's animating ideas just aren't that animating.

In recent years, we've been bombarded with articles and books about China's rising global ideological influence. (One typical title: "Charm Offensive: How China's Soft Power Is Transforming the World.") These works portray China's model -- a one-party state with a juggernaut economy -- as highly attractive to elites in many developing nations, although China's dreary current crop of acolytes (Zimbabwe, Burma and Sudan) don't amount to much of a threat.

But consider the case of the high-kicking panda who uses ancient Chinese teachings to turn himself into a kung fu warrior. That recent Hollywood smash broke Chinese box-office records -- and caused no end of hand-wringing among the country's glitterati. "The film's protagonist is China's national treasure, and all the elements are Chinese, but why didn't we make such a film?" Wu Jiang, president of the China National Peking Opera Company, told the official New China News Agency.

The content may be Chinese, but the irreverence and creativity of "Kung Fu Panda" are 100 percent American. That highlights another weakness in the argument about China's inevitable rise: The place remains an authoritarian state run by a party that limits the free flow of information, stifles ingenuity and doesn't understand how to self-correct. Blockbusters don't grow out of the barrel of a gun. Neither do superpowers in the age of globalization.

And yet we seem to revel in overestimating China. One recent evening, I was at a party where a senior aide to a Democratic senator was discussing the business deal earlier this year in which a Chinese state-owned investment company had bought a big chunk of the Blackstone Group, a U.S. investment firm. The Chinese company has lost more than $1 billion, but the aide wouldn't believe that it was just a bum investment. "It's got to be part of a broader plan," she insisted. "It's China."
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What exactly is Chinese economic policy?

Is it "mass produce using cheap labour (even child labour to bring down costs)"?
Is it "dump cheap mass produced products on every single market and saturate until localised industries are destroyed"?
Is it "disregard intellectual rights - especially that of foreigners and mass produce knock offs of these resultant products"?
Is it "disregard the human rights of labourers and force them to work in horrid working conditions for barely any wages"?
Is it "attaching oil conditions to almost every deal pursued by the government"?

Mmmm. Sound economic policies those.
 
I am not saying any of those things are right. What I am doing here is to try and call a spade a spade and say what is happening. It's not about whether I agree with it or not but about what is indeed happening in today's industrialized world.

I, for one cannot stand the sweatshops and what they do in China to those poor people, but the reality is that China will make our products for years to come still, and it is something we will have to live with. The effect on this is that it is slowly wiping out the US manufacturing base, because, the people in charge of these companies, just like any other manufacturer anywhere in the world, they seek to lower costs and increase production volumes.
 
The big number wheeled out to prove that China is eating our economic lunch is the U.S. trade deficit with China, which last year hit $256 billion. But again, where's the missing nuance? Nearly 60 percent of China's total exports are churned out by companies not owned by Chinese (including plenty of U.S. ones). When it comes to high-tech exports such as computers and electronic goods, 89 percent of China's exports come from non-Chinese-owned companies. China is part of the global system, but it's still the low-cost assembly and manufacturing part -- and foreign, not Chinese, firms are reaping the lion's share of the profits.
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From the article, something I was saying all along without even having read that.
 
Turiko said:
I am not saying any of those things are right. What I am doing here is to try and call a spade a spade and say what is happening. It's not about whether I agree with it or not but about what is indeed happening in today's industrialized world.

I, for one cannot stand the sweatshops and what they do in China to those poor people, but the reality is that China will make our products for years to come still, and it is something we will have to live with. The effect on this is that it is slowly wiping out the US manufacturing base, because, the people in charge of these companies, just like any other manufacturer anywhere in the world, they seek to lower costs and increase production volumes.
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The issue is that China has huge problems, far greater than the US.
1. Corrupt, inept government which is struggling with its local functionaries.
2. A population crisis (lots of old people emerging).
3. Environmental crisis incl water shortages.
4. Banking and bad debt crises.
5. General government run business inefficiencies.
6. Culture - lack of individualism, all is State controlled.
7. Co's investing there are mostly foreign and as wages go up
they will look elsewhere too.
 
China can solve many of its problems if it invades and conquers much of Russia. I foresee that as a conflict zone in the next 30 years.
 
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