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    10 Replies Latest reply on Mar 9, 2010 9:02 AM by wordperfect

    Will China lead the world in 2010?

    wordperfect Scout

      Ha ha, a contentious tittle I know, but over the past six weeks there has been a tsunami of fiscal and financial information ex China; better end of year 09 figures than expected, substantial increase on both imports and exports than predicted, a lowering of the trade deficit, wave after wave, we are drowning it it.


      More recently, minor adjustments to interest and bank rates, among other things, have sent signals that maybe China is considering withdrawing the Economic Support Package soon. This has sent experts into frenzies of analysis and counter analysis with all eyes now fixed on the important end of first quarter results, due out around end of March, hoping to predict what will the China economy do in 2010 and second guess the Chinese government, a foolish game at the best of times!


      For those of you who didn't know, February 14th is an important date as it is the start of the Lunar New Year. Last year, the year of the BULL, was very un-bullish, this year is the year of the Tiger, will it growl and roar into life? Or will it be a pussy cat? This is what the experts with their calculators, spreadsheets and computer generated financial models are desperately working on.


      My predictions are way less complex based on noise, smoke and flash.


      Chinese New Year Eve is NOT complete without fireworks, the bigger, brighter and louder the better and possibly half of China's air pollution is released on this one night! Last year it was noticeably quieter in comparison with the past 9 years I have lived here as people, waking up to dire economic news and long term bleak predictions were reluctant to see so much of their money go up in smoke or didn't have it in the first place.


      But now, we are awash with goods news, both home and abroad so will this translate into general optimism for 2010? Well, it is noon here, still 12 hours to go and as Rod Stewart wrote, "Tonight's the night!" but if the past few days and the almost deafening noise of big bangers outside now are any indication then my guess is YES, 2010 will be a good year for China Business. Furthermore it also seems that for now at least, like Mary's Little Lamb, where China goes, the world is bound to follow.


      And I for one will breath a sigh of relief.


      Now, where are my matches and sparklers?.
        • Re: Will China lead the world in 2010?
          alytus Scout
          i think china is a good investment, i own some FXI and i'm looking to add to that position in the next few weeks
          • Re: Will China lead the world in 2010?
            UncleLeon Scout
            China has every opportunity to lead the world...if not in 2010; - soon.

            Why? They have natural resources, almost unlimited cheap labor, and are extremely cash rich. In fact, we (USA) owe China about a gazzillion dollars, now, and growing as you read this. And the only limit to our debt to China is their willingness to continue to "Carry" us.

            The spendthrift attitude of the Obama administration is surpassed only by the spendthrift attitude of the Obama administration.

            Uncle Leon sed it.
              • Re: Will China lead the world in 2010?
                wordperfect Scout

                Hello UncleLeon, I have read most of the posts you have made and I respect your wisdom and experience of US business, thank you for your input here.


                Whilst my post was hugely tongue in cheek, I am curious to see how China is perceived from offshore, having been here too long myself.


                I posted this on several sites and the replies are very interesitng, all have a degree of basic truth but illustrate just a fundamental or superficial knowledge of China, mostly repeating what I have seen in the popular press, which is understandability. Sad, but understandable.


                I would just like to say that while China does enjoy certain advantages, she also has major internal social and political problems that need to be sorted so I wouldn't expect China to be leading the world any time soon, not for a few hundred years, if at all.


                That isn't to say that we will see a continuance of US domination, I personally believe that 2009 was a watershed, the end of the UK USA Old Boys Club and we are moving into an era of new power brokering in the world of which China and US among others will need to work more closely together than maybe they have in the past.
                  • Re: Will China lead the world in 2010?
                    Iwrite Pioneer
                    I think the idea of any country leading the world is coming to an end. As national economies become more and more intertwined, we will continue to see the lines become more blurred. I think China is finally taking its place at the table, but as Wordperfect has pointed out, everything is not as rosy as the leadership of China would like the world to believe. The internal stresses do not seem to be fading, in fact the tensions seem to be growing. I think it is a natural by product of the growth of democracy, even if it is watered down. The old guard's attempt to maintain control will slam head long into the desire of people to have more freedoms, and the Chinese system has shown itself to be too rigid to deal with this change.

                    I have to address the comments blaming the current President for the shape the US economy is in. I believe we have been in this spiral for over a year - we got here because both parties let us down. Our problems have been years in the making and will be years in solving. Even longer due to our inability to realize that our system has not really changed - we're continuing down the same path. I don't think our congress can help itself.

                    China's strong presence in Africa is going to come back to bite the US in the butt. Africa and South America are untapped markets.
                      • Re: Will China lead the world in 2010?
                        wordperfect Scout

                        I-write, thank you for your input.


                        When ever I post I look forward to seeing if you will contribute, your comments are always insightful.


                        I was beginning to think we share the same philosophy on may things, but now I suspect you are living in the same building as I in Beijing.


                        May I make one smallish observation? I am not 100% sure that the "ROSY' picture you spoke of is actually propagated by the leadership here. We of course only hear Wen and Hou's addresses in Chinese so I do not know how they are translated, but generally they are at pains to stress that China is not the mythical, magical mega force the world sees it as. In fact I think it was only as recently as two weeks ago Hou complained that the world tends to expect too much from China given its state of development and internal problems.


                        I think much of this "Hype" and expectation is generated and driven by the media, and, excuse me for saying so, US media, we are seeing the same feeding frenzy over the Toyota issue now.


                        I can't comment too much on your own internal political issues you spoke of, but the point you raise brings to mind another post I made in a different forum regarding the balance of trade deficit and China's currency.


                        The current situation didn't happen over night, it has been slowly growing, certainly there needs to be some measures to address it but the revaluing of China's RMB isn't going to fix it overnight, and, as you again said, with+ national economies become more and more intertwined+, the result of such drastic changes may not be what the rest of the world is wanting.


                        Apart from possible negative effects directly on intentional economies, anything other than a gradual change here in China will quickly upset the delicate balance the administration has and the last thing the world wants or needs right now is for China to slide into another revolution or aggressive civil unrest.


                        There has been a steady and continued campaign to get Chinese people to open their wallets and spend, but just as you inferred, old habits die hard and Chinese have long been a nation of thrifty savers, and, when there is very little but improving social security and support here, who can blame them?


                      • Re: Will China lead the world in 2010?
                        UncleLeon Scout
                        Thank you, Wordperfect, for your kind words. I'm honored by your opinion of my input.

                        Regarding the political situation in China: Of course China is still a Communist country and consists of primarily (by our standards) poor people.

                        In spite of Communism, the Chinese leaders are not stupid. - To the contrary. They observed how a free market can prosper a people by seeing, under the English, how Hong Kong prospered. Since taking over Hong Kong, they have allowed and inspired business within their own country, as well. (Under government control, of course.)

                        However, as I grow older, and learn more, there is one thing of which I'm certain. My knowledge on ANY subject is limited. There are always those wiser than me. The trick is to determine who is wise and who is "blowing smoke".

                        Unfortunately, we don't have a wise old "sage" who will say: "Ahh Grasshopper", (and then utter some profound wisdom for us to retain for life.)

                        Therefore I will strive to speak little, - listen much, - and attempt to differentiate "The wheat from the Chaff".

                        When I was a boy, my mother had a corney poem, but I've found over the years that it's true.

                        She said: "I used to think I knew a lot, but now I must confess." "The more I know I know I know, I know I know the less.
                          • Re: Will China lead the world in 2010?
                            wordperfect Scout
                            Hello uncle Leon, my opinion is genuine.
                            I respect the wisdom and experience of your own field of expertise.
                            Of course as you point out, few of us are experts in everything, except maybe politicians who are deluded anyway
                            Like wise as an Anglo NZ, with a dubious bloodline of French, Russian and Viking I have scant knowledge of the US other than what I read / see on CNN, VOA,TV, movies, and other such fictional sources.
                            What precious little I know is the result of bobbing around the seven seas and living and working in different countries with vastly different cultures to that which i was brought up in.

                            Nor am I by any stretch an "expert" on China, but having run a business and lived here for nigh on 9 years I have learnt a thing or three, and as your mum, aptly said, I too find the more I learn the more I find I don't know.
                            It is on that basis I hope you will allow me to make a few comments on your observations of China.

                            First, you are correct, there is an awfully large group of quite poor people, relative of course in China, the much talked about "affluent middle class" and millionaires which is the face of China most Western media focus on, is still well in the minority here. It is the majority that, as long as it suits their purposes, share and support the view of the government, as I hinted so we usually see policies slanted towards keeping them happy.
                            The current "political session under way here in Beijing is no exception, rural and social spending has once again eclipsed defence spending

                            However, don't fall into the trap of believing China is a Communist country, certainly it has a Communist government, in name at least, even those who support the administration have moved towards capitalism and a very free market philosophy. Does the fact that the US has either a Democrat or Republican administration make everyone there a Democrat?
                            I have this deep, troubling feeling sometimes when I talk to friends' and relatives back home in UK or NZ that in fact, those 2 countries at least, and possibly others, are now more "Communist" in their outlook than China is.

                            Just as some may have regretted voting for GWBush in US, the same applies here, and party members who do not live up to the "electorates" expectations are removed much the same way at the next session, may not be democracy as we know it, but it sort of works.
                            And "elections" for want of a better word are annually here, so one has to shape up fast or be shipped out.
                            And who is to say that our system works any better?
                            The US has amply proven that in the past 6 years. As has the UK.

                            You also say: "In spite of Communism " but how is that so?
                            Had the aforementioned shrub been running China for the past decade do you really think China would be where it is today?
                            And, "under Government control of course" well yes, I am not going to dispute that, but I am curious if there is any economy in the world that is NOT under government control!

                            Look, I am not trying to defend or paint China whiter than white, I DO live here, I know the place, warts and all and I am not saying I am wiser than you, or anyone else, just pointing out that we need to be careful when we make sweeping generalities based on what we read / hear on popular media.
                            Of course it is a double edged sword because I KNOW that schools in USA are battle grounds where students fight each other with knives and guns on a daily basis and that every America male is forming a long queue to go to Iraq where they can rape and murder, I KNOW this for sure because it is what I see and read!
                            Do you see my point Sir?

                            Finally, I recently read, "Lost on Planet China" by J.Maarten Troost and initially smiled at some of his observations. But then I became a little confused, surely as an upright, western man, influenced by US culture he could not be guilty of deceit, of manipulating the truth, spreading false rumours, or writing what the masses want to hear simply to promote his book?
                            Surely that is what the cunning, untrustworthy, lying Chinese do, so all I can assume is that there are indeed 2 capital cities in China, both named Beijing and he visited the one I do not live in.

                            It does seem there are those among us who have a hidden agenda, a vested interest in purveying mis information, as you said, sorting the wheat form the chaff is no easy matter.
                              • Re: Will China lead the world in 2010?
                                UncleLeon Scout
                                I KNOW that schools in USA are battle grounds where students fight each other with knives and guns on a daily basis and that every America male is forming a long queue to go to Iraq where they can rape and murder, I KNOW this for sure because it is what I see and read!

                                Do you REALLY believe that? I would have had no idea you would be so susceptible to such nonsense.

                                I'm not saying that there is never a knife fight at a school, or even that there is (extremely, extremely) rare gun fire at or around a school. But when there is, it is the extreme rareity of such an incident that makes it newsworthy.

                                I survived attending school. During that time there were no gunfights at any of the schools in my area. There were no knife fights. I (personally) may have had less than a half dozen fist fights throughout my years in school, and those are just part of growing up amoung other boys, and "finding ones place within the "pecking order". Your statement indicates that you believe this is a daily occurrance.

                                My best reply is to state, firmly, tht you are misinformed.

                                And, having rebutted your misinformation, I should also state that we have now led this conversation well off topic, and should not continue in this direction.
                        • Re: Will China lead the world in 2010?
                          gasandoil Newbie
                          My opinion is China will lead the world in 2010, however, we need to be on the look out of emerging markets like India, and Africa. Chinese economies may come out ahead in the short term, but the other markets are now beginning to stand out, and they have their wheels in motion. Once those wheels start turning, I believe they will be a commanding economic impact in the years ahead.