With less than 20% of the world’s population, China consumes:
... 53% of the world’s cement
... 48% of the world’s iron ore
... 47% of the world’s coal
... and the majority of just about every major commodity
To continue:
- In 2010, China produced 11 times more steel than the United
States and achieved a New World Record by making and selling 18 million vehicles
in 2010
- There are more pigs in China than in the next 43 pork
producing nations combined
- China is currently the number one producer in the world of
wind and solar power (although they don’t use it themselves)
- China currently controls more than 90% of the total global
supply of rare earth elements
- China is the world’s largest gold producer
- In the past 15 years, China has moved from 14th place to
2nd place in the world in published scientific research articles
- China now possesses the fastest supercomputer on the entire
globe
- China has accumulated over USD3 trillion in foreign
currency reserves - the largest stockpile on the entire globe and is the largest
external foreign creditor of the US Government (second only to the biggest
single creditor of the US Government which is in fact the USG itself as it
issues around one quarter of its debt in internal IOUs to itself!)
- The Chinese consume 50,000 cigarettes every second …
Yet Scott Paul, the executive lobbyist for the Alliance for
American Manufacturing, a labour-management partnership, says a 28.5 percent
appreciation in the Yuan would create 2.25 million American jobs and reduce the
annual trade deficit by USD190.5 billion. He believes that China has declared
trade war on the USA and that legislation is needed to protect poor little
America against the new bully kid on the block.
This has been greeted with much incomprehension by those who
believe that economies develop and markets adjust factors like currencies and
interest rates accordingly. Yes, Central Banks like the PBoC and The Fed push
back against those responses of the market that they do not like. The PBoC has
focused on targeting and setting the CNY exchange rates whilst The Fed has used
money supply to undermine their own Forex rates through QE, The Twist and two
year interest-free teaser rates on short term money.
Scott Paul refuses to see this, preferring to believe that
China’s economic success story is a mere reflection of the competitive advantage
obtained by China in the currency debasement wars with American manufacturing
and jobs the innocent victims of a brutal trade war. This conveniently forgets
the fact that when the Bretton Woods agreement installed America as the global
supplier of capital, America’s consumption-driven economy quite rightly
developed itself and moved up the value chain into highly skilled services and
value added manufacturing, dominating high-tech and finance globally. Scott now
wants to drag America back down to complete with third world manufacturing
labour.
Forgetting that the RMB has appreciated since the Global
Financial Crisis and is one of the few currencies year to date to have
strengthened relative to USD, Scott now wants to see markets manipulated in the
AAM’s favour to help, artificially, US job creation at this difficult time.
Ignoring that the failure to address American structural lack
of competitiveness will only make matters worse and that the US has tried to
mask this through QE-driven stimulus and currency depreciation, Scott’s view is
that QE is acceptable because it was conducted through American capital markets
whereas the CNY rates were set by a Cabal in Beijing.
Conveniently forgetting that FDR, and his Cabal in the ‘30s,
sat in the White House setting US exchange rates in the same way that the PBoC
do now, Scott who, it has to be said, seems to be a thoroughly likeable chap
with a highly polished grin, is very articulate as he rewrites history for a
desperate gallery.
However, American voters, American businesses and American
workers deserve better than this, used as mere pawns in a game of party
politics. They deserve to be able to pin the blame on those responsible for the
job losses in America’s high-skilled, high-tech, high value economy and not just
on a soft target like a Chinese Bogeyman!
Long-term China observers have often remarked that threats
and public intimidation are the worst possible way to try to get the Chinese
government to do what you want them to, especially in the name of American party
politics which Chinese officials tend to view with great disdain.
Enzio von Pfeil of Commercial Economics Asia is decidedly
sceptical: “I’m just not sure revaluing Yuan will necessarily create a Chinese
trade deficit because U.S. multinationals account for a trade surplus of USD3
trillion in America’s global trade…China is for free on the hill… anybody gets
to beat up on China and you get free election points off China when you are out
there campaigning in Oregon or Seattle.”
Robert Roche, vice chairman of the American Chamber of
Commerce in Shanghai, says that there are bigger issues: “We really don’t feel
that the currency is the big issue… Market access is higher up on the list,
national treatment is higher on the list, intellectual property rights (IPR) is
higher on the list. This is somewhat of a hollow gesture… By going off on the
currency bandwagon, it can get a little bit... off track. We don’t evaluate the
China risk every time something changes in China. We made the risk, we’re here,
and we’re willing to do what it takes to succeed here, and we react to the
different changes in the environment. We don’t do a whole another risk
analysis.”
Maybe the self-appointed foot soldiers in the trade war need
to do a risk analysis of the damage that could be done if Beijing reacts too
strongly to all this. At a time when China is taking some key decisions about
its economic future, loose words can cost billions of dollars in a trade war and
provoke catastrophic effects for the entire global economy. China is at quite a
fragile developmental stage - it is vital for everyone that China avoids
repeating the serious policy mistakes that the west has made. This would be
easier without such noise and distraction and without such idiotic politics.
The above data and research was compiled from sources
believed to be reliable. However, neither MBMG International Ltd nor its
officers can accept any liability for any errors or omissions in the above
article nor bear any responsibility for any losses achieved as a result of any
actions taken or not taken as a consequence of reading the above article. For
more information please contact Graham Macdonald on
[email protected]
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