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Thread: China's President Lays Groundwork for Obama Talks

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    China's President Lays Groundwork for Obama Talks

    * WORLD NEWS
    * JANUARY 17, 2011
    China's President Lays Groundwork for Obama Talks
    Hu Highlights Need for U.S.-China Cooperation, Questions Dollar - WSJ.com
    By ANDREW BROWNE

    BEIJINGóChinese President Hu Jintao emphasized the need for cooperation with the U.S. in areas from new energy to space ahead of his visit to Washington this week, but he called the present U.S. dollar-dominated currency system a "product of the past" and highlighted moves to turn the yuan into a global currency.
    Can anyone say what would happen if the US Dollar loses world reserve status to the Chinese???

    At present, EVERY transaction with OPEC is REQUIRED to be performed in US dollars, at least until the Chinese made a private deal with the Russians to conduct oil trade between their countries in either or both of their respective currencies...

    So, what are the implications of the calls for movement against the dollar??

    Correct me if I'm wrong, TO ME, this is a statement that the world is losing faith in the american currency, I'd wager partially a result of trillions upon trillions of dollars worth of bailouts...so, the world is losing faith that those paper notes ACTUALLY have any value left... which in turn is going to mean that it will require MORE dollars to get the same value of goods from other nations... that means inflation. But HOW MUCH inflation??

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    Re: China's President Lays Groundwork for Obama Talks

    There's a new sheriff in town.

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    Re: China's President Lays Groundwork for Obama Talks

    Quote Originally Posted by Albert Di Salvo View Post
    There's a new sheriff in town.
    I don't know about you, but having China as 'Sheriff' isn't gonna be a good thing for the majority of people that it affects.

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    Re: China's President Lays Groundwork for Obama Talks

    This is just another reason why all of us should refuse to buy crap that is made in China and tell our retailers that we want them to stock American made products.


    It starts with us.

    Buy American because it puts people back to work and brings manufacturing jobs back to the USA.
    Last edited by GPS_Flex; 01-18-11 at 01:02 AM.

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    Re: China's President Lays Groundwork for Obama Talks

    All the US bonds China holds are obviously held in dollars, and they pay in absolute dollars, not adjusted for any reason. You simply get a percent on your investment without regard to how much the currency is worth. So if China were to try and rapidly devalue the dollar, which they could do, they'd be shooting themselves in the foot. Not to mention the hit that global trade would take.

    China has to look long term if it wants to devalue, weaken, or even replace the dollar. I mean the next 50 to 100 years at the soonest, it has to be done gradually so it won't be such a shock to the system and it has to be done with partners. China will never be big enough to take on the US dollar as a global currency or the US economy one on one, they simply don't have the resources and have too much holding them back to grow into what the United States is. The United States didn't either when it took on its global role, it was only due to all the other major economies in the world destroying themselves during WW2 that the US was actually able to seize its position. So unless there's a WW3 China will have to form trade blocs, something like the SCO, but much closer.

    Shanghai Cooperation Organisation - Wikipedia, the free encyclopedia

    Specifically I'm talking about China's huge population, which for a long time was a great assets as it was cheap labor which could bring in all kinds of industry and jobs. However as an economy develops so does its work environment and its people. Many experts will say the current recession, and one of the biggest problems in America, is the "consumer culture." Americans will buy buy buy and buy it on credit, which created the demand China now feeds off of, that led to America's extreme trade deficit. We want to buy so much that the only way to get it cheap is to buy it overseas. However America has just over 300 million people, and China over 1.3 Billion and in 50-100 years who knows how much more. What county or continent is going to feed the consumerism of 1.3 billion or more people if China develops into an economy like the United States?

    I don't think China wants to take the place of the US, its a tough position to be in. Its much easier to be lacking behind, you have initiative, you're always a target, and you're still an emerging market(since you're always playing catch up), and being on top means you've moved you're economy away from cheap goods productions, something which I'm not sure China can do.

    Personally from visiting China I think the country is in disagreement with itself. Within the cities they are constantly seeking to encourage and active consumer culture, its buy buy buy, but out in the country and smaller towns its still collective farm ventures, traditional living, cheap labor factories. If I had to guess I'd say China is seeking to divide its country to "consumers" and "producers" for lack of a better term. By holding a majority of their people in the country side they can maintain their poor lifestyle, thus use them as cheap labor, and not have to constantly ensure the economy grows fast enough to support their increasing standard of living and expectations. The people in the cities will take on the role of the consumer and use up everything the producers make, which isn't exported, as well as of course buy imported products. This will give China a large population of professionals and better educated individuals, lawyers, professors, accountants, etc. With China's 1.3 billion people and much more planned economy and country if they could segregate say 400 million of that into weather and better educated class they'd still have 900 million to supply cheap labor, producer, etc while having a population of professionals larger than the entire population of the United States.

    But then again China is still moving forward rapidly and its impossible to tell where its going to end up when it finishes its major advances, like basic infrastructure. I don't think the Chinese government has that detailed of a plan, since its so impossible to predict and plan for the future, but they have an idea where they want to end up and are sailing in that general direction.

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    Re: China's President Lays Groundwork for Obama Talks

    Quote Originally Posted by BmanMcfly View Post
    I don't know about you, but having China as 'Sheriff' isn't gonna be a good thing for the majority of people that it affects.
    It won't be good for anyone who loves any of the many versions of America. But it is what it is.

    China has been very lucky in it's leadership starting with Deng Xiaoping, and continuing with Jiang Zemin, Hu Jintao and Wen Jibao. The quality of their civilian leadership has made all the difference in the world.

    Compare them with Bush, Clinton, Bush and Obama. One of the major problems of the American political system is that the skill set needed to achieve electoral victory is very different from the skill set needed to govern and lead.

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    Re: China's President Lays Groundwork for Obama Talks

    Quote Originally Posted by GPS_Flex View Post
    This is just another reason why all of us should refuse to buy crap that is made in China and tell our retailers that we want them to stock American made products.


    It starts with us.

    Buy American because it puts people back to work and brings manufacturing jobs back to the USA.
    The political and regulatory systems in America don't encourage the kind of investment needed to reestablish manufacturing facilities in the United States.

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    Re: China's President Lays Groundwork for Obama Talks

    Quote Originally Posted by BmanMcfly View Post
    * WORLD NEWS
    * JANUARY 17, 2011
    China's President Lays Groundwork for Obama Talks
    Hu Highlights Need for U.S.-China Cooperation, Questions Dollar - WSJ.com


    Can anyone say what would happen if the US Dollar loses world reserve status to the Chinese???

    At present, EVERY transaction with OPEC is REQUIRED to be performed in US dollars, at least until the Chinese made a private deal with the Russians to conduct oil trade between their countries in either or both of their respective currencies...

    So, what are the implications of the calls for movement against the dollar??

    Correct me if I'm wrong, TO ME, this is a statement that the world is losing faith in the american currency, I'd wager partially a result of trillions upon trillions of dollars worth of bailouts...so, the world is losing faith that those paper notes ACTUALLY have any value left... which in turn is going to mean that it will require MORE dollars to get the same value of goods from other nations... that means inflation. But HOW MUCH inflation??
    Ultimately, it's not sustainable to have the US dollar as the world currency. That's not necessarily a bad thing, but it is an unavoidable reality. As other large nations become wealthy, the US economy will no longer be the center of the world. It's not so much the world is losing faith in the dollar, as they are gaining faith in other currencies.

    Hu's comments that the yuan might become the global currency are laughable, and I assume geared toward a nationalistic domestic audience. The yuan isn't going to be the global currency anytime soon...it's not even a free-floating currency right now. More likely, there will probably be a period of time when the world will simply not have any global currency at all, and will instead use a basket of currencies for international exchanges.
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    Re: China's President Lays Groundwork for Obama Talks

    Quote Originally Posted by Wiseone View Post
    All the US bonds China holds are obviously held in dollars, and they pay in absolute dollars, not adjusted for any reason. You simply get a percent on your investment without regard to how much the currency is worth. So if China were to try and rapidly devalue the dollar, which they could do, they'd be shooting themselves in the foot. Not to mention the hit that global trade would take.
    I don't see it as 'China' devaluing the dollar... this is more likely a RESULT of dollar devaluation caused by the injection of at least 28 TRILLION in promises because of TARP. Now, the Federal reserve has been buying it's own bonds, it calls this 'quantitative easing' and version 2... with rumors of QE3...

    The Chinese are NOT stupid, they see what the Americans are trying to do to get out of their bind...

    China has to look long term if it wants to devalue, weaken, or even replace the dollar. I mean the next 50 to 100 years at the soonest, it has to be done gradually so it won't be such a shock to the system and it has to be done with partners. ... So unless there's a WW3 China will have to form trade blocs, something like the SCO, but much closer.

    Shanghai Cooperation Organisation - Wikipedia, the free encyclopedia


    I think you are underestimating the position China is ALREADY in... and in terms of war power... the US army can hardly handle the Iraqi and Afghan resistance, nevermind if the Chinese became aggressive.

    Specifically I'm talking about China's huge population, which for a long time was a great a... the consumerism of 1.3 billion or more people if China develops into an economy like the United States?
    That's not going to happen... China has a tightly controlled system... if the people get out of line they are dealt with quickly.

    [quote]I don't think China wants to take the place of the US, its a tough position to be in. Its much easier to be lacking behind, you have initiative, you're always a target, and you're still an emerging market(since you're always playing catch up), and being on top means you've moved you're economy away from cheap goods productions, something which I'm not sure China can do.

    Personally from visiting China I think the country is in disagreement with itself. Within the cities they are constantly seeking to encourage and active consumer culture.... 1.3 billion people and much more planned economy and country if they could segregate say 400 million of that into weather and better educated class they'd still have 900 million to supply cheap labor, producer, etc while having a population of professionals larger than the entire population of the United States.
    Interesting point.

    But then again China is still moving forward rapidly and its impossible to tell where its going to end up when it finishes its major advances, like basic infrastructure. I don't think the Chinese government has that detailed of a plan, since its so impossible to predict and plan for the future, but they have an idea where they want to end up and are sailing in that general direction.
    Meanwhile... at least in relative terms, the US is dying.

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    Re: China's President Lays Groundwork for Obama Talks

    I don't think China wants to take the place of the US, its a tough position to be in. Its much easier to be lacking behind, you have initiative, you're always a target, and you're still an emerging market(since you're always playing catch up), and being on top means you've moved you're economy away from cheap goods productions, something which I'm not sure China can do.



    Interesting point.



    Meanwhile... at least in relative terms, the US is dying.
    The US is not dying, just undergoing a retrenchment

    It has borrowed to much and consumed to much. This will require an extended period of lower economic activity to rebuild its wealth, industry and real productivity (as opposed to the productivity created by tradind dollars back and forth)

    Provided the American public dont go nuts (either extreme right wing or left wing) it will recover and remain a major world power. It may not be the most powerfull nation in all respects, but it will still be in the top 2-3 in the majority of areas, and still be #1 in a large number of areas
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