|
Korean Job Discussion Forums
"The Internet's Meeting Place for ESL/EFL Teachers from Around the World!"
|
| View previous topic :: View next topic |
| Author |
Message |
thepeel
Joined: 08 Aug 2004
|
 Posted: Sat Nov 24, 2007 7:14 am Post subject: The Forthcoming Contagion to China, East Asia and Emerging M |
 |
|
| Quote: |
Paradoxically China is the one country that has, so far, decouple the most � both in real and financial terms from the U.S. but it will also be the first and most serious victim of a U.S. led recession. The decoupling of China is clear as its growth rate has not decelerated, in spite of the U.S. slowdown, and its financial markets have � so far � blissfully avoided (thanks in part to its financial system partially isolated via capital controls from the global one) the turmoil and volatility that hit the US and Europe since the summer. But the reason for the Chinese growth decoupling is that, until recently the US slowdown was still modest (short of the coming hard landing) and it was not concentrated in private consumption but rather housing: China is mostly exporting low-priced consumer goods to the U.S. and the recoupling of China will occur soon once the US consumer recession is in full swing. Thus, the biggest victim of a US consumer led recession will be the country � China - that, so far, has decoupled the most from the US. And for China a fall in its growth rate from 11% towards 6-7% would be the equivalent of a "hard landing" as China � to maintain its social and political stability given its widening income and wealth inequality � needs to grow at least 10% a year in order to move about 15 millions poor farmers from the rural to the urban and industrial sector every year. No wonder that Chinese officials have started to express serious concerns about the current sharp slowdown in Chinese exports to the US, from an annualized growth rate of over 20% in Q1 to a rate of 12.4% in Q3 of this year ("If demand in the US drops further, Chinese exporters will be devastated by a rapid and continuous fall in orders," a Chinese official report said).
And once there is a sharp growth slowdown in China the next victims of this recoupling will be East Asia and commodity exporters. There is a current myth among some analysts that the increased amount of trade between East Asian economies shelters them from a US slowdown. But in spite of the growing intra-Asian trade the cyclical and structural dependence of East Asia on US growth is now larger than five or ten years ago. The reason � as analyzed in detail in recent work by, for example, the Asian Development Bank � is as follows: it used to be the case a decade ago that East Asian economies tended to export directly final goods to the US. But the rise of China has radically changed the Asian global production and supply chain: now East Asian countries tend more to produce inputs and intermediate goods and raw materials that are exported to China; in turn China, given its lower labor cost, processes these inputs and assembles them into final goods that are exported to the US. Thus, in spite of growing intra-Asian trade the dependence of Asia on US growth is now larger than any time before, both structurally and cyclically. So the argument that Asia can decouple from the US because of this greater intra-Asian trade is altogether flawed. Rather, once China slows down the Chinese demand for these Asian intermediate inputs and its demand for raw materials from Asia, Latin America and Africa will fall. Thus, you will observe both a slowdown in Asian growth and a sharp fall in commodity prices that will hurt all commodity exporters.
Some argue that, while a US hard landing may hurt China and Asian economies, there is wide room for domestic demand and non-US demand to maintain the growth of Asia. But this is another myth that has little basis. The role of domestic demand in China�s growth is very modest. You have an economy where exports are 40% of GDP; where investment is 50% of GDP and, leaving aside housing investment, most of such investment is directed towards the productions of more exportable goods; where the current account surplus has gone from $20b in 2002 (2% of GDP) to an expected $300 billion plus this year (12% of GDP). China and Asia strongly depend on trade and on trade to the US. And, as recent research by Morgan Stanley shows, there is a very low probability of major improvements in domestic demand or non-US external demand. |
http://www.rgemonitor.com/blog/roubini/228535 |
|
| Back to top |
|
 |
huffdaddy
Joined: 25 Nov 2005
|
| Posted: Sat Nov 24, 2007 8:58 am Post subject: Re: The Forthcoming Contagion to China, East Asia and Emergi |
|
|
| thepeel wrote: |
| Quote: |
| Paradoxically China is the one country that has, so far, decouple the most � both in real and financial terms from the U.S. but it will also be the first and most serious victim of a U.S. led recession. |
|
Them and Canada. America sneezes... well, you know the rest. |
|
| Back to top |
|
|
thepeel
Joined: 08 Aug 2004
|
| Posted: Sat Nov 24, 2007 9:41 am Post subject: |
|
|
Awwwww, somebody's feelings are hurt. I suppose, while watching your family and friends enter the poorhouse, you can spare a smile for ol'Canada. While you are going full-broke I have complete faith that average Americans will take comfort that they got to drag some darn feerriners down too.
But the post isn't there for your petty grievances and immature one-ups. The story of the past 20 years has been the Chinese rise, and the story of the next 20 years is if the CCP can keep themselves in power, the country together and growth positive. The next 18 months are likely to shed some light on the answers to these questions. |
|
| Back to top |
|
|
huffdaddy
Joined: 25 Nov 2005
|
| Posted: Sat Nov 24, 2007 9:58 am Post subject: |
|
|
| thepeel wrote: |
| Awwwww, somebody's feelings are hurt. I suppose, while watching your family and friends enter the poorhouse, you can spare a smile for ol'Canada. |
No, my family and friends are doing quite well. Nobody I know is entering the poorhouse anytime soon.
| Quote: |
| While you are going full-broke I have complete faith that average Americans will take comfort that they got to drag some darn feerriners down too. |
Just stating the facts. Canada is heavily dependent on the American market. Now that your loonie is at parity, the relative advantages are going to disappear.
| Quote: |
| But the post isn't there for your petty grievances and immature one-ups. The story of the past 20 years has been the Chinese rise, and the story of the next 20 years is if the CCP can keep themselves in power, the country together and growth positive. The next 18 months are likely to shed some light on the answers to these questions. |
Canada is even more dependent on trade with the US than China. There's nothing petty about that. Just a simple fact. It seems that the pettiness is in your court. Is there a bitter break up that is clouding your judgment?
Enjoy your time in Calgary. When the US economy crashes, I have no doubt that it will drag both China's and Canada's with it. |
|
| Back to top |
|
|
thepeel
Joined: 08 Aug 2004
|
| Posted: Sat Nov 24, 2007 10:37 am Post subject: |
|
|
Your really suffering from a case of the butt-hurt feewings, eh? Here, let me try and help.
All better. |
|
| Back to top |
|
|
huffdaddy
Joined: 25 Nov 2005
|
| Posted: Sat Nov 24, 2007 5:24 pm Post subject: |
|
|
| thepeel wrote: |
| Your really suffering from a case of the butt-hurt feewings, eh? Here, let me try and help. |
Hey now, don't be so upset with America. She was still a Cuban or Peruvian or something like that. |
|
| Back to top |
|
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
|
FAQ
Search
Memberlist
Usergroups
Register
Profile
Log in to check your private messages
Log in
