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China’s competitiveness ‘on the decline’
#1
FT: China’s competitiveness ‘on the decline’

Quote:“China’s costs are all going up,” Mr Fung said. “It is no longer the most cost-effective country in the region...Anything [sourced] from China has a higher inflation component than from other places around the world.”

Beneficiaries of China’s rising prices have included textile and garment manufacturers in India, Bangladesh and Cambodia, which were expected to lose orders to China after the quota regime governing textile production expired in January 2005.

This may be interesting...Chinese economy has a build-in expectation of a rapid growth...as the escape mechanism from social unrest.
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#2
Combine this sort of slow down with a possible demographic bomb (too many old people, not enough young) and China as it is now, will go to hell and gone.
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#3
I think this is wishful thinking, but China is facing serious problems indeed.
Government is necessary because people left unchecked will do evil.

The government is composed of people left unchecked


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#4
Gunnen4u Wrote:Combine this sort of slow down with a possible demographic bomb (too many old people, not enough young) and China as it is now, will go to hell and gone.

I believe you are thinking of Japan here. China does not have that problem IMO.

BTY, this all goes along with Stratfor's assessment for some time about China's upcoming economic/corruption/banking troubles. It is all down hill, and at just the right time. While we are worried about Iran and the Oil future's market is exerting upward force on price, PRC's slow down will help relieve those worries as more fuel is there in the market.

This is good news for us.
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#5
John L Wrote:
Gunnen4u Wrote:Combine this sort of slow down with a possible demographic bomb (too many old people, not enough young) and China as it is now, will go to hell and gone.

I believe you are thinking of Japan here. China does not have that problem IMO.

Not for quite some time, but the problem is there long-term and potentially is larger than similar problems in aging western societies.

One-child policy will eventually lead to an excess of old people in villages.

But this is perhaps 20 years away; for now the Chinese problem is the purely economic, and the picture is entirely bleak, given that other large countries have their own problems. For example:

China to surpass U.S.


Quote:China probably will surpass the U.S. as the world's largest exporter of manufactured goods this year, propelled by its embrace of advanced technology, a study by a U.S. industry group says.


"The rapid growth of Chinese manufactured exports, with an increasingly high-tech orientation, presents a major challenge to U.S. competitiveness,'' said the report by Ernest Preeg, a senior fellow at the Manufacturers Alliance in Arlington, Virginia, an association that represents companies such as Caterpillar Inc. and Motorola Inc.


In 2001 China exported half the amount of factory goods the U.S. did. Since then, Chinese exports of those goods -- including auto parts, toys and semiconductors -- have grown by more than 25 percent a year to $713 billion in 2005. Assuming an "unlikely'' slowing in export growth to 20 percent, China still would pass the U.S. in those exports this year, the 15-page report said.


China is increasingly competing with the U.S. in such areas as information technology, aerospace, biotechnology and electronics. The U.S., with a trade surplus of $29.7 billion in those products in 1998, ran a $44.4 billion deficit in 2005.
.....
Government is necessary because people left unchecked will do evil.

The government is composed of people left unchecked


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#6
Quote:(..)There are too many car makers, consumer-electronics companies, textile producers and steel mills locked in contests for market share. That means they can't pass on rising costs to their end customers, and many, therefore, are unable to make decent profits.

So far, the pace of consolidation has been sluggish, hurt by the willingness of banks to extend credit to borrowers. In the first quarter of the year, new loans hit a record 1.26 trillion yuan ($157.23 billion), more than half Beijing's 2.5 trillion yuan full-year target, according to research from Goldman Sachs Asia Economics Research Group.
...
The past few years have been a roller-coaster period for China's steel mills. By the end of last year, as many as 90% of them were operating at a loss, according to data from Noble Group of Hong Kong, which has a steel-trading business with China. In past years, the mills were making substantial profits. But overinvestment, funded by the banks, has led to their proliferation. China is now a net exporter, and even the mightiest steel companies' profits have come under pressure.(..)
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Source: WSJ, May 2, Page 13 (European edition)

The steel sector got some space to breathe thanks to a drop in the price of iron-ore, but the problems will be even bigger when the price will climb back.

Capital that is allocated in big bubbles, and causes the flooding of foreign markets (overcapacity,) just needs a correction in the future. Usually a rising interest rate is a great bubble killer, but they probably won't increase it. Last week's increase was minor and it's predecessor occurred in 2004. Perhaps a big reallocation of capital will commence after the 2008 Olympics. They will have two more years to increase the bubble and like Stratfor mentioned (http://ai-jane.org/forums/viewtopic.php?p=20490#20490, great thread btw) other problems will probably also become unsustainable by then.
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#7
China has a demographic problem,but it is not aging population. It is sex imbalance. Too many boys,too few babes.

Means war folks,as sure as the sun coming up in the morning. All aggressive states have high male youth #. It's a matter of who and when,not if.
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#8
Palladin Wrote:China has a demographic problem,but it is not aging population. It is sex imbalance. Too many boys,too few babes.

Uggh,,, NO. China has two demographic problems. One as you describe, but the issue of the aging population is coming too, with a vengeance.

Consider long-term implication of the forced 1-child policy, especially on agrarian communities: in simple terms, this one child will eventually have to support two aging parents.

It is no accident that the Chinese are already discussing euthanasia ... there will be many excess older people to deal with.
Government is necessary because people left unchecked will do evil.

The government is composed of people left unchecked


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#9
MV,

You're right. But,I'm right on the sex imbalance and it always means aggressive war.
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#10
Palladin,

Quote:always means aggressive war

Hard to say. The Chinese system and psychology are different. Their older rulers may order the young to be gay and they will....
Government is necessary because people left unchecked will do evil.

The government is composed of people left unchecked


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#11
Say it ain't so! Actually,the system over there is far more liberal than 20 years ago according to my Chinese friend who returns home occasionally.

However,testosterone is a war making component and they'll have extra shares of it without the counter vailing feminine input.

I sure hope I;m wrong.
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#12
the one child rule will soon become history, and the rest of us will become part of the Chinese history.
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#13
Kamil Wrote:the one child rule will soon become history, and the rest of us will become part of the Chinese history.

I can't help but disagree with your glowing optimism here Kamil. I remember the very same thing being stated about Japan in the 80s, and of course the Union of Soviet Socialists before that.

I suspect that unless the PRC makes the necessary changes to their inept and corrupt system, they will break up into smaller units. I suspect India will be the next entry to the upper tier status, when the dust settles.

Of course, I could be wrong. That is what makes forecasting so much fun, and so wrong most of the time. S6
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All men are frauds. The only difference between them is that some admit it. I myself deny it.
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#14
Navel gazers normally don't cause ripples far away. China may become more Free enterprise - and in so doing will lessen some of the worst problems that we worry about. If it doesn't it will lose out competitively to India, and to other better economies.

We need a good alien invasion from Epsilon Eridani to pull all our peoples together and stop the whining.
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