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Rob_Hugo@PortNWI came across a web article today that describes how China now has over 850 billion (yes, billion) in its foreign currency reserves. The article goes on to state that China now surpasses Japan as being the country with the largest reserve in foreign currency.
The article also goes on to state that China owes this due to their heavy exporting, and the resulting trade surplus that has resulted from it - their trade surplus reached over 100 billion last year.
Also, according to the article, this incredible trade surplus allows China's financial insitutions to buy up the currency that comes into their country, like the US dollar, which they are then opting to invest in US treasury bonds.
My question while reading this article, how long is it before China becomes the biggest financier of US debt?
While reading the article I was also thinking how times have changed because in the 80's all the talk seemed to be how dominate Japan was financially, how they seemed poised to conquer the world with their economy.
Now here we are today and it is China that is being viewed as the economic giant.
They have had double digit growth in their economy over the last decade that is the envy of the world. They also have this incredible trade surplus, and a workforce pool that is inexhaustible.
It will be interesting to see if China can keep this rapid growth growing.
AnonymousChina has so many people and the data is showing that they have financial resources too. It is no surprise that they are compelled to strategically move towards becoming a more productive nation. I may be sidetracking now, and I know one cannot speak for all, but I have one Chinese friend who has told me about his people. He says that the Chinese like to stock pile and hoard. This information comes as no surprise.
AnonymousThomas Friedman wrote an article on 4/26/06 about China's environmental issues and how they should work with California about it.
But he mentions something that really stuck out.
"Why the Bush team was unwilling to host the Chinese president for a state dinner is beyond me. If I owed someone $1 trillion, I'd give him a state dinner. I'd also give him breakfast, lunch and Chinese takeout."
Clearly, China has a major impact on the world economy and the U.S. economy. Imagine if China called for us to pay off our debts.
AnonymousAnonymousHey guys,
Somehow I made the previous post under someone else's login - sorry aaguilar, it was completely accidental.
Anyway, I was trying to comment on two articles I read in the LA Times, one in yesterday's business page, the other in today's front page.
The first article discussed the raising of interest rates in China in order to try and control the dramatic economic growth. It described the devastating worldwide economic response to any significant slowing in the Chinese economy. I certainly didn't foresee China's economic rise and I think we are still reacting to the power shift.
Second article, today's LA Times front page was examining the lifestyle of one of the wealthiest Chinese businessmen. Although he is a billionaire, Huang Guangyu lives a modest and frugal life as it is still not culturally acceptable to accumulate personal wealth. Apparently, the belief that wealth is likely linked to some immoral or questionable endeavor is still widely held.
Tough for me to imagine having a fortune but living quietly. Harder still to imagine a culture where wealth would be frowned upon. How long will it last.
La Times story -Be rich silently
It will be interesting to see how the communist philosophy morphs as the economic changes continue.
AnonymousAccording to an article in LA Times Chinese villagers are trading their plowshares for film scripts. It seems that it's more lucrative to play the role of a farmer in a film than to actually be one. Farmers are lining up to play extras in films because playing a farmeer pay more money than actual farming. Hengdian, China is now hailed as the Hollywood of the East. It even has a la Univeersal Studios--- where tourists can walk around some sets such as an ancient town with raging floodwaters.[Edit by="wjkillian on Jul 12, 9:27:53 AM"][/Edit]
AnonymousIn the Sunday, May 14 LA Times, Chen Kaige, who is a native of China spoke about his new movie, China's transformation movement, and his desire to take a pass at making a Chinese- language mass-market movie. Chen's new movie "The Promise" is his ninth film. It is a romantic fantasy epic set 3,000 years ago. Chen said that his inspiration for the movie is based on some interesting myths that exist in China's history, especially one in which a young man can run like the wind. Chen also says that the film reflects through its characters what's actually going on in China in that the general in the movie is crazy about winning battles to get glory, fame, and success. Destiny is a very important theme in the film. Both the general and the princess represent the values of current Chinese society, choosing material wealth over love. Chen further says that as a director, he has to think about how he's going to raise money and how he's going to get that money back from the marketplace. He refers to this as market economy.
[Edit by="wjkillian on Jul 12, 9:22:27 AM"][/Edit]
[Edit by="wjkillian on Jul 12, 9:25:11 AM"][/Edit]
AnonymousI'd like to share an article from today's LA TImes front page (it is also available at their website at
http://www.latimes.com/news/nationworld/world/la-fg-children5jul05,0,5241004.story?coll=la-home-world
The title of the article is "Orphans of the Chinese Economy" and it describes a troubling situation facing many rural Chinese- the need to move for employment or economic opportunity is causing them to leave their children behind in small villages.
The number of children involved is estimated to be 20 million. Sometimes these children are left with other family members, most often apparently grandparents. Other times, they are left on their own. The article states that the problem is expected to continue for a long time and is having an unprecedented impat on the CHinese family.
Problems are being encountered in the schools as these children are suffering from depression and other problems. Officials in China at the national level are concerned that social stability will be threatened an an increase in crime already underway is being attributed to these "orphans".
This story was really distressing, especially the accompanying picture of a 13 year old girl featured in the article. I can't begin to imagine leaving my children in order to find work.
The article mentions how this is often true for Latin Americans workng in the United States. This is another of the many benefits I've experienced growing up that brings it home to me how fortunate I am.
AnonymousI just finished reading an article entitled Silk " The Queen of Fibers." The article was written in Japan. It spoke of how in ancient times the production of silk was an enterprise exclusive to China, because no one else knew how to produce it and anyone who divulged the secret of the silkworm could be executed as a traitor. This monopoly on producing silk made it very expensive. First the Romans, then the Persians controlled all silk coming out of China. Because the price of silk was still very high, Byzantine Emperor Justinian, in about 550 C.E. devised a plan whereby he sent two monks on a covert mission to China. The monks returned two years later with concealed silkworm eggs in hallow bamboo canes. The secret was out and the silk monopoly came to an end.
This article also went on to tell about the many different kinds of silkworms, but the one from which the finest quality of silk is produced is scientifically known as Bombyx mori. There are about 2000 households in Japan that still engage in the labor-intensive work of raising silkworms. It is labled as such because it takes quite a number of silkworms to make silk fabric. One family in particular, the family of Shoichi Kawaharada who lives in Gumma Perfecture, Japan engages whole- heaartedly in this work that is so widely appreciated.
I found it very interesting to note that silkworms eat only mullberry leaves--- and quite a lot of them, since their hearty appetites keeps them eating day and night. The article explained in detail the developement of the silkworm from its hatching from a pinhead sized egg to having grown 70 times its original size in just 18 days, besides having shed its skin four times. The process by which silk is spun is lenghthy, amazing, and intriguing.
Even though most silk production is done in countries such as China and India, fashion designers of France and Italy still lead the world in silk designs. Although some other fabrics seem to imitate this wonderful fabric, silk cannot be synthesized or duplicated. Much is known about the molecular formula and structure of silk; however, this unique fabric cannot be copied. Silk still remains a mystery.