Clinton’s recent visit to China is SIGNIFICANT

Secretary of State, Hillary Clinton’s recent visit to China is a significant event in U.S – Chinese relations and the implications are sure to effect the future direction of the global economy and world markets.

Global markets have every reason to be jittery. In the last few years, Japan  and China have bought into US treasury bonds and hold large significant US currency reserves. Why? To keep the value of the dollar high so the US can continue buying lots of their exports. What would the dollar be worth if they were not propping it up? What will it be worth when they can buy no more?

This seems to be the question being asked by investors on Wall Street

Wall Street tumbles to 1997 levels

Wall Street tumbles to 1997 levels

US stocks tumbled to levels not seen in more than a decade amid fears about the sharp slowdown in the global economy

On the one hand China recently issued their concerns about the US stimulus and the possibility that it may lead to a depreciating dollar.  Which is obviously a major concern given their large investments in the US.

U.S. stimulus-related debt “could hurt investors,” China warns.

Increased borrowing by the United States to fund its massive stimulus package could cause the depreciation of U.S. dollar-denominated assets, Chinese economists have told Xinhua.

Being the largest holder of U.S. Treasury securities, China had reason to be concerned about that possible depreciation, the economists said.

Yet, more recently China seem to have conceded the fact that keeping U.S’s consumer economy ticking over is in their best interests given the amount of export trade revenues are under threat as well as their obviously large stake invested in the ongoing success of their US investments.

China to heed Clinton’s call on buying US bonds: economists

China overtook Japan last year as the United States’ biggest foreign creditor, and had 696.2 billion dollars of Treasury Bills in December, according to the latest official data from Washington.

Its world-largest foreign exchange reserves, which stood at 1.95 trillion dollars as of the end of December, also mean it is the world’s biggest foreign holder of the US currency.

Clinton sought to highlight the importance of the ever-building inter-dependency between the world’s biggest and third biggest economies.

Talking about walking a tightrope.

Over To You

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24 Responses

  1. I’ve got to say that upon hearing President Obama’s commitment to cut the US’s deficit in half was motivated by the fact that that China are none to eager to keep covering their debts. I think Glenn Beck is pretty close.

    Putting Together the Pieces
    http://www.foxnews.com/story/0,2933,498944,00.html

    On Monday, President Obama hosted an economic summit where he talked about trying to cut the current deficit from $1.3 trillion to $533 billion by the end of his term. That story doesn’t make sense. He just doubled the deficit and now he’s going to cut it in half?

    Our decision: When do we change our behavior?

  2. I can feel a glacial wind and it ain’t because we’ve got the frig door open.

    If China gets wobbly, a chasm will open with a slippery dip aimed at it’s mouth and we’re going to start a rapid descent.

    We buy crayfish for a living and exporters are in deep doodoo at the moment because China isn’t buying and there aren’t any other markets which are prepared to pay the idiotic prices that are being asked thanks to turf wars being conducted by some moronic cowboys.

    Unfortunately, there have always been plenty of them in this industry and there’s no lack of idiots lining up to have a crack.

    If this looming economic boil does come to a head, Australia may have to unload Rio Tinto and OZ Minerals and God knows what else to the Chinese at bargain basement prices to cover our a@*e!

    I sincerely hope I’m being unduly pessimistic.

  3. Jane, on February 24th, 2009 at 11:03 am Said:

    “If China gets wobbly,”

    China is very wobbly if Beijing is any guide.

    “By Rodman’s calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn’t include huge projects developed by the government. He says 100 million square feet of office space is vacant — a 14-year supply if it filled up at the same rate as in the best years, 2004 through ’06, when about 7 million square feet a year was leased.

    “The scale of development was unprecedented anywhere in the world,” said Rodman, a Los Angeles native who lives in Beijing, running a firm called Global Distressed Solutions. “It defied logic. It just doesn’t make sense”

    http://www.latimes.com/business/la-fg-beijing-bust22-2009feb22,0,358907,full.story

  4. “I sincerely hope I’m being unduly pessimistic.”

    Jane, it’s been a long time since I’ve actually had a knot in my stomach when writing a thread. The last time I did the ASX came in for a huge hammering.

    It’s not only that, the facts seem to support concerns.

  5. Nature5

    Talk about about over-expansion and capitalisation! Very telling reference indeed.

    “In this vibrant capital city of 17 million, there is an insatiable demand for housing, yet prices remain far out of reach of most residents. American-style free-standing homes are being advertised for more than $1 million in gated communities with names like Versailles, Provence, Arcadia and Riviera. Within the Fourth Ring Road, a beltway that defines the central part of the city, two- and three-bedroom apartments are offered for $800,000 in compounds named Central Park and Riverside.

    “These are like New York prices, but we are Chinese. We don’t have that kind of money,” said Zhang Huizhan, a 55-year-old businessman who owns a Chinese furniture factory. He has been looking for five years for an apartment for him and his wife within their budget of $150,000.

    The average salary in Beijing is less than $6,000 a year.”

  6. Interesting..

    Cooincidentally during my recent trip to Kuala Lumpor, we caught a txi from the airport into KL central (which is about a one hour drive), on either side of the highway, there were huge projects some completed and some abandoned – most look deserted.

    The real eye-opener was an entire suburb of free standing identical homes – probably 200 – 300 in total – all recently new and completely deserted. Not one was occupied and all the “gardens” and streetscapes were just overgrown with weeds.

  7. John there are a few difficulties with the article but I suppose one can forgive some of the generalisations. Beijing’s ‘official’ population, for example, is commonly listed at 17 million but the truth is there are many more than that living there hoping to find work. In China people cannot legally just move about but that is not completely effective.

    There is an ‘insatiable’ demand for housing with row upon row, mile upon mile of boring, tiny apartment blocks. Tiny by our standards, in part due to the ‘one child’ policy. Even though the government against speculators, it still goes on.

    I think statements that the factory owner has been looking for five years and can’t by an apartment for $150 000 are slightly over the top. In some parts of the city, prices are now about $1000 (US) a square metre.

    But there is no doubt that Beijing’s expansion is in trouble and the article makes that point. Also it demonstrates that in places such as Beijing and Shanghai (in particular) there is enormous wealth in the hands of some.

    Personally, I suspect that ‘political unrest’ is now on the increase and that would have the authorities very worried because without a ‘democratic safety-valve’ the only option is violent revolt.

  8. Nature5

    “But there is no doubt that Beijing’s expansion is in trouble and the article makes that point. Also it demonstrates that in places such as Beijing and Shanghai (in particular) there is enormous wealth in the hands of some.

    Personally, I suspect that ‘political unrest’ is now on the increase and that would have the authorities very worried because without a ‘democratic safety-valve’ the only option is violent revolt.”

    Usually very secretive I don’t think they’ll be able to contain this problem Nature5. I think you’re spot on.

  9. Min requesting an audience with HRH reb. A very long time since I’ve been to KL but one thing that I remember is the gardens. I just cannot imagine KL with overgrown gardens and weeds.

  10. Audience granted Min.

    The gardens in KL are still ok (if you can find them in amongst the concrete), it’s the area between the city and the airport that is now like a ghost town.

    It was meant to be an IT corridor full of commercial enterprise and residential estates, but there’s just tumbleweeds there now and abandoned construction sites.

  11. Nature5

    “John there are a few difficulties with the article but I suppose one can forgive some of the generalisations. Beijing’s ‘official’ population, for example, is commonly listed at 17 million but the truth is there are many more than that living there hoping to find work. In China people cannot legally just move about but that is not completely effective.”

    A little bit of advice Nature5 and I mean this in the most sincere way. There’s no doubting your intelligence and attention to detail and facts Nature5. Keyne’s once said “I’d rather be generally right than precisely wrong’ which makes a lot of sense to me. I think unless something is really amiss it’s worth pointing out, otherwise you can end up getting bogged down in detail.

    How do I know this? I used to do the very same and still do at times . Just let loose with you’re opinion when you’re sure of your facts. Enjoy yourself, seriously.

    Here’s a place to let loose enjoy and learn.

    Sincerely

    John Mc

  12. Min bows in gratitude to HRH reb. I still can’t imagine it..those lovely beautiful well maintained gardens..everywhere was neat and clean and you could see that the locals were proud of their city.

    With due indulgence to HRH I’m throwing in another plug for: http://www.theage.com.au/national/garrett-to-rejoin-midnight-oil-for-bushfire-benefit-20090224-8gao.html

    No doubt HRH will be offered tickets, but should any spares come his way, then donations gratefully accepted.

  13. “everywhere was neat and clean and you could see that the locals were proud of their city.”

    It might have something to do with the way in which people who drop litter, or commit any other trivial offence, are quickly whisked away by the police never to be seen again.

  14. Young John I am rather guided by Voltaire who said:

    “Doubt is not a pleasant state of mond, but certainty is an absurd one.”

    (There are various versions.)

    Or perhaps Emerson who said:

    “Truth is beautiful, without doubt. But so are lies.”

    Cheers.

  15. mond? Try ‘mind’.

  16. Works every time HRH.

    Ahh well..a long time since I’ve been OS. The last time at Pattaya it was grass huts and vegie markets and only 2 major hotels, the Pattaya Beach and the Hilton..just from memory. This is ’75.

  17. The last time at Pattaya it was grass huts and vegie markets..

    1875…?

  18. Yep ’75..amazing how a place can be completely ruined in such a short space of time. And similar…Byron Bay then..Byron Bay now.

  19. Lol. Just breaking the Ice Nature5 that’s seems to have formed of late between us. Like the quotes by the way. I enjoy sharing and learning without too much seriousness. Blogocrats is a place to float ideas and search for some truths as well as dispel certain lies or myths. And lets face it their are so many gray areas when it comes to facts and opinions.

    ‘Young John ‘ surely you’re not ancient?’

    Cheers

  20. ….I can see your mind ticking over Nature5… ‘their are so many gray area??? errors! I know (wink)

  21. Ahhh…I’d been wondering what the implications were of a massive fall-off in steel and cement consumption, the building blocks of modern civilization, for a nation producing cities the size of Sydney every six weeks. That writing has been on the wall for a little while now; and yes, the industrialising semi-agrarian West of the East has been quite revolting since the middle of last year below the MSM radar. But…Chinese capitalism is still different from Western capitalism and social capitalism for the heirs of the Han, being ‘Confucian’, with its emphasis on relational ‘duty’ and not ‘individuality’, which cuts both ways as between leaders and the led.

  22. John McPhilbin, on February 24th, 2009 at 2:34 pm Said:

    “I can see your mind ticking over Nature5”

    I don’t think so! Given that ‘mind’ is a concept, it’s extremely unlikely that the ‘mind’ could be ‘seen’ let alone ‘heard’. Lol.

    Legion, on February 24th, 2009 at 4:31 pm Said:

    “a massive fall-off in steel and cement consumption, the building blocks of modern civilization”

    An interesting, implied ‘concept’ of civilization. Personally, I believe, and I suspect you do, that the concept of ‘civilization’ equates with the ‘culture’ concept which goes far beyond steel and cement as the building blocks. Just sayin ..

    As for:

    ” for a nation producing cities the size of Sydney every six weeks.”

    I agree that the enormity of China, its diversity of ‘cultures’, its language families or whatever measure one wants to employ is simply ‘mind-blowing’. Probably the nation is beyond governance as we understand it.

    Clearly with comments such as:

    “emphasis on relational ‘duty’ and not ‘individuality’, which cuts both ways as between leaders and the led.”

    you understand the different ‘common sense’ of living in China.

    What about a post?

  23. “The real eye-opener was an entire suburb of free standing identical homes – probably 200 – 300 in total – all recently new and completely deserted. Not one was occupied and all the “gardens” and streetscapes were just overgrown with weeds.”

    They could fill it w/ monkeys & turn it into a jobs generating tourist site.

    Or even better…turn them into dorms for Uni students…or shelters for the homeless.

    Hmmm, identical homes eh? Better yet, turn them into a giant studio lot…start up a Malaysion ‘Coronation Street’.

    I’m sure those who were benefitting from the cheap labour of China & it’s largesse will excuse it whilst it puts some safety nets & affordable homes in place. I’m sure they can find opportunities in parts of Vietnam & Africa…crikey, even the Gaza strip eventually.

    And as for Hillary, she’s not dumb enuff to kick a gift horse in the mouth. I likey her style so far. China needs us too. Calm rational discussion w/ spoonfulls of respect helps. The bully boy Bush coulda learnt a thing or two from diplomat Hillary.

    N’

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