US Economy

choi

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Most Americans have not heard of Lang Lang, or his playing piano in White House. But many--they are supporters of Pres. Obama; a majority of Massachusetts voters are--are angry they know many of their friends and relatives who are laid off and that China steals all those jobs (manufacturing job, that is),  by artificially lowering exchange rate of China's and America's currencies. This is something Chinese need to address--urgently. (Fortunately for Taiwan, Americans do not even think of Taiwan in these discussions--except in (6) below.)

(1) 中国将扩大对美进口 (组图). VOA Chinese, Jan 27, 2011.
http://www.voanews.com/chinese/news/20110127-China-Expand-Import-from-US-114712469.html
(从“奖出限入”变为“进口出口并重”; 前中国外经贸部副部长孙振宇: 中国在统计中“往往把进口的部分不算做对GDP的贡献。这个，我觉得，从理论上来讲，也是说不通的")

My comment: Import itself does not generate GDP--because GDP only counts DOMESTIC activities by definition--though import creates jobs (longshoremen, truckers, salesmen, etc.) that do factor into GDP.

(2) 鲁比尼警告中国通胀可能失控. VOA Chinese, Jan 26, 2011.
http://www.voanews.com/chinese/news/20110126-Davos-WEF-2011Inflation-asset-bubbles-could-cause-Chinese-economy-to--114676769.html

Quote:

"麦肯锡上海公司总监欧高敦(Gordon Orr)说，中国食品价格的通货膨胀将比想像中持续更长的时间，因为这次通胀的驱动因素是结构性的。

"他在报告中说，中国人现在消费更多的肉类产品，这就意味着需要更多的谷物来喂养家禽家畜。而现在这条食物链已经满负荷运行，濒临崩溃。这样的压力将导致未来的食品质量危机。

"他还预测，2011年，中国的中产阶级资产会大幅度缩水。中国消费者会花掉他们手中的最后一枚硬币去购买好几处房产，一旦银行利率和贷款利率提高，由此导致房价的大幅飙升就会带来新一轮的财产大幅缩水。

My comment:
(a) 鲁比尼 Nouriel Roubini
http://en.wikipedia.org/wiki/Nouriel_Roubini
(b) Gordon Orr, What Might Happen in China This Year?  Despite inflation, bankruptcies, and other problems, industrial enterprises should remain highly profitable. McKinsey Quareterly, January 2011.
http://www.mckinseyquarterly.com/What_might_happen_in_China_this_year_2732

Quote:

"The drivers of inflation are much more structural than cyclical. Indeed, the entire system is now so highly stressed that one snowstorm brings large spikes in food and energy prices as coal runs short.

"Buyers have aggressively bought multiple properties with every penny of free cash flow. All that is needed for a wave of bankruptcies is further interest rate rises (targeting inflation) that result in a blip down in house prices just as mortgage payments rise.

* I believe the VOA report is mistaken in saying hike in interest rates will result in 房价的大幅飙升. The McKinsey report, on which the VOA report is based, states "a blip down in house prices"--a reasonable consequence due to rise in mortage rate (though many Chinese finance real estate purchase entirely with cash.

(3) 中国拟建“珠三角大都市.” VOA Chinese, Jan 26, 2011.
http://www.voanews.com/chinese/news/20110126-China-Super-City-Scheme-114637849.html

(4) 林毅夫促中国警惕房地产泡沫. VOA Chinese, Jan 26, 2011.
http://www.voanews.com/chinese/news/20110126-World-Bank-Warns-China-Property-Bubble-114636524.html
("不过，林毅夫又说，中国经济也必须要居安思危。他举例说，一些国家如日本、爱尔兰，在保持二、三十年的强劲经济增长之后却陷入停滞，其背后的共同原因是房地产泡沫破灭，因监管不力，再演变为严重的金融问题")

My comment:
(a) If Mr Lin says that real estate bubbles are the primary cause of declining economies of Ireland and Japan, I disagree. Sure, the collapse of real estate sector will invariably bankrupt over-leveraged, debt-ridden investors. But that is a side effect of recession, rather than the cause--at least in these two nations. (It is nonetheless the cause of 2007 financial crisis in US.)
(b) The same VOA report also observed, "尽管中国政府极力抑制房价，但是中国各地的豪宅房价继续上涨。以北京为例，被称为中国十大豪宅之一的北京钓鱼台七号院近日创出天价，以每平方米15.7 万元人民币的价格成交，成为北京单价最高的豪宅."
(c) The report quoted 经济学家茅于轼 as saying, “中国房地产泡沫的根本成因就是高储蓄，收入分配不均衡，另外，有钱人手里头钱非常多，而且他们没有投资机会，就去买房子。大家担心通货膨胀，把钱放在银行里边会贬值，所以就选择买房。行政力量有限得很，它控制不住。这几个因素不改变，房价它还得往上涨。”

(5) 重庆上海启动房产税试点 其效果引起质疑. BBC Chinese, Jan 27, 2011.
http://www.bbc.co.uk/zhongwen/simp/china/2011/01/110127_china_property_shanghai.shtml

Quote:

"中国两大直辖市重庆市和上海市将于周五（28日）起启动房产税试点

"重庆市市长黄奇帆周四（27日）在新闻发布会上表示，该市将对高档住房征收房产税，税率为0.5%、1%和1.2%，具体取决于市场交易价格。

"与此同时，上海市政府周四发布公告称，房产税税率暂定为0.6%，应税住房交易价格低于一定水平的，税率可能降至0.4%。

(6) James R Hagerty, Assembled Elsewhere; To manufacture the Kindle, Amazon couldn't find enough expertise and capacity in the U.S. It headed to Taiwan. Wall Street Journal, Jan 25, 2011.
http://online.wsj.com/article/SB10001424052748703398504576100301867568600.html
(book review on Andrew N. Liveris, Make It in America. Wiley, 2011)

Quote:

"But when U.S.-based firms move all their capacity in high-tech processes overseas, our country eventually loses some of the skills needed for whole groups of products. Mr. Liveris cites the Kindle. Amazon, he says, invented it but couldn't find all the screen-making expertise and capacity required to produce it in the U.S. and so had to have it manufactured in Taiwan. (An Amazon spokeswoman declined to discuss with me where the Kindle is made and why.)

My comment: I always wondered where Kindle was made--but could not find it out in the web. Now I know.

(7) Pascal Lamy, ‘Made in China’ tells us little about global trade. Financial Times, Jan 25, 2011.
http://www.ft.com/cms/s/0/4d37374c-27fd-11e0-8abc-00144feab49a.html

Quote:

"Measures we use also change the way trade affects jobs too. Research on Apple’s iPod shows that out of the 41,000 jobs its manufacture created in 2006, 14,000 were located in the US. Some 6,000 were professional posts. Yet since US workers are better paid, they earned $750m, while only $320m went to workers abroad. Indeed, the iPod may have never existed if Apple had not known that Asian companies could supply components

My comment:
(a) "The writer is director-general of the World Trade Organisation."
(b) The article first pointed out
(i) Apple's iPhone is assembled in China, with components from numeous countries.
(ii) The phone contributed $1.9bn to the US trade deficit with China, using the traditional country of origin concept.
(iii) But if China’s iPhone exports to the US were measured in value added – meaning the value added by China to the components – those exports would come to only $73.5m.
--