Article

2010-08-30 China-Japan-Koreas

China: Rumors of the Central Bank Chief's Defection

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Posted by tipper 2010-08-30 15:04|| || Front Page|| [4 views ] Top

#1 I seriously doubt this rumor, which is likely to have been circulated by Chinese nationalists on the internet who have no knowledge of how Japanese-style export-driven economic growth works. The reality (and downside) is that all countries (including all of the fast-growing East Asian economies) that resort to this strategy take massive losses on their USD currency and bond holdings. The upside is that all countries that have resorted to this strategy have grown far richer than countries that have not, even after factoring in the currency and bond holding losses. These Chinese internet know-nothings want to have export-driven growth without the associated currency losses. I seriously doubt that the Chinese leadership sees those losses as anything other than part of the cost of doing business.

Posted by Zhang Fei 2010-08-30 16:32|| http://timurileng.blogspot.com 2010-08-30 16:32|| Front Page Top

#2 all countries (including all of the fast-growing East Asian economies) that resort to this strategy take massive losses on their USD currency and bond holdings

Those losses are actually insurance premiums paid to the premier guarantor of Asian collective security, free trade, and open sea lanes of communication, aka the US Military.

We police the seas and restrain the Asians from going to war with each other, and they (indirectly) support our massive military expenditures by preventing our interest payments from spiraling out of control.

Posted by lex 2010-08-30 16:37|| 2010-08-30 16:37|| Front Page Top

#3 re. above reinsurance policy: ain't broke, don't fix.

Posted by lex 2010-08-30 16:38|| 2010-08-30 16:38|| Front Page Top

#4 Those losses are actually insurance premiums paid to the premier guarantor of Asian collective security, free trade, and open sea lanes of communication, aka the US Military.

Actually, there's no geopolitical component to this. Uncle Sam could withdraw completely from the Far East, and export-driven economies would continue their strategy of keeping their currencies low against the ones of their major export markets. The idea that the US Navy is the mechanism through which Uncle Sam extracts tribute (in the form of cheap goods) from his protectorates is nonsense on stilts. They take the currency losses because it's a proven strategy for rapid growth. China certainly doesn't see the US as a force for good in the Far East - it sees the US as the primary obstacle to its dream of a universal Chinese empire of All Under Heaven. Without the US (nuclear umbrella) in the way, China could monopolize the offshore resources of the Western Pacific by using the nuclear threat liberally against its non-nuclear neighbors.

Posted by Zhang Fei 2010-08-30 16:50|| http://timurileng.blogspot.com 2010-08-30 16:50|| Front Page Top

#5 Fair enough re China's capabilities in Asia (I didn't view it as "tribute", btw). The main point is about ensuring the uninterrupted flow of the oil from the middle east, has been for 50 years now.

Maybe I'm missing something but I don't see the Chinese as contributing in any meaningful sense to that aspect, the main one, of the insurance policy.

Posted by lex 2010-08-30 16:56|| 2010-08-30 16:56|| Front Page Top

#6 The uninterrupted flow of oil from the middle east hurts us a lot more than it helps us. They do not, and have not for over a decade, sold it for less that it would cost to produce it ourselves, with the added problem that there are massive currency flows to outside the country.

Posted by Thing From Snowy Mountain 2010-08-30 17:00|| 2010-08-30 17:00|| Front Page Top

#7 Maybe I'm missing something but I don't see the Chinese as contributing in any meaningful sense to that aspect, the main one, of the insurance policy.

The Chinese self-insure, via hundreds of nuclear warheads and delivery vehicles. And they're not interested in a world where there's a US price, and everybody gets that US price, whether American or not. In a Chinese-dominated world, China will pay a certain (below-cost) price, and everybody else will pay more. That is the meaning of tribute. It's the kind of insurance policy the neighborhood grocer pays to the local mobster to ensure that no man-made accidents occur on his premises.

Posted by Zhang Fei 2010-08-30 17:28|| http://timurileng.blogspot.com 2010-08-30 17:28|| Front Page Top

#8 Lots of wealthier Chinese are trying to beat feet right now, figuring that the Chinese economy is about to bust, and don't want to get caught up in the next Cultural Revolution.

Canada is fed up with all its new Chinese arrivals, and there are increasing numbers trying to cross the border from Mexico.

Also, I imagine a lot of those wealthier Chinese are just a few steps ahead of Chinese prosecutors.

Posted by Anonymoose 2010-08-30 18:00|| 2010-08-30 18:00|| Front Page Top

#9 I don't know where the buggers live, but they ALL SHOP at Tyson's Corners Mall on Saturdays.

Posted by Besoeker 2010-08-30 18:06|| 2010-08-30 18:06|| Front Page Top

#10 Nit-noid Alert!

That'd be Tyson's Corner vice Corners.

Heading for bed now; just didn't want to lose any sleep tonight...You N. Afrikaners will never learn. Boering, Not!

Posted by AsymeTarzan Ulereper4435 2010-08-30 21:50|| 2010-08-30 21:50|| Front Page Top

#11 Lots of wealthier Chinese are trying to beat feet right now, figuring that the Chinese economy is about to bust, and don't want to get caught up in the next Cultural Revolution.

Huh? No. If they wanted to "beat feet" then they'd just buy an investor visa. Canada is particularly easy to emigrate to, due to their multicultural policies. It's no coincidence that Vancouver had a SARS outbreak a few years back.

Posted by gromky 2010-08-30 21:52|| 2010-08-30 21:52|| Front Page Top

#12 Other than my inane brain-farts; you've all provided some great macro economic insight on this thread. Thank you and May God Bless You All.

Posted by AsymeTarzan Ulereper4435 2010-08-30 22:23|| 2010-08-30 22:23|| Front Page Top

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