China and its ONE TRILLION US Dollars

[Pangea]

China curretly possess around one trillion in american dollars due to our huge trade with them. One trillion could buy out american companies like hot cakes, build a military far superior to our own, and essientially take over the spot of supreme super power. Good thing their economy depends on our consumption of cheap shit they sell us...they still need us...for a while hopefully.

[Zimzum]

This is when we sell them a few billion dollar missiles and get our money back. Rinse and repeat. They sell cheap items, we sell luxury items.

[Fengzi]

The biggest danger from China holding so many US$ is not that they will buy weapons(they make, and sell, their own anyway) or U.S. companies. The biggest danger is that they could dump all those dollars into the worldwide currency market, which would drive down the worldwide value of the dollar. So, not only would our $ buy less cheap Chinese shit, but also a lot less of everyone else's shit too.

Fortunately for us, China sees it's holdings of US$ as an investment. The Yuan is not a very desirable currency on the worldwide market, so China needs it US$, Japanese YEN, and Euro's in order to get what it wants. It is doubtful they'll want to fuck with it. Personally, I'd be more worried about the fact that Japan has more US$ than China does. The Yen is a more robust and liquid currency in the market so they're not going to care so much about whether the value of the dollar goes down.

In any case, you're right, China does still need us. They have a long, long way before becoming a supreme super power though. China's a weird place in that they are both ultra-modern and third world at the same time. There's a massive amount of disconnect between the coastal cities and the rest of the country. They've also got huge gaps in their infrastructure that need to be filled in. Until they can get these issues taken care of they'll never be a supreme super power.

[Zimzum]

In the long run would it be such a bad thing if the global economy as a whole was more stable in there currency rates? Sure the USD would lose some value but others would pick up. And down the road $1 USD = 1 CND = 1 YEN = 1 etc,etc,etc. I have trouble balancing my own check book let alone the worlds..:(

[Fengzi]

In that case you'd just need one worldwide currency. Can you imagine how big of a hissy fit the anti-globalization whiners would have?

[Pangea]

Fengzi, you seem to have alot of knowledge of this subject. Why? or should i say how do you?

[Fengzi]

Umm, well..Asia, and trade with Asia, is what I do. I have a B.S. in International Business and a B.A. in East Asian Studies. Plus I lived in China for a little over a year back in '96-'97. Also, 虽然我是一个白鬼子， 我不但会说中文， 而且我太太是从中国来的。 (Translation-Although I'm a "white devil" , I can speak Chinese and have a Chinese wife). .

[Dr.Hashman]

Remember that all the currencies in the world were not setup so a coke costs $1, 1 euro, 1 yen, 1 rupee, 1 peso. What about places where a coke costs 5000 units of their currency?

Japan has its own problems with it's economy, it is not going to try to cause any other problems. They are the only country who practically gives money away! (1% interest rate lol). Also a different culture; they carry cash, we carry plastic.

As far as China having alot of money, hell, they can't even use monetary policy to control their own economy. Their economy is like a juggernaut, it is expanding so fast it can't be stopped without a Greenspan or Bernanke, and we have all of em in the USA. How about China tries a different play in their contractions (tight) policy handbook? God I hate China's economy...

I'm also learning Chinese right now (mandarin), that it hard to learn with Rosetta Stone.

[Fengzi]

As far as China having alot of money, hell, they can't even use monetary policy to control their own economy. Their economy is like a juggernaut, it is expanding so fast it can't be stopped without a Greenspan or Bernanke, and we have all of em in the USA. How about China tries a different play in their contractions (tight) policy handbook? God I hate China's economy...

I'm also learning Chinese right now (mandarin), that it hard to learn with Rosetta Stone.


Great point Dr. Hash. China really is walking the tighrope with their economy. It's a time bomb waiting to go off but nobody has a clock to tell them when. I don't even know how they could control it at this point. The biggest tool the Fed has to control our economy is interest rates but China's economy really isn't that tied to the cost of borrowing. My brother-in-law just bought a new car with 100% cash, my mother and father-in-law just bought a new house with 100% cash. That's pretty much the way it's done there. Even the way a large corporation would get a LOC(Letter of Credit) for purchasing goods from abroad is different from how it's done here. The banks being more of an intermediary than actually loaning the money.

What do you think Dr. Hash? How could they do it? The only thing I can think of would be to have a more realistic valuation of the Yuan which would raise costs for other countries, making cheap Chinese goods not so cheap anymore. But how do you tell someone to kill the goose that's laying the golden eggs??

[Dr.Hashman]

Since OMO, discount rates, and reserve requirements won't move the economy, I don't know what will. I read somewhere that trying to slow the chinese economy is like trailing a bucket behind a supertanker. If they don't stop, they will eventually go into extreme inflation and then it will go back down.

Ooooh... I should write my economic commentary about China's economy and how it is out of control.

[mrdevious]

Thing is... At what point in the history of civilization was China NOT involved in major international trade and massive ecomic power?

[Pangea]

Thing is... At what point in the history of civilization was China NOT involved in major international trade and massive ecomic power?

When they were completely isolated from the rest of the world from like 1400-1800?

[thecreator]

I don't think they could build an army. Arms dealers would have such repercussions and the leaders of military technology is in America. Oh yea our seemingly endless credit line doesn't hurt.

[suhl]

as to what you said about the military, with atomic bombs that could destroy the planet twenty times over the playing field is kind of levelled for anyone who has enough of them, and the us has the most

[mrdevious]

When they were completely isolated from the rest of the world from like 1400-1800?

400 years is a tiny piece of history for china. My point is, China being an economic powerhouse isn't the sudden new threat everyone makes it out to be.

[thecreator]

400 years is a tiny piece of history for china. My point is, China being an economic powerhouse isn't the sudden new threat everyone makes it out to be.

I agree! We shouldn't be baffled by the economic strength of China. The real wonder is its diversity of there wealth. You see the meshing of other cultures and investments. At one point in time fraternizing with westerners was a punishable by death.

[Fengzi]

Actually, China being an economic powerhouse is relatively new. Sure there was previously a lot of trade, but prior to WWII it was pretty much the West who's economies profitted the most from trade with China. Britain's East India Company made an art out of exploiting Eastern countries. Hell, they even got England to fight a war with China for the right to get the Chinese addicted to opium.

Once the communists took over in 1949 the disasterous effects of Mao and his Great Leap Forward, and later the Cultural Revolution, just took their economy backwards. It wasn't until the reforms of the early '80's that China's economy started to grow and then in the 90's it just took off at an staggering rate. To give some perspective on how fast it has grown, China's current GDP is about 200 times greater than it was in 1980. Compare that to the U.S., where our current GDP is only about 4.5 times greater than it was in 1980.

Despite the rapid growth of China's economy, I agree that we shouldn't be threatened by it. They are a massive country with a huge population. Whay shouldn't we expect they have a huge economy to go with it. Why is this seen as a threat and not common sense? Do we have any right to demand they don't strive to increase their standard of living? We're all for digging wells and sending grain to starving kids in third world countries, but fuck them if they want a couple of tv's and two cars in the garage. Why? And what do we expect they are going to do that is so threatening?

China does have a huge, and growing, military but so do we. Why is it that when we build the most massive, high tech, military in the world it's called "defense" but when China build it's military it's called "intentions of world domination"? In any case, thier military doesn't pose much threat to us here in the U.S.. Sure, they'd probably kick our ass if we tried to invade, but they have no way of projecting their military might beyond their borders. Except for nukes but seriously, unless the shit really hits the fan, and probably even if it does, this isn't going to happen. They know if they did they'd be wiped out. It's the old M.A.D. standbye that has kept itchy trigger fingers off the button for a long, long time.

[andruejaysin]

US miltary spending is roughly equal to the rest of the world combined. And still bong lives in fear.

[Fengzi]

US miltary spending is roughly equal to the rest of the world combined. And still bong lives in fear.

That's because our Military is nothing compared to THE MUSLIM HORDE :eek:

[fishman3811]

FENGZI the U.S.A government only gives a shit about Chinas prosperity because the bigger and wealthier they get the more oil China needs influencing the world price of oil.Less Supply and high demand =higher gas prices and the U.S.A economy with its high debt is on shaky ground.America is a super power but the American people dont want to be taxed accordingly.

[Fengzi]

Can't argue much with that fishman. I will add, however, that other than I think that China also makes a great bad guy and the more bad guys that are out there, and the bigger they are, the happier the U.S. government is.

[ncnavguy]

China is in an excellent place, their biggest competitor (US) is pouring hundreds of billions of $'s into a war, and it's not against them, heck its not even a proxy war against them! We are building on greater debt, while they are building up greater prosperity.
And too the people that don't think China could pose a military threat because of our nuclear weapons and mutual assured destruction forget that china really doesnt care too much about human rights and would be willing to sacrifice a city for a city as long as the leadership lived.

[Fengzi]

.
And too the people that don't think China could pose a military threat because of our nuclear weapons and mutual assured destruction forget that china really doesnt care too much about human rights and would be willing to sacrifice a city for a city as long as the leadership lived.

Wrong, wrong, wrong, wrong. Even if we assume that the government would sacrifice 10's of millions of people, they might not want to sacrifice the cities. Contrary to what our govt and media want you to believe, the Chinese govt isn't a bunch of crazy, Little Red Book waving, Mao worshipping, Communists bent on turning the world red. Now, like here, they're just businessmen and professional politicians. And, although their values may be different than ours, we share one value and that is love of $$$$. A huge, and I mean huge, portion of China's economy is primarily based in three main cites Beijing, Shanghai, and Guangzhou. Six well placed missles and you've taken out pretty much anything they'd want to protect. After that, what's the point?

[Dr.Hashman]

The US government and the US citizens have a fear of not being the highest on the food chain. If the US is a Lion and China is a shark, why would it make and difference, its not like Lions are going to start swimming in the ocean! LMFAO, Image a lion drinking at a watering hole and a big great white shark comes up and eats the lion! Now that what I call crazy! Just about as crazy as a war with China would be. So when Lions start getting eaten by sharks, I'll worry about China invading or attacking the US.

[andruejaysin]

A huge, and I mean huge, portion of China's economy is primarily based in three main cites Beijing, Shanghai, and Guangzhou. Six well placed missles and you've taken out pretty much anything they'd want to protect. After that, what's the point?Just so they leave ningbo alone.

[Fengzi]

What's in Ningbo Adrue? I mean for you. Actually, I'm sure if Dubya had a 7th missile it would be aimed right at Ningo. Or Xiamen, or Tianjin, or ...I'm pretty sure that if it did come down to a nuclear war with China we'd pretty much take out their entire East Coast. Plus, I'm sure Dubya would send a few into Xinjiang just for fun, they're Muslims after all.

[andruejaysin]

What's in Ningbo Adrue? I mean for you.

A couple of chemical companies that have embraced capitalism to a degree that must horrify the DEA.:D

[fishman3811]

Why is everyone talking about a war with China when America cant ever deal with insurgents in Iraq.Yes there was mistakes in the war big mistakes.But Americas military reputation around the world has suffered,just like it did during Vietnam.So i guess Bush,s new world order has to be put on hold for now,hopefully.I gues Cheney and the boys thought it would be easy taking over another country,well guess what they were wrong and thousands of Iraq,s are paying the price.Not that Bush cares,him and his buddies are making tonns of money in this war and wasnt that what it was all about in the first place making money.The American taxpayer is getting raped by this administration and nothing is being done about it.But as long as American Idol is on T.V and Britany Spears is getting her hair cut then the American public is distracted from what is really going on in this world.But hey as long as their is tits and bling bling nobody cares and the Elite want it to stay that way.Anyway im rambling on peace and take care