China - still going strong

[Mick100]

A few months ago there was alot of talk about some steps the chinese govt. was taking to try to slow the growth of the chinese economy.
Tightening the money supply by raising interest rate was one of the measures put in place.

There was talk of hard landings and soft landings.
Has there been any slowdown at all?

July oil imports were up 40% on july last year.
China is no longer self sufficent in food production.
A good number of the worlds bulk ships are cued up waiting to get a berth in a chinese port.

I have not read anything recently which would indicate to me that the chinese economy is slowing down.


Mick

[Mick100]

China records first agricultural trade deficit

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BEIJING - China recorded its first-ever agricultural trade deficit in the first half of the year, casting doubts on its ability to remain a self-sufficient food producer, state press reported Friday.
The deficit came in at 3.73 billion dollars, the Ministry of Agriculture was cited as saying by the China Daily.

Agricultural officials said maintaining food surpluses China has enjoyed for years would likely no longer be possible due to the country's opening to foreign competition under its World Trade Organisation (WTO) obligations.

Over the eight years to 2003, China averaged an agriculture trade surplus of 4.3 billion dollars a year, the report said.
Although China exported 10.62 billion dollars of farm produce in the first half of 2004, an increase of nearly 11% from a year ago, imports soared even more.

They were up 62.5% year-on-year to a record 14.35 billion dollars, the government figures show.

"The deficit is glaring but not surprising given the country's commitments following WTO entry, the implementation of tariff rate quotas and competition in the global market," said Han Yijun, a researcher with the ministry's Research Centre for Rural Economy.

The report said a fall off in wheat exports had affected the headline figure.

China was a net exporter of wheat in the first half of last year, but it imported 2.727 million tons of wheat by the end of June this year.

Compared with the same six-month period last year, China imported 1.8 times more grains, or 4.115 million tons, from January to June this year.

The deficit was largely a result of the sharp increases in imports of grain, edible oil and cotton, the report quoted Cheng Guoqiang, researcher with the State Council Development Research Centre, as saying.

Since 1998, China's grain production has dropped by 15.7% to reach a low of 431 million tons last year as many farmers have found it unprofitable to till the land, according to official Chinese statistics.

AFP

[Capitalist]

China is not slowing down to be sure. And what about India? India will overtake China in time.

So, IMNSHO, you show your a*rse in your other apocalyptic predictions.

Emerging markets like China and India have huge population bases that will inevitably increase the wealth of the world over the next few decades. It'll be profitable to invest there, and American companies will get their hands into the pot, making it profitable to invest in the USA as well.

[Mick100]

The only US investments I hold are in natural gas.
IMO, the US will not benifit at all from china's strengthening economy.
Sounds like your stuck in the last century Cap.

China is a rising star while the US is a fading star.


Mick

[Cooper]

Mick, The US has a very large advantage in capital and productivity per worker. GDP per head of population is miles ahead of China. Despite it's recent amazing rate of growth China is still having teething problems in it's financial infrastructure, leading to an inefficient and wasteful allotment of capital,whereas the US is very efficient in this area. Even factoring in the twin deficits, the "war on terror", the recent recession and even the possibility they are facing a double dip recession it'd be a brave move to write off the US as the number one world Economy yet. China is inarguably a rising star, the US is questionably a fading star... and they still have a way to go in their respective directions before the twain shall meet.... to paraphrase every managed fund..."recent returns are no indication of expected future returns"...

[Packersoldkidney]

quote:Originally posted by Mick100

The only US investments I hold are in natural gas.


Mick.
Just out of interest, what US natural gas stocks do you hold? I am of the opinion if Kerry gets voted in his energy policy will revolve heavily around natural gas, liquiefied and compressed. Don't think this '4th oil shock' is going to have a massive effect on the economy as the previous ones did, mainly because the use of oil is twice as efficient today as it was then. But still, the oil situation will have to be addressed, and I don't think Dubya is the man to do it as all his mates are making money hand over fist at the mo. Reckon US natural gas stocks will be a place to be, short, medium and long term. :)

[thereslifeafter87]

The US will remain the worlds most powerful economy for the simple reason that most of the worlds capital is US capital.

US multinationals control and own large chunks of developing powerhouses like China. They have structural economic power that is not reflected in simple statistics like US GDP.

[Mick100]

PSK, My interests in gas in the US are indirectly through ASX co's
I'v got 4 co's with operations in the US.
The only one that's had any real success so far is PSA

The US lacks infrastucture for importing LPG.
Increasing demand along with falling production
can only lead to rising gas prices.


Mick

[Mick100]

The Implications Of Living In A China-centric World

The deteriorating trend in net US inflows suggests a growing reluctance by foreign private investors and central banks to shoulder this burden. Until now, Asian central banks were "the lenders of last resort". That has stopped. And, foolish politically inspired duties on China's furniture manufacturers is due to spark a reciprocal action. China has an increasing imbalance of trade and financial surpluses, piling up more than $400 billion in US Treasuries and has made moves to diversify into euros and more recently gold. In June, China purchased a net $700 million of treasuries, down from $3.1 billion the previous month.

China's voracious appetite for raw materials has caused huge price spikes raising concerns whether the price moves are sustainable. China has become a major player, with total trade expected to top $1,000 billion up from $851 billion last year, surpassing Japan as the third largest market. Indeed, the threat of a slowdown in China was enough to cause the global stock markets to selloff. As outlined in our last report, The China Syndrome, we believed the fears of a slowdown were greatly exaggerated. China is on the path for another 9% plus growth - it's not even a speed bump. China's imports are up a whopping 50 percent in the first half of this year due to a 40 percent increase in crude imports to 2.45 million b/d. Bank lending in June rose 16.3 percent. Industrial production rose 15.5 percent in July. While the world is focusing on China's growth prospects, investors appear to have missed the implications of this growth. China has accumulated large surpluses and a major part of US indebtedness, making it a world player in the financial markets.

[Cooper]

Mick, China is holding large amounts of US debt because it is trying to keep it's currency lower against the US to increase it's exports. The US has (wrongfully in my opinion) reacted to this by raising trade barriers, signalling that they believe the Chinese method of currency control is unfair (the US obviously not wanting a huge influx of cheap chinese manufactured goods competing with their domestic goods when they're trying to drag themselves out of a recession). So the Chinese have purchased the large amount of US debt at a cost of having an undervalued currency.
With all those tremendous growth figures, along with a sluggish interest rate and huge amounts of non-efficient capital, comes the risk of high amounts of inflation. This is amplified by the fact that the costs of raw inputs are increasing very rapidly. This is only my own opinion but the tremendous tales of Chinese growth should be tempered with the fact that the financial infrastructure may not be prepared for the huge influx of capital and the inflation inherent in such a staggering growth rate, especially as the interest rate and the currency are to all intents and purposes fixed, and the banks are generally pretty poorly run. Sure they're a powerhouse and they were always going to make their presence felt when they finally started to free themselves up but it's necessary to remember we're not dealing with an efficient western financial system.

[Cooper]

The Chinese authorities were trying to slow growth for a reason...

[Mick100]

Yeah, point taken Coop
The chinese banking industry sounds as though it's due for some serious restucturing.

I havn't concidered investing directly into china
IMO, it would be quite risky.

[Cooper]

Mick...I was looking at Nickel earlier in the year on the basis of a continued 9%+ growth rate for China... I was also looking for Foreign banks who looked like they might be the first to get a serious toehold in China... I came upon enough info to make me think that they must surely be going through some growing pains at some point. Don't get me wrong, China has already announced it's presence in grand style by soaking up a lot of raw material, but I haven't been hearing many negatives about the growth from a Chinese perspective when I know I should be. Of course, all this is my own view... I have been, and could be, horribly wrong on this one... I feel there needs to be a devil's advocate though.
Regards.