Chillin' out till it needs to be funded
We thought about it for a minute before I took to writing down another post on China. As I pick up the most important deals and banking and finance news and trends, I am finding it increasingly difficult to miss China at the center of the global storm. The perfect storm might have played out in from 2008 till Jun 2010, but the new age of growth and global citizen continues to draw more and more China into the center. With China growth estimates pared to 9% and the sun setting on July with a 1.7x increase in surplus from July 2009, Australia, US and other major trading partners continued to look at the yuan / Renminbi in disbelief and for some guidance for the global economic calendar.
China’s benchmark Shanghai Composite Index dropped 2.9 percent, the most in six weeks, as the trade data and the slowest growth in property prices in six months fueled concern the world’s third-largest economy is losing steam. Property prices in 70 major cities rose 10.3 percent in July from a year earlier and transactions by floor area shrank 29 percent from June, the statistics bureau said.
The pressure from US no longer seems to awaken the sleeping dragon as it battles local economic chaos
A U.S. jobless rate still close to 10 percent may prompt “people in Washington to say China needs to do more to get its trade surplus down and that would involve a stronger currency,” said Brian Jackson, a Hong Kong-based emerging-markets strategist at Royal Bank of Canada.
China’s trade surplus with the U.S. rose 10 percent to $93 billion in the first five months of 2010, according to the American Commerce Department. China’s customs bureau puts the gap at $59.4 billion, 18 percent higher than a year earlier.
Meanwhile trade with Australia and Brazil has grown and the trade with Brazil, denominated in the Chinese Yuan to end the USD Euro argument.
On China’s trade surplus:
The gap surged 170 percent from a year earlier to $28.7 billion, the customs bureau said, exceeding the forecasts of all 29 economists in a Bloomberg News survey. Exports increased 38.1 percent to $145.5 billion and imports advanced 22.7 percent to $116.8 billion, the bureau said on its website today.
However this slowdown will only help to cement China’s preeminence in Global trade in the coming decade as and when it rolls ou with Chinese cars in Europe and Texas, its mobiles and power plants and many other heavy items of manufacturing already having a definitive slice of monopolistic victory in the Asia Pacific and the third world.
China owns its own $2.7 trillion payments system to rival Visa, its own Fedex equivalent and drives in domestic preference where it has been able to adapt the technology and the design to mass manufacturing but the appreciating currency overturns its cost advantages in both labour and materials, and the resource business precariously close to default everyday. Problems of paper growth with people refusing to inhabit the newly built city infrastructure and still competing with the government for suitable compenssaion for property does signal an economic vacuum in that soft center that cannot be dabbed away but tthe Chinese are very much in control as they isolate the currency fluctuations and enquire into serious global capitalism. This time however all governments seem to be ready for the argument.