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AP: Obama - China can't rely on US consumers to pull the global economy out of recession this time

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posted on Jul, 27 2009 @ 01:56 AM
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Rumors of the end of the recession are greatly exaggerated.

Associated Press


US hopes China talks spur economy, job creation
By MARTIN CRUTSINGER (AP) – 8 hours ago

...the Obama administration intends to remain focused on the trade gap. It plans to stress at the talks Monday and Tuesday that China can't rely on U.S. consumers to pull the global economy out of recession this time. In part, that's because U.S. household savings rates are rising, shrinking consumer spending in this country.

"Perhaps the most important message we are going to have for the Chinese is that there has been a fundamental change in the U.S. economy," said a senior administration official, who briefed reporters on the meetings under rules that did not permit use of his name. "The U.S. economy is going to recover, but it is going to be a different type of recovery than what the Chinese have seen in the past."

That change will mean that the Chinese won't be able to rely on booming U.S. demand for Chinese goods to lift their economy. Instead, they will have to shift from an export-led economy to growth that's fueled in large part by rising Chinese spending.
...


So, that is concerning. The GDP is 70% consumer spending. Most folk have not been spending what's in their savings accounts, but buying on credit. So, no more leveraging equity lines of credit? Banks are cranking up credit card interest rates, so less credit card spending? What impact will that have on 70% of the GDP? I bet this contraction will show up later in the GDP rather than earlier.


...
The Chinese are bringing a delegation of 150 officials, one of the largest ever to visit the United States. Highlighting the importance of the meetings, President Barack Obama will address the opening session.

Chinese officials are making clear they want further explanations of what the administration plans to do about the soaring U.S. budget deficits. China, the largest foreign holder of U.S. Treasury debt — $801.5 billion — wants to know that those holdings are safe and won't be jeopardized in case of future inflation.

"The Chinese delegation, especially Vice Premier Wang, will make the request that the U.S. side should adopt responsible policies to ensure the basic stability of the exchange rate of the U.S. dollar and protect the safety of Chinese assets in the United States," Zhu Guangyao, an assistant Chinese finance minister, told reporters in Beijing.
The Chinese are likely to hear a repeat of the assurances Geithner gave them when he visited China last month. He said then that the administration is committed to cutting the U.S. budget deficit — expected to hit $1.84 trillion this year — in half once the emergency spending to ease the recession and the financial crisis are no longer needed.
...


So what are they going to do about that? Bernake said a few days ago they could take the money back from the banks. Slowly?

[edit on 27-7-2009 by Dbriefed]




posted on Jul, 27 2009 @ 09:47 AM
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Good find S&F ...

I just had to laugh when I read the part of the story that said ...


Perhaps the most important message we are going to have for the Chinese is that there has been a fundamental change in the U.S. economy


Like, if ANYone doesn't know this yet they need to pull their head out of the sand. Even WE are going to have a hard time pulling the economy of the US up. I don't, in all honestly, think anyone should be depending on us except ourselves.

With regards to the delegation coming from China. I get the feeling that they want to "see for themselves" how bad things really are. I don't know what kind of reassurances Obama or Geithner are going to give that they haven't already given. The Chinese obviously didn't believe them then, what makes them think they're going to believe them now?



posted on Jul, 27 2009 @ 10:25 AM
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As difficult as things are here in America, China sure does have a looming problem on it's hands.

American Corporations have transformed the face of the Communist State in barely a decades time into a highly industrialized, highly mechanized, consumer oriented society from an agrarian mostly peasant society.

It obviously seemed like a great idea to the Chinese who had been experimenting with free trade in a free trade zone in the south of the country across from what was then British controlled Hong Kong at the time and then ran with it big time with the aide of American Corporate investment once Hong Kong reverted back to Chines Control in 1999.

Here they are in 2009 with what is practically a huge white elephant on their hands of new factories, new cars, new roads, new services, new regulations all aimed at capitalizing on something that has dried up on them.

I am still not sure if the Powers that Be are redistrubiting wealth to China because of it's huge potential as a market, or if they have done this purposefully to sew the seeds of disent and revolution in China when the collapse economically because their economy is attached to U.S. Spending.

Either way it looks bad for China and bad for us.



posted on Jul, 27 2009 @ 10:32 AM
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reply to post by ProtoplasmicTraveler
 



China has nothing to worry about. They have nowhere near the debt our country has and quite the opposite they hold a lot of our debt. They are making deals all over the world for natural resources i.e. in Africa while we are making enemies all over the world and taking what we need through wars and militarism. China can produce what their country consumes. America doesn't produce hardly anything it consumes. If times get tougher China, regardless of population, can weather it much better than the US.

The only scary thing I see happening is a war with China and no one wants to talk about this possibility. This is even more evident with NK. NK is obviously a Chinese patsy and that is scary. China is America pre WWII and will become the post WWII industrial/economic powerhouse.



posted on Jul, 27 2009 @ 10:41 AM
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reply to post by Zosynspiracy
 


I have little doubt that China will be the New World Order post World War III prototype darling state.

Yet it's important to remember American Corporations for all intents and purposes own and control China.

The political government angle is just that an angle, nothing but smoke.

American Corporations turned China into what it is today not the Chinese.



posted on Jul, 27 2009 @ 08:16 PM
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It just dawned on me, Chinese investments in Treasury bonds could pay off in concessions rather than a stable Dollar.

The article states the Chinese are coming to Washington searching for guarantees that these bailouts and stimulus packages are not going to depreciate the Dollar. At least their Treasury bonds investment in the Dollar.

The Chinese could settle for concessions, like the US turns their head longer for the Darfur situation, or hand over Taiwan, or allow them to buy US oil or mining companies.

The Dollar can collapse and in exchange China could be happy with gaining access to American natural resources.



posted on Jul, 28 2009 @ 01:00 AM
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Originally posted by ProtoplasmicTraveler
Yet it's important to remember American Corporations for all intents and purposes own and control China.

American Corporations turned China into what it is today not the Chinese.


The investment directly from US in China accounts for only 9% total china FDI, so American Corporations are not so important to China, at least less important than US consumers.



posted on Jul, 28 2009 @ 02:56 AM
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Originally posted by ProtoplasmicTraveler
As difficult as things are here in America, China sure does have a looming problem on it's hands.

American Corporations have transformed the face of the Communist State in barely a decades time into a highly industrialized, highly mechanized, consumer oriented society from an agrarian mostly peasant society.

It obviously seemed like a great idea to the Chinese who had been experimenting with free trade in a free trade zone in the south of the country across from what was then British controlled Hong Kong at the time and then ran with it big time with the aide of American Corporate investment once Hong Kong reverted back to Chines Control in 1999.

Here they are in 2009 with what is practically a huge white elephant on their hands of new factories, new cars, new roads, new services, new regulations all aimed at capitalizing on something that has dried up on them.

I am still not sure if the Powers that Be are redistrubiting wealth to China because of it's huge potential as a market, or if they have done this purposefully to sew the seeds of disent and revolution in China when the collapse economically because their economy is attached to U.S. Spending.

Either way it looks bad for China and bad for us.



Could you please stop posting - you don't actually KNOW what you are talking about - seriously mate.

For a start you seem to think the US is somehow bigger than the EU - weird case of mental mismanagement. Second you have a very, very vague sense of the reality of China - is has well over a dozen cities which are all bigger than anything in America.....and has had for well over a century - in fact China has had a greater urbanized population than America for well - EVER. Yes China also has a HUGE agrarian population - as does the US - but still its urbanized population has always, and will also far outstrip the US.

You seem to not even know the dates of the British Mandate conclusion - 1999??

China has been an emerging power for well over 17 years, as a start - further - America had nothing to do with the transformation - in fact the US was dead keen on South America and only FOLLOWED the rest of the world in outsourcing and capital investment in China - OK - secondly the VAST majority of US imports from China are tech products which America never exported - TV's, Videos, Microwaves, etc - which Japan and Korea exported to China. In fact the American export of capital is only now heating up -



posted on Jul, 28 2009 @ 02:38 PM
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reply to post by ProtoplasmicTraveler
 


That's true

China's growth in "production" will not help the world's economy out of it's present situation. Countries need a market for their products so they can put their people back to work. That's where the US and EU come into the picture. We are both producers and consumers.

All this gloom and doom does is prolong the crises.

China is a producer nation right now. If they want to maintain their growth they will have to turn inward and create a consumer market for their own trinkets the US and EU will no longer be able to support that level of growth and the Chinese are learning those very cold hard facts.



posted on Jul, 28 2009 @ 02:44 PM
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Originally posted by Zosynspiracy
China can produce what their country consumes. America doesn't produce hardly anything it consumes. If times get tougher China, regardless of population, can weather it much better than the US.





Our problem is not under production it's over consumption. The vast majority of what we produce here in the states is consumed at home. What little else is shipped over seas. We've seen this before in the 70s and 80s with Japan. At one point they were buying up land and business like they were going out of style. It's wasn't until the Japanese started being consumers that the trade balance got better.

The Chinese population are mostly employed as producers. They dont have a large consumer market YET. But it's growing fast. When the pendulum swings to where they start to buy their own products and they open their internal markets to larger internationals we will see lots of exchange the problem right now is that they are maintaining a closed or limited market for foreign products.

This will increase as they gain wealth so will inflation in their home markets. The large internationals will start looking for another Cheap labor force. At that point the Chinese economy will have to stand on it's own. Not very good when you consider they have very little oil and are desperate for it. Other wise their Massive growth grinds to a halt.



Contrary to "Pop Culture " Beliefs the US and EU are still the big dogs. This can get ugly real fast. With the shrinking of the US manufacturing sector from the glory days of over 30% of world production now down to 21% and falling. It is becoming very apparent the US needs to start Manufacturing again. But how can one compete on an uneven playing field?



Some feel our real problem is not under manufacturing but over consumption our industries cannot keep up with our own demands. All too often too many statements are made that only increase the confusion of the reality of the situation. Yes the US has lost manufacturing jobs. Yes our industry is on the decline. No arguments there. But there are many ways to judge the situation. I even wrote a thread on topic Here I understand all too well. No need to preach to the choir.

Most of what the US does produce are higher end higher technology that the average consumer would not see or is even aware of they would not find them on the shelves at Walmart. Heres the kicker they are not all defense related either.
Source

World’s largest manufacturer
Published 6/23/09
Filed under: Miscellaneous, Politics

What country is the world’s largest manufacturer by a huge margin? If you have a kid, you would think it must be China — I don’t know the last time I saw I toy (or anything else, really) that wasn’t made there.

Wrong.

Accounting for more than 20% of the world’s total manufacturing output is the United States.

Japan is a distant second at just over 13%. Then China (12%), and Germany (8.2%). Then, well, everyone else. (Data come from the Dept. of Labor and the United Nations.)


Revenue Leaders by Nation
Country/Province Number of Companies Revenue Total (Millions) Average Company Revenue Growth (%)*
United States 290 $5,386,377 10.50
Japan 233 $3,624,074 6.74
Germany 40 $1,269,963 11.97
France 48 $1,103,959 4.23
United Kingdom 36 $882,521 17.30
China 36 $606,892 19.74
Netherlands 13 $599,939 7.97
South Korea 37 $574,252 27.46
Switzerland 21 $364,031 2.90
Italy 15 $356,603 5.75
Russia 8 $338,870 32.37
Canada 27 $335,500 24.20
Taiwan 29 $328,564 5.47
India 12 $206,903 48.20
Finland 16 $189,505 0.56
Brazil 10 $184,523 23.04
Sweden 14 $161,619 6.29
Spain 6 $149,468 7.73
Luxembourg 3 $145,569 14.33
Australia 12 $143,580 38.52
*Manufacturers that did not appear on the 2008 IW 1000 list were not included in revenue growth averages.

If you look at the FACTS Why hasn't anybody said that Germany will be the dominant global power or the EU. Keep in mind while looking at those figures that inspite of that we consume most of our own production and still maintain the #4 spot.

World Exports
1 European Union
$ 1,952,000,000,000

2007
2 Germany
$ 1,530,000,000,000

2008 est.
3 China
$ 1,465,000,000,000

2008 est.
4 United States
$ 1,377,000,000,000

2008 est.
5 Japan
$ 776,800,000,000



posted on Jul, 28 2009 @ 02:46 PM
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reply to post by Dbriefed
 


China responds with "You are right, we do not expect them to fix anything. They are however, extremely tasty especially when mixed with noodles and a dash of soy sauce."

soylent green!




posted on Jul, 28 2009 @ 03:18 PM
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reply to post by audas
 





Could you please stop posting - you don't actually KNOW what you are talking about - seriously mate.


No!




For a start you seem to think the US is somehow bigger than the EU - weird case of mental mismanagement. Second you have a very, very vague sense of the reality of China - is has well over a dozen cities which are all bigger than anything in America.....and has had for well over a century - in fact China has had a greater urbanized population than America for well - EVER. Yes China also has a HUGE agrarian population - as does the US - but still its urbanized population has always, and will also far outstrip the US.


America runs the world, what part of Europe were your parents living in when our soldiers and our money saved them, what part of Europe were your grandparents living in when our soldiers and our money saved them.

Europe what a joke!

Oh yeah I recall us saving China too from the little tiny Island of Japan that is now like what are 74th unofficial state?




You seem to not even know the dates of the British Mandate conclusion - 1999??


You have a date with a British man? Hey I can see why 007 wouldn’t do it but scratching the bottom of the barrel there with agent 1999 aren’t you?




China has been an emerging power for well over 17 years, as a start - further - America had nothing to do with the transformation - in fact the US was dead keen on South America and only FOLLOWED the rest of the world in outsourcing and capital investment in China - OK - secondly the VAST majority of US imports from China are tech products which America never exported - TV's, Videos, Microwaves, etc - which Japan and Korea exported to China. In fact the American export of capital is only now heating up


You know it’s great that you love to hear yourself talk but we still own China, just like we own most of Europe just like we own most of the Middle East, South America, Asia, Australia, the North Pole, Antarctica and probably you, which I sure hope we got at a discount for. Yet you wonder why you guys can’t ever win a war on your own?



posted on Jul, 28 2009 @ 03:21 PM
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Originally posted by SLAYER69
reply to post by ProtoplasmicTraveler
 


That's true

China's growth in "production" will not help the world's economy out of it's present situation. Countries need a market for their products so they can put their people back to work. That's where the US and EU come into the picture. We are both producers and consumers.

All this gloom and doom does is prolong the crises.

China is a producer nation right now. If they want to maintain their growth they will have to turn inward and create a consumer market for their own trinkets the US and EU will no longer be able to support that level of growth and the Chinese are learning those very cold hard facts.


The Party bosses have to be sweating bullets long about now trying to figure out what the heck to do to keep the whole thing from blowing up in their faces.

Where on earth is chairman Mao when you need him!



posted on Jul, 28 2009 @ 03:27 PM
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U.S. Finding Its Voice in Africa Again

SHANGHAI — For several years, the prevailing winds blowing over the African continent have come from China.

With President Barack Obama’s visit to Africa, America’s approach to the continent seems poised to emerge from a long, deep sleep. It is true that the administration of George W. Bush began some experiments worthy of mention, notably conditioning American assistance on economic management and other measures of good governance. But this represents more of a fine-tuning of a longstanding American approach to Africa than it does any truly new departure. Over the past eight years, Washington also emerged as a much more vigorous partner in African health, notably in fighting AIDS.



posted on Jul, 28 2009 @ 03:29 PM
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Originally posted by audas
US imports from China are tech products which America never exported - TV's, Videos, Microwaves, etc - which Japan and Korea exported to China. In fact the American export of capital is only now heating up -



U.S., China talk money, climate; no breakthroughs


"We will work to increase our imports from the United States," he said, adding: "We hope the U.S. will relax its controls and restrictions on exports to China of its high-tech technologies."


Unlike many here. I do not confuse the truly beautiful, glorious and ancient Chinese culture and the present day single party communists. Their government is what 60+ years young? Compared to others around the world they are relative newcomers.

Giving them credit for such a wonderful ancient culture is like giving the Present day Egyptian government credit for the great pyramids or the present day UK government credit for Stonehenge. Sorry I just don't buy it. China is not the China of 3000 or 300 or even 70 years ago. This is the new China and there will be change, BIG change. The Ginnie of freedom cannot go back into the bottle once it's released.

There will be change alright but not the change the Government expected nor wanted.




posted on Jul, 28 2009 @ 04:26 PM
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reply to post by Dbriefed
 


Enlightening that the US Gov does not anticipate a strong re-emergence of US Consumerism, considering that 70% of our entire GDP is consumer based, leaving a huge chunk of our corporations undecided as far as how their futures will pan out?

The ultimate disaster for the US .. no .. the entire Western World.. is when China becomes the next Consumer Nation .. when their middle class out strips ours, we are doomed .. when China becomes a post-industrial nation, the US with 1/5th of the consuming power will be obsolete..



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