China on the rise!

[uls]

On a Per-Capita Basis, China's GDP Equals the U.S. in 1878 - Seeking Alpha

On a Per-Capita Basis, China's GDP Equals the U.S. in 1878



There have been reports lately like this one that predict that the U.S. will be the third largest economy by 2050, after falling behind China's GDP in 2020 and India's by 2050. But of course one of the main reasons for the rise in economic output for China and India will be because their populations are so much larger than the U.S. (China: 1.3 billion and India: 1.15 billion). The chart above shows real GDP on a per capita basis for the U.S. from 1800 to 1880 (data from Global Financial Data), and for China from 1969 to 2010.

Bottom Line: While China's exponential economic growth over the last 40 years is pretty impressive, from wretched, abject poverty and only $128 of per capita real GDP in 1969, to per-capita output of $2,800 in 2010, China's economic output on a per capita basis is still about the same as the U.S. in 1878 ($2,800), 132 years ago.

[uls]

http://seekingalpha.com/article/2208...per-capita-gdp

China Might Rank Second by GDP, But Ranks 99 for Per-Capita GDP

According to a Bloomberg story Monday:

China surpassed Japan as the world’s second-largest economy last quarter, capping the nation’s three- decade rise from Communist isolation to emerging superpower. The country of 1.3 billion people will overtake the U.S., where annual GDP is about $14 trillion, as the world’s largest economy by 2027.

Adjusting for GDP (Purchasing Power Parity) on a per-capita basis, China (at $6,567) has a long way to go before it achieves "superpower" status, considering that it ranks #102 according to the CIA, #99 according to the IMF, and #92 according to the World Bank. In fact, on a per-capita basis in 2009, China ranked behind Namibia, Jamaica, Belize, Thailand, El Salvador, and Albania. And the last time the U.S. had per-capita GDP of $6,567 was back in 1932.

[timrev]

List of World’s Largest Creditor and Debtor Nations

factor sa euro crisis...

pwede din imitate ng Philippines some business strategy ng china diba? according sa stat lagi lang sila pataas...dapat din ibahin ng pinas business law dito like yun 60/40 ata un...

[uls]

there's a saying -- if you owe a bank thousands, you have a problem. if you owe a bank billions, the bank has a problem

China earns so much dollars the only place big enough to park those dollars is in USG bonds

as of June 2012 1.1 trillion of China's dollars are parked in USG bonds

http://www.treasury.gov/resource-cen...uments/mfh.txt

the USG owes China more than a trillion dollars. that's China's savings

so who is at who's mercy? who owns who?

China is the bank. the USG owes the bank over a trillion dollars. if the USG wants to screw China...

if the USG decides NOT to pay China... China is f#cked

all that talk about the US being at China's mercy coz China is the biggest creditor is nothing but Republican scaremongering

the US owns China

[uls]

as of june 2012 China has 3 trillion dollars in forex reserves

1/3 of that is in USG bonds

di pa kasali ang investments nila sa Fannie Mae and Freddie Mac bonds, and other dollar denominated assets

probably 60-70% of China's forex reserves is denominated in USD

the rest is denominated in yen, euros, pound

the US owns China

[pop3corn]

ang galing galing mo naman *uls. Napapabilib mo ko sa analysis mo ah. Sayang atheist ka Lang kse eh, pwede na kita maging bespren sa cyberspace

[Monseratto]

if the USG decides NOT to pay China... China is f#cked

Honestly Uls, do you think the US would ever do that? Everyone knows US bonds are the safest place to park your money. Even the predicted collapse of the US dollar never happened. Heck, even Putin bought US bonds. Only people like OB will lap at that idea...See, he already wants to hug you.

The United States might officially be the worst neighbor on Earth: the US now owes its allies $5.2923 trillion, the most money the country has ever been indebted to its foreign friends in the history of the nation.

In total, China owns about 8 percent of publicly held U.S. debt. Of all the holders of U.S. debt China is the third-largest, behind only the Social Security Trust Fund's holdings of nearly $3 trillion and the Federal Reserve's nearly $2 trillion holdings in Treasury investments, purchased as part of its quantitative easing program to boost the economy

Statistics released this week by the US Treasury indicate that, as of June 2012, the United States has borrowed bucks from most of the world’s major countries and has accumulated a debt that is on the verge of doubling in only a few short years.

As of June, the amount of US Treasury securities held by foreign holders is close to $5.3 trillion, which includes $1164.3 billion from China and $1119.3 billion from Japan at the top of the list. The list of nation that have helped out the US doesn’t end there though: Brazil, Taiwan, Russia and the UK are also towards the top of the roster, which goes on to cite a substantial sum of money borrowed from the countries of India, Italy, South Africa and Peru, among others.

The latest figure of funds owed by America — $5.3 trillion — is substantially larger than what the country owed to the others when US President Barack Obama took office in January 2012. Only three and a half years after his inauguration, the United States’ debt to foreign holders has increased by $2.2 trillion, or 72.3 percent.

Should that rate continue, the United States could expect to owe its allies over $9 trillion in just another few years. According to Associated Press reporter Martin Crutsinger, though, that’s a good thing. In the AP’s write-up, he says that the demand for US debt has risen in recent times because of fears that financing European Union nations on the brink of collapse could be a bit more risky.

“US government debt is considered one of the world’s safest investments,” the AP reports.

http://rt.com/usa/news/us-foreign-debt-record-981/

[uls]

Honestly Uls, do you think the US would ever do that? Everyone knows US bonds are the safest place to park your money. Even the predicted collapse of the US dollar never happened. Heck, even Putin bought US bonds. Only people like OB will lap at that idea...See, he already wants to hug you.

if the question is -- can the USG default? well... it has happened before. unintentionally

The Day the United States Defaulted on Treasury Bills - Forbes

Investors in T-bills maturing April 26, 1979 were told that the U.S. Treasury could not make its payments on maturing securities to individual investors. The Treasury was also late in redeeming T-bills which become due on May 3 and May 10, 1979. The Treasury blamed this delay on an unprecedented volume of participation by small investors, on failure of Congress to act in a timely fashion on the debt ceiling legislation in April, and on an unanticipated failure of word processing equipment used to prepare check schedules.

remember the US debt ceiling crisis last year?

that scared the hell out of China

[Monseratto]

Uls even mentioned before China recieved SPECIAL TREATMENT from the US Goverment when buying bonds... Would you do that if China isn't a special buyer.

Published on May 23, 2012 00:35

China now has direct access to the US Department of the Treasury to buy US government bonds, though "the buying amount is not significant," a source close to the central bank told the Global Times Tuesday.

China can now bypass Wall Street when buying US government debts, and it is the US Treasury's first-ever direct relationship with a foreign government, Reuters reported Monday, citing the Treasury's documents.

While all the other countries have to go through primary dealers on Wall Street to buy and sell US bonds, China now only has to sell, not buy, through these brokers, Reuters reported.

The People's Bank of China, the country's central bank, has a direct computer link to the US Treasury's bond auction system, and China used it to buy two-year notes in late June 2011, the report said.

"The situation is more or less the same (as what was reported)," the central bank source said. The two countries came up with the special arrangement after Fannie Mae and Freddie Mac were ordered to delist from the New York Stock Exchange in July 2010, the source said.

"The direct access is an acknowledgement of critical importance of China to the US' ability to fund its deficits. It gives China more power in bidding without showing its hands to Wall Street banks and other potential competition," Dariusz Kowalczyk, a senior economist at Crédit Agricole CIB, told the Global Times Tuesday.

China, which holds $1.2 trillion in US Treasuries, should not be "flattered" by the US special treatment, said Tan Yaling, president of the China Forex Investment Research Institute.

"It is the US' strategy to use China's over $3 trillion foreign reserves to patch the holes in the US economy, so of course they want to flatter us. But we don't have a clear, long-term forex investment strategy of our own," she noted.

China once held up to $397.6 billion worth of debts issued by Fannie Mae and Freddie Mac, Beijing Times reported in March 2009, citing Chinese Vice Premier Wang Qishan. The US Treasury agreed to invest up to $200 billion in the agencies to keep them afloat after the 2008 financial debacle.

China's large debt holding in the failing agencies created public concerns, and forced the State Administration of Foreign Exchange to issue an announcement in February 2011 claiming that China had never invested in Fannie Mae and Freddie Mac stocks.

"The direct access does not seem to have any material impact on the safety of China's investments in the US, but there may be improvement in terms of better transparency between the governments," said He Liping, a finance professor at Beijing Normal University.

The arrangement does not change the big picture of excessive concentration of Chinese reserves in US Treasuries, Kowalczyk said. "If the US defaults, China will not enjoy any special protection of its investment."

Experts said that the key for ensuring the safety of China's foreign assets is diversification.

[Monseratto]

If the US will use it's debt as a weapon to screw China. Which will not only destroy US crediblity and throw the world financial system into a spin, since no one will trust the US...

[uls]

my point in all this is let's not get too excited about China's growth

the US owns the reserve currency. the global financial system is owned by the West. the powers-that-be designed the system and we all just live in it. including China

China has to keep buying USG bonds. they have no choice. they earn dollars and the savings instrument for dollars is USG bonds

every country on earth needs to earn and save dollars and park dollars in USG bonds

that's the way it is

so China, with their 3 trillion dollars in forex reserves, is only a player in the system designed, owned, and operated by the West

[pop3corn]

Wala talo c Monseratto sa arguments, ang convincing ni *uls. You're the man!

[uls]

there's no debate or argument here

just posting views

i understand Monseratto's views

China's economic growth is indeed impressive



in a couple of decades hundreds of millions of Chinese were lifted from poverty

but i doubt China will replace the US as the dominant power

i believe global dominance comes owning the reserve currency

the renminbi doesnt have what it takes to be a reserve currency

[Monseratto]

Si OB naman. Ano akala mo sa amin ni Uls? Hindi kami gumagawa ng facts and views sa imagination, so we see each others points of view midway.

[jon777]

there's a saying -- if you owe a bank thousands, you have a problem. if you owe a bank billions, the bank has a problem

China earns so much dollars the only place big enough to park those dollars is in USG bonds

as of June 2012 1.1 trillion of China's dollars are parked in USG bonds

http://www.treasury.gov/resource-cen...uments/mfh.txt

the USG owes China more than a trillion dollars. that's China's savings

so who is at who's mercy? who owns who?

China is the bank. the USG owes the bank over a trillion dollars. if the USG wants to screw China...

if the USG decides NOT to pay China... China is f#cked

all that talk about the US being at China's mercy coz China is the biggest creditor is nothing but Republican scaremongering

the US owns China

how did the US own China?
If the US decides not to pay China, then the US is f*cked not the other way around

Think of it this way, you have a billionaire depositor (China) who decides to deposit P1 billion in cash (his extra money) in Metrobank (US). But Metrobank becomes bankrupt because of mismanagement (either through risky proprietary trading, bank run, high non performing loans etc etc), then Metrobank is f*cked because its cost of doing business is going to increase tremendously. Metrobank's credit rating, corporate bond will suffer due to increase borrowing cost. On the other hand, the billionaire will surely be affected but the P1 billion deposit is his extra money. he still has around P500 million in cash

[Monseratto]

how did the US own China?
If the US decides not to pay China, then the US is f*cked not the other way around

Think of it this way, you have a billionaire depositor (China) who decides to deposit P1 billion in cash (his extra money) in Metrobank (US). But Metrobank becomes bankrupt because of mismanagement (either through risky proprietary trading, bank run, high non performing loans etc etc), then Metrobank is f*cked because its cost of doing business is going to increase tremendously. Metrobank's credit rating, corporate bond will suffer due to increase borrowing cost. On the other hand, the billionaire will surely be affected but the P1 billion deposit is his extra money. he still has around P500 million in cash

If the US were to use it's debt as a weapon, it will damage it's reputation and it's financial standing. The world economy would collapse, interest rates will go sky high since goverments and investors won't trust to park their money in the US and be blackmailed later on. The idea itself is farfetched and has a lot of consequences.

Magpautang ka tapos tatakbuhin mo, subukan mo humiram sa iba... simple as that.

See OB? Ikaw lang ata approve sa view na iyan?

[uls]

some things people don't understand

where do China's treasury and GSE bond holdings exist?

does China hold physical paper? kept in a vault in Beijing?

it's all electronic. the bonds exist in the Federal Reserve System's hard drive

every country on earth that uses US dollars has an account at the Fed

the US can freeze any country's account

the president of the US can freeze China's account with a phone call

if China decides to dump its treasury holdings the US will see it as a threat to national security and freeze China's account

the US owns China

[Monseratto]

some things people don't understand

where do China's treasury and GSE bond holdings exist?

does China hold physical paper? kept in a vault in Beijing?

it's all electronic. the bonds exist in the Federal Reserve System's hard drive

every country on earth that uses US dollars has an account at the Fed

the US can freeze any country's account

the president of the US can freeze China's account with a phone call

if China decides to dump its treasury holdings the US will see it as a threat to national security and freeze China's account

the US owns China

Yep, the US did that before with Iran during the Hostage crises. But China is no Iran. Would the market take this calmly? Or would there be a financial meltdown that would make the 2008 market crash a picnic? What do you see Uls? Peace on earth?

Motivated by the political prudence and economic wisdom it lent foreign currency to other nations. In 2008, when Argentina, Indonesia and South Korea were confronting with short-term liquidity problems, China's credits rescued them timely (Wharton University 2011). Additionally, it encouraged its domestic companies to invest abroad with US dollar in exchange for renminbi. Thanks to the instant and other measures its outward FDI jumped from US $90 billion in 2006 to US $230 billion in 2009. The options are not vast in front of Chinese managers of the monetary policy. It seems that as its currency is pegged with US $ its economy is unwittingly entangled with fate of US economy. Both might share market-based ups and downs felt in either country. In case China decides to convert US $ into other currencies like euro it might discredit the former and as a result China's investment in US assets might lose its value. Secondly, if it decides not to invest anymore in US assets the consequences will also not be different. Moreover, in case of stopping buying US treasury bills, the cost of borrowing within US might go up, making US exports to China more expensive, hurting Chinese exporters and consumers. Under these circumstances, the US has been refrained from applying some protective measures on Chinese products bound to the US. To the US, it gives some assurance that China will not take any action haphazardly that could affect US assets.

[uls]

Moreover, in case of stopping buying US treasury bills, the cost of borrowing within US might go up, making US exports to China more expensive, hurting Chinese exporters and consumers. Under these circumstances, the US has been refrained from applying some protective measures on Chinese products bound to the US. To the US, it gives some assurance that China will not take any action haphazardly that could affect US assets.

if China stops buying US treasuries then it has to figure out where to put their dollars. there's no other place big enough to absorb those huge amounts of dollars. gold? there's not enough gold. and being such a big buyer they'll just drive up the price of gold. oil? same thing. copper? silver? soybeans? their presence in any market will drive up the price of whatever they're buying

convert their dollars to other currencies? so whoever they sold the dollars to will buy USG bonds. China not buying treasuries won't drive up yields. there's always another buyer. all dollars eventually make it back to the US

convert dollars to euro and buy eurozone bonds? done that

convert to yen and buy JGBs? done that

convert to pound and buy UK bonds? done that

and China still has majority of its holdings denominated in USD

China stop buying USG bonds? it's a bigger problem for China than the US

China is held hostage by the USD and they can't do anything about it

China hates the dollar but they're stuck with it. they hate Fed monetary policy which devalues the dollar. but there's no other currency on earth now that can replace the dollar

--

re rising US bond yields -- what can drive up yield is return of risk appetite. when there's less safe haven demand

[uls]

how did the US own China?
If the US decides not to pay China, then the US is f*cked not the other way around

Think of it this way, you have a billionaire depositor (China) who decides to deposit P1 billion in cash (his extra money) in Metrobank (US). But Metrobank becomes bankrupt because of mismanagement (either through risky proprietary trading, bank run, high non performing loans etc etc), then Metrobank is f*cked because its cost of doing business is going to increase tremendously. Metrobank's credit rating, corporate bond will suffer due to increase borrowing cost. On the other hand, the billionaire will surely be affected but the P1 billion deposit is his extra money. he still has around P500 million in cash

wrong analogy

Metrobank can go bankrupt. the US can't

the US owns the dollar. it can print dollars to pay debt

if they default it won't be coz they went bankrupt

they can intentionally or unintentionally suspend payment (technical default)