China the Orwellian Puzzle Palace
Currencies / China Currency Yuan May 19, 2008 - 11:17 AMBy: Black_Swan
Key News - Japanese manufacturers turned pessimistic about business conditions for the first time in five years in May as high raw material prices and a U.S. slowdown eroded sentiment, a Reuters survey showed on Monday.(Reuters)
China should “disguise its ambition and hide its claws.” Attributed to Deng Xiaoping
FX Trading – Ecstatic to be out of the Orwellian Puzzle Palace we often refer to as “China”
I spent four days in Beijing, last week. I was invited to speak at a conference regarding the development of foreign exchange trading in China. Never again will I go back!
In short, I’ve concluded that China is an Orwellian Puzzle Palace at best. They really don’t give a rat’s ass (excuse my French) about what anyone, especially from the West, says unless in some twisted Machiavellian way they can use it to their advantage in terms of market power. [To be very clear, I am talking about the Chinese “leadership” and its policy choices, not the people who are locked inside this place.]
In short, the Asian model, that sucks the life out of the West, just seems to be getting stronger. We should know better by now.
- A labyrinth of tariff and non-tariff trade barriers
- An artificially undervalued currency
- A policy requiring technology transfer and local manufacturing
- Export subsidies to key industries
* In the Jaws of the Dragon, Eamon Fingleton
But gee Jack; they’ve let their currency appreciate a lot last year! Yeah, sure they have.
Assuming you revise history of where the currency was (revising history is of course a big part of China’s success and those who buy into their fantasies), I think you can see how drastically the currency has been suppressed to serve China’s mercantilist trade policy--a policy by the way that also delivers massive capital to them so they can further enhance their manufacturing power and use said massive capital to continue to suppress their currency…and on and on and on….to the benefit of China as the sheep who drive policy in the West (likely rich sheep looking to get richer) mouth the mantra of “free trade.”
I am no longer even close to being on the fence on this issue of Chinese currency manipulation and “free trade.”
For those who don’t quite grasp the real world, and mouth the mantra of “free trade,” here is the definition of real free trade in my book of the real world:
Free trade means we send China stuff, they let it in freely, and their consumers are free to buy it. China’s sends us stuff, we let it in freely, and our consumers are free to buy it.
Guess what? This may shock you. They don’t let stuff in and don’t allow their consumers to freely buy it!
Knock, knock, is anyone in the West at home? This isn’t free trade!!!!!!!!!!!!!!!
This represents enriching China on the back of middle- and lower-class, i.e. those Western workers who will never have the skills to shift magically into a knowledge-based worker.
Sure, Western consumers are subsidized by the supply of low-priced and increasingly high-value added goods flowing from China. Sure, platform companies, primarily the stellar big name multinationals that supply China with market power and free technology transfer, are profiting. It is a jobs-for-stuff exchange between China and the West.
Jack Crooks
Black Swan Capital LLC
http://www.blackswantrading.com/
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