China Economy Forum

[FairAndUnbiased]

We're going in circles at this point. Since it's impossible for China to ever accommodate any other nation in your framework, you've decided to pursue fringe arguments to explain away the currency appreciation (which had no other discernible policy catalyst). Strange, I would have expected someone who is "FairAndUnbiased" to be a bit more pragmatic.

It's interesting that you consider my counterpoints to be equivalent to condescension. Since you have not declared your flags, it's impossible for me to adjust my responses to suit your culture, although your consistent defensiveness regarding China provides a clue. In the United States, we do not treat debate as a mechanism to condescend, but rather to explore the facts and come to a reasoned conclusion. If such an exchange is unacceptable to you, I am happy to disengage.

I'm an old member. I used to have flags when they were mandatory, and simply have not updated them when I returned. I was one of the ppl around for the 3rd version of PDF. Your tone in the last reply is one of clear condescension with the use of terms such as "chip on shoulder". I have said nothing about previous replies. Also, I have replied with counterpoints such as other trading partners having absolutely no issue in 2005 with the exchange rate, without use of charged words or personal attacks.

Also see Tranquilium's reply.

 

[tranquilium]

I'll try one more time, then I give up. Japan and Germany had three choices:

1) Stimulate demand in their own economies, enabling US exports to grow
2) Go along with the Plaza Accord, and suffer a bit with the exchange rates.
3) Oppose the Plaza Accord, and face unilateral American devaluation of the USD (do you doubt the US ability to do this unilaterally?) along with protective tariffs to protect its manufacturers.

You tell me: if you were Japan or Germany, which one would you choose? It's hard for me to believe this is a difficult choice, but perhaps you see something that I'm not seeing. I sense you might not know this, so let me point it out explicitly (and perhaps this will clarify the situation for others as well). Here was Japan's real GDP growth in the 1980s:

1980: 3.2%
1981: 4.2%
1982: 3.4%
1983: 3.1%
1984: 4.5%
1985: 6.3%
1986: 2.8%
1987: 4.1%
1988: 7.1%
1989: 5.4%

And here was Germany's:

1980: 1.3%
1981: 0.1%
1982: -0.8%
1983: 1.6%
1984: 2.8%
1985: 2.2%
1986: 2.4%
1987: 1.5%
1988: 3.7%
1989: 3.9%

I keep hearing from users here about how Plaza destroyed the Japanese economy. That asserting is not evident in the numbers. The real estate bubble was not inevitable, and could have been avoided with better monetary policy (just like the US real estate bubble), but to put Japan's lost decades entirely on the shoulders of Plaza is misguided. It's clear that Plaza didn't destroy the German economy either. In fact, in this fascinating account of the lead up to the Plaza Accords and the after-effects, it's clear that Germany essentially single-handedly was responsible for the USD devaluation, doing far more than either the US or Japan (pp. 12-13 of the pdf, pp. 303-304 of the text in the upper left corner). And to complete the picture, the USD had already depreciated as much in the six months leading up to Plaza as it did in the six months following Plaza, so the trend was already in place. Plaza simply accelerated it.

In light of that, is it easier for you to accept that Japan could make a decision, as a sovereign nation, that its best course of action to assist a major trading partner without triggering a trade war, would be choice #2? If not, then please continue believing that Japan is an American colony, or science experiment, or amusement park.

China, on the other hand, managed the appreciation well, whereas Japan did not. I don't see how that contradicts the case that China accommodated the US in this regard, as it was the least bad option from China's perspective.

Regarding the issue of forcing other countries to put America's interest over their own, it is precisely that framework of thinking that I am trying to refute. These actions served the interests of both nations. Not every nation sees the world through a zero-sum lens in the same way that several Chinese users here do. Not even the CCP sees the world through that lens, at least when it comes to the United States.

In short, I don't assume other nations should prioritize the US over their own interests. Please, let's move on from that framework, since it is false.

Without the threat of military invasion and instigated coup, choice 3, with future target of replacing US as the dominant industrial power of influencing their respective region. Take Japan, for example, it had better access to both Chinese, South Korea, as well as Southeast Asia market than US. Germany also had better access to European market, especially the ones in East Europe. Your entire argument hinges on US economy being the end all benefit for Japanese and Germany economy. It is not. There are many other markets available back in the 90s. Remember, this was the time before Chinese manufacturing reached the critical stage it started to swallowing up market share left and right.

How is Plaza accord "suffer a bit with the exchange rates"? The entire Plaza accord event is what started Japan's lost decade. Sure, by itself, it is only targets exchange rates, but the impact created by Plaza accord is that it quickly reduced competitiveness of the Japan manufacturing sector, which caused capital to flow into its real estate market. The subsequent burst is what created broke Japan's monetary chain and created the lost decade. However, the entire event can trace its root back to Plaza accord. (BTW, Noboru Takeshita at the time agreed to a 20% appreciate over the next decade, not a close to 100% appreciate over 4 years. In fact, the agreed appreciation rate is a lot closer to the rate China was appreciating since 2005)

Is it US' intention to destroy Japanese economy in the first place? Not really. There are too many factors that Japan itself mismanaged that accumulated into the big burst, but what is the trigger of all this? US' need to strength its economy by request other economy to damage itself. Basically, this is a scenario of "I forced you take a shot to help me out, but it shouldn't be too much trouble to you, since it is just a scratch." But it turned out its a bone shatter, flesh rendering wound. So, if you are the Germans, are you going to take the chance the next time it really only going to be a scratch?

 

[LeveragedBuyout]

Without the threat of military invasion and instigated coup, choice 3, with future target of replacing US as the dominant industrial power of influencing their respective region. Take Japan, for example, it had better access to both Chinese, South Korea, as well as Southeast Asia market than US. Germany also had better access to European market, especially the ones in East Europe. Your entire argument hinges on US economy being the end all benefit for Japanese and Germany economy. It is not. There are many other markets available back in the 90s. Remember, this was the time before Chinese manufacturing reached the critical stage it started to swallowing up market share left and right.

How is Plaza accord "suffer a bit with the exchange rates"? The entire Plaza accord event is what started Japan's lost decade. Sure, by itself, it is only targets exchange rates, but the impact created by Plaza accord is that it quickly reduced competitiveness of the Japan manufacturing sector, which caused capital to flow into its real estate market. The subsequent burst is what created broke Japan's monetary chain and created the lost decade. However, the entire event can trace its root back to Plaza accord.

Is it US' intention to destroy Japanese economy in the first place? Not really. There are too many factors that Japan itself mismanaged that accumulated into the big burst, but what is the trigger of all this? US' need to strength its economy by request other economy to damage itself. Basically, this is a scenario of "I forced you take a shot to help me out, but it shouldn't be too much trouble to you, since it is just a scratch." But it turned out its a bone shatter, flesh rendering wound. So, if you are the Germans, are you going to take the chance the next time it really only going to be a scratch?

1) The US only accounted for approximately 25% of global GDP in 1980, so it's obvious that Germany and Japan could afford to lose access to the US market without suffering any adverse consequences. It's clear that getting shut out of the US market would be far preferable to the currency appreciation option.

2) It's not possible that Japan and Germany did well at the expense of the US in the 1970s, so asking them to make a relatively small sacrifice to help out their primary ally was certainly unreasonable and contrary to their interests.

3) Japan's economic malaise is primarily the fault of Plaza, and not Japan's excessive focus on its internal market, its lack of corporate governance, its inability to adapt to an increasingly global and competitive world, its lack of productivity growth, its cross-shareholding which destroyed profit and locked strategic options, or any other domestic reason. As usual, everything can be blamed on the US, which can cause entire countries to commit economic suicide at will.

You've convinced me. You win, I lose.

I am going to stay out of this thread, since my arguments apparently are wrong and condescending, and serve no purpose. Good luck, gentlemen.

 

[FairAndUnbiased]

1) The US only accounted for approximately 25% of global GDP in 1980, so it's obvious that Germany and Japan could afford to lose access to the US market without suffering any adverse consequences. It's clear that getting shut out of the US market would be far preferable to the currency appreciation option.

2) It's not possible that Japan and Germany did well at the expense of the US in the 1970s, so asking them to make a relatively small sacrifice to help out their primary ally was certainly unreasonable and contrary to their interests.

3) Japan's economic malaise is primarily the fault of Plaza, and not Japan's excessive focus on its internal market, its lack of corporate governance, its inability to adapt to an increasingly global and competitive world, its lack of productivity growth, its cross-shareholding which destroyed profit and locked strategic options, or any other domestic reason. As usual, everything can be blamed on the US, which can cause entire countries to commit economic suicide at will.

You've convinced me. You win, I lose.

I am going to stay out of this thread, since my arguments apparently are wrong and condescending, and serve no purpose. Good luck, gentlemen.

You are misunderstanding disagreement as disrespect. I am not disrespecting you at all. I am just disagreeing.

1. That is 1980, today is 2014. The relative strength of the US economy has changed, thus policies towards it may also be different.

2. Chinese did not do well at first, and it did not come at cost to the US. The US was the primary beneficiary of Chinese industrialization in the 80's and 90's through vastly lowered consumer goods prices and an almost locked market for US products at very high profit due to the exchange rate - Chinese consumers were forced to accept extremely high prices for US imports while exporting for very little profit due to the exchange rate and prevailing commodity import costs at the time. China did not compete in any market that the US was interested in at that time. GDP per capita actually dropped during some years during the 80's and the relative gap between China and the rest of the world grew larger, rather than smaller, during this timeframe. Only in the 2000's did Chinese start seeing benefit from industrialization going to the people, rather than to foreign investors, and only at this time did Chinese start competing in markets that were shared with the US.

 

[tranquilium]

1) The US only accounted for approximately 25% of global GDP in 1980, so it's obvious that Germany and Japan could afford to lose access to the US market without suffering any adverse consequences. It's clear that getting shut out of the US market would be far preferable to the currency appreciation option.

2) It's not possible that Japan and Germany did well at the expense of the US in the 1970s, so asking them to make a relatively small sacrifice to help out their primary ally was certainly unreasonable and contrary to their interests.

3) Japan's economic malaise is primarily the fault of Plaza, and not Japan's excessive focus on its internal market, its lack of corporate governance, its inability to adapt to an increasingly global and competitive world, its lack of productivity growth, its cross-shareholding which destroyed profit and locked strategic options, or any other domestic reason. As usual, everything can be blamed on the US, which can cause entire countries to commit economic suicide at will.

You've convinced me. You win, I lose.

I am going to stay out of this thread, since my arguments apparently are wrong and condescending, and serve no purpose. Good luck, gentlemen.

I did point out that Japan's own mismanagement played a big part in the bubble burst. US is not to be blamed for everything, it's just one that pulled the trigger. So, it is the same question. Would you take the chance the next time the trigger is pulled the result will be relatively harmless, or would you rather build a layer of protection for yourself which comes in handy in other situations as well as expanding your influence.

And please, you know full well how "reasonable" international politics are. By that logic, should USSR ask West Germany to sacrifice their economy for them because the Germans "owe them one" for WWII?

For the first one, the Plaza accord did nothing to fix the trade deficit between US and Japan. This is because their products occupies different markets. In fact, after the Plaza accord, US trade deficit versus Japan farther widened.
U.S.-Japan Goods Trade Data (1990-2013)
This means the Plaza accord did everything but the proposed purpose and left all the negative impacts.

 

[UnChosen]

Germany bailing out failing European countries is hardly "wasted". As long as EU exists, Germany will be known as core of EU instead of economic colony of US like Japan is. It was barely 20 years ago when Germany was forced to sign Plaza according along with Japan and barely 25 years ago when Germany was divided in half. The other European states may be a drain on German economy, but the protection they provided is practically priceless.

Germany does not have infinite money so the best they could do is to keep all these debtor EU states on life support.

This ends up undermining EU even faster because countries like Greece and Spain is being kept at a state where they get just enough money to service debt but never have any money left over for investments and spending due to austerity cuts. So these country cannot grow and eventually will grow to resent Germany whether or not the Germans have bad intentions. Some will get desperate and would sell out to anyone with money against EU solidarity...so the US or Russia will just have to send a little bribe money and these peripheral country will do whatever they say.

Instead of constantly bailing them out Germany should just let them default and negotiate some other agreement to recoup the money further in the future.

 

[tranquilium]

Germany does not have infinite money so the best they could do is to keep all these debtor EU states on life support.

This ends up undermining EU even faster because countries like Greece and Spain is being kept at a state where they get just enough money to service debt but never have any money left over for investments and spending due to austerity cuts. So these country cannot grow and eventually will grow to resent Germany whether or not the Germans have bad intentions. Some will get desperate and would sell out to anyone with money against EU solidarity...so the US or Russia will just have to send a little bribe money and these peripheral country will do whatever they say.

Instead of constantly bailing them out Germany should just let them default and negotiate some other agreement to recoup the money further in the future.

If the current trend continues, yeah, sooner or later Germany and France will have to let them go, but I think for now they are still holding on the forlorn hope that the PIIGS will pull their act together.

 

[cirr]

Hyundai Motor to build two new plants in China: sources

(Agencies) Updated: 2014-09-17 09:30

South Korean automaker Hyundai Motor Co plans to build two new factories in China instead of one, two people familiar with the matter told Reuters on Tuesday.

Hyundai plans to open a new plant in the northern Hebei province, one of the people said.

Hyundai, which has three factories in Beijing, in March signed a preliminary agreement to build a plant in the southwestern city of Chongqing to help the automaker expand into western China.

One of the people said Hyundai had planned to open its $1 billion Chongqing factory in early 2016, but would likely start production later because the automaker has yet to gain central government permission.

Hyundai, which has a joint venture in China with Beijing Automotive Industry Holding Co Ltd, now aims to open a factory in the Hebei city of Huanghua in 2016, ahead of its proposed plant in Chongqing, the two people said.

The two people spoke on condition of anonymity because the plans are confidential.

Hyundai's decision comes as foreign direct investment in China fell in August to a low not seen in at least two and a half years, adding to a string of weak economic indicators in the world's second-biggest economy.

In the same month, Hyundai's sales in China slipped 1 percent to 84,516 vehicles, from 85,091 vehicles a year earlier.

The change in plan is also reminiscent of a decision by Fiat Chrysler's Chinese partner Guangzhou Automobile Group Co to build two plants, after competition between the cities of Guangzhou and Changsha to host the auto partnership.

A Hyundai spokeswoman said in an emailed statement that nothing has been decided regarding new factories in China.

Hyundai Motor to build two new plants in China: sources - Business - Chinadaily.com.cn

 

[cirr]

China passes construction milestones

15 September 2014

by World Nuclear News

The reactor pressure vessel has been installed in the second AP1000 unit under construction at the Haiyang nuclear power plant. Meanwhile, first concrete has been poured for the foundation of the conventional island for the HTR-PM at Shidaowan.

The reactor vessel for Haiyang 2 is lowered into the containment building (Image: CNEC)

The vessel was first raised from the ground to above the unit's containment building using a 3200-tonne crawler crane. The large component was then carefully lowered into position within the building. The operation began at 11.09am on 12 September and took less than two hours and twenty minutes to complete, plant constructor China Nuclear Engineering Corporation (CNEC) announced.

The reactor pressure vessel for Haiyang 2 - measuring around 10.3 metres long, with a diameter of about 6.5 metres and weighing some 274 tonnes - was manufactured by Shanghai Electric. The vessel for unit 1 was produced in South Korea by Doosan Heavy Industries & Construction.

Phase I of the Haiyang plant in Shandong province, comprising two AP1000 units, was approved by the State Council on 23 September 2009. The following day, the National Nuclear Safety Administration issued a permit for the construction of the two reactors, and first concrete was poured within days. Haiyang 1 and 2 are expected to begin operating by the end of 2015 and in early 2016 respectively.

Two AP1000 units are also under construction at the Sanmen site in China's Zhejiang province. Sanmen unit 1 is expected to be the first AP1000 to begin operating. All four Chinese AP1000s are scheduled to be in operation by 2016. Third and fourth units are planned at both Sanmen and Haiyang.

Shidaowan concrete pour

Construction of the HTR-PM - a demonstration high-temperature gas-cooled reactor - is progressing at Shidaowan in China's Shandong province.

The foundation for the HTR-PM's conventional island is poured (Image: CNEC)

On 7 September, the pouring of first concrete for the foundation of the unit's conventional island took place. CNEC said that the milestone marks the end of civil works at the unit. The pouring of the concrete basemat for the HTR-PM's reactor building was completed at the end of March and construction of the reactor building itself is underway.

The demonstration plant's twin HTR-PM units will drive a single 210 MWe turbine. It is expected to begin operating around 2017. Eighteen further units are proposed for the Shidaowan site, near Rongcheng in Weihai city.

Location of the Shidaowan nuclear site, near Rongcheng in Weihai city.

 

[Edison Chen]

From sohubusiness

 

[TaiShang]

Nissan, Dongfeng come together for Infiniti

Japanese automaker Nissan Motor Co said on Monday that it has set up a joint venture with Dongfeng Auto Motor Corp to manufacture and market its luxury brand Infiniti in China.

Dongfeng Infiniti Motor Co Ltd, a 50-50 joint venture between Dongfeng Motor Corp and Nissan Motor Co Ltd, with also be fully prepared to take advantage of the localization drive in China, company officials said.

The new venture will independently operate the Infiniti brand, both imported and locally produced models under the principles of "One Strategy, One Brand, One Team, One Channel" to achieve corporate growth, said Daniel Kirchert, managing director of Infiniti China, who was appointed president of Dongfeng Infiniti.

Kirchert will lead the new company along with Executive Vice-President Lei Xin, former deputy general manager of Strategic Planning Department at Dongfeng Motor.

The first board of directors also included Xu Ping, chairman of Dongfeng Motor Corp and incoming president Roland Krueger of Infiniti Motor Co Ltd.

In November, the first localized Infiniti model Q50L will roll out of the production lines at sister company Dongfeng Nissan Passenger Vehicle Co's plant in Xiangyang, Hubei province.

By next year, the second model, the long wheel-based SUV Infiniti QX50 will also start production in Xiangyang, Infiniti's third manufacturing base in the world.

According to Kirchert, during the next three to five years, the locally produced lineup will be expanded by 60 percent, with all models tailored for requirements of Chinese customers.

"We hope to have annual sales of 100,000 units in China by 2018, with 50 percent of it coming from locally produced models. The new joint venture and localization kick-off will boost our confidence," he said.

Xu Ping, chairman of Dongfeng Motor Corp said Dongfeng Infiniti is an important step in extending Dongfeng Motor Corp's value chain into the luxury segment. With Q50L, Infiniti will help Dongfeng for the first time tap into China's booming and promising luxury vehicle segment, he said.

On top of the 54 percent sales growth in 2013, Infiniti sold 18,279 cars in the first eight months of this year, a 102 percent growth over the same period of last year.

Jia Xinguang, an independent auto analyst based in Beijing said localization is necessary and essential for foreign automakers, especially for those who want a higher market share in China's luxury vehicle segment.

"If companies miss the localization bus, they will fall behind in the efforts to succeed in China's highly competitive and lucrative domestic market," he said.

Premium vehicle producer Jaguar Land Rover, owned by India's Tata Motors, earlier this year joined hands with Chinese firm Chery Automobile for a joint venture with an investment of 10.9 billion yuan.

Based in Changshu, Jiangsu province, the new factory is expected to start operations in the fourth quarter, and produce 130,000 Jaguar, Land Rover vehicles as well as own-branded vehicles and 130,000 engines a year in the future.

However, another auto analyst Zhong Shi said that "even with localization, it would be difficult for Infiniti, a young and small brand, to dislodge BMW, Mercedes-Benz and Audi in China's luxury vehicle sector, in the short term".

Global consulting firm PricewaterhouseCoopers has estimated that luxury car sales in China will surpass that in the United States by 2016, and clock annual sales of more than 3 million units by 2020.

 

[Chronos]

I now that this is off topic, but I will say it here anyways.

When I first joined the forum I used to troll some of the Chinese posters. So for my past transgressions I apologize. In truth, I actually think it is one of the greatest achievements a nation can have what the Chinese have accomplished over the last 30 years.

@Chinese-Dragon @Raphael @Edison Chen

 

[Edison Chen]

I now that this is off topic, but I will say it here anyways.

When I first joined the forum I used to troll some of the Chinese posters. So for my past transgressions I apologize. In truth, I actually think it is one of the greatest achievements a nation can have what the Chinese have accomplished over the last 30 years.

@Chinese-Dragon @Raphael @Edison Chen

Yeah I know, me too. We don't know much about the others, so we judge them just by first impression or Internet rumors. Much appreciated, thanks.

 

[Chronos]

Yeah I know, me too. We don't know much about the others, so we judge them just by first impression or Internet rumors. Much appreciated, thanks.

If India had done half as well as China, I would be happy with that performance. That is how well you guys have done.

China still have some way to go to catch up to the West. But India has a way longer road ahead.

It's just that sometimes the Jingoism gets the better of me

 

[Raphael]

I now that this is off topic, but I will say it here anyways.

When I first joined the forum I used to troll some of the Chinese posters. So for my past transgressions I apologize. In truth, I actually think it is one of the greatest achievements a nation can have what the Chinese have accomplished over the last 30 years.

I hadn't noticed . Most newbies tend to be extremists and trolls, so I don't bother forming an impression of them. Once they stay for a while they tend to mellow out (or if they don't they get banned).

Anyway, this forum was made for trolling. I say if you can't stand the heat, get out of the kitchen .