First, thanks for your reply and inputs.
After read your post, I still have few questions
1) You said taxes on manufacturing sector is low in China, exactly how low? The number I found on the World Bank website suggest its 63.5% of profit... not low at all comparing to US 46.3%
2) When you say "core CPI", what do you mean? As I understand, food accounts 32% of CPI weighting in China since Feb. 2011, which still is the largest part of CPI.
3) As for causes for food price rise, this article suggest its rent and management fee:
??? ???
What's your opinion on this issue?
4) Can you give few examples of high end goods that China produces? Out of my head, I can think two: automobile and renewable energy industry.
5) Your mentioned over regulation is one of the cause for decline of US manufacturing capability, but how come this does not apply to Japan? Japanese regulation is not loose by any mean.
first of all, u are not chinese, u are an indian or an american pretending to be chinese. so stop the bullsh!t right there bud.
ask any business and they will say china has lower taxes than the US. chinese govenrment gives tax brakes to many businesses to lure them to china. US has corporate taxes are some of the highest in the world. not only that the US has to pay numerous other taxes such as state and local taxes when doing business in the US. these are general knowledge. china had given much lower taxes to foriegn businesses compared to local businesses. these are pro-business tactics.
core cpi is inflaton without food and energy, the core cpi is very low in china. as i said, food is the major cause of inflation in china and not transportation costs like u said.
food prices increases are due to increase in the money supply in china due to QE2 in the US as the yuan is pegged. plus the adverse weather conditions have caused production to slow on certain food products which caused shortages and the supply couldnt keep up with demand.
china is now the biggest manufacturer and exporter of electronics and electrical products in the world, from PCs to smartphones, to tablets, to every electric gadget. u look it up ur self.
japanese regulation is not great, but US is worse, US has environmental protections agency, NLRB with boeing being denied, dodd-frank, long time taken to setup a business to gain approval, healthcare costs, so many more. china dont have these regulations, regulations create extra costs for a business which decreases their margins. regulations, taxes, access to capital, cost of capital, work ethic of the population, infrastructure, educated labour force, etc are all the things that affect a business.
ur point that currency is the only thing is utter garbage.
china has one of the most pro-business environments in the world, not only that, china has the fastest growing consumer market, plus the biggest savings pool.
some businesses can qualify for subsidies from the chinese government if they manufacture their product in china as happened with general motors and SAIC.
china gives tax breaks for businesses.
china has access to rare earth which is need to make high tech goods, china can produce rare earth at a lower cost than in other countries. china also has higher tariffs, so if any firm wants access to the chinese consumer market, u have to manufacture in china to avoid the tariff or ur competitor will win.
all these things put together and many more things make china the powerhouse that it is today. thats why china is growing fast without going into debt, but china will need to go into some debt to create the dim sum bond market to make the yuan a global currency as u need to create liquity in the currency and need to have a deep and liquid bond market.
