China June trade surplus swells five-fold

Reuters ^ | Reuters

[jpsb]

BEIJING (Reuters) - China's trade surplus for June swelled five-fold from a year earlier as exports grew much faster than imports, offering more ammunition for foreign critics who argue that Beijing should let the yuan rise in value.

The June surplus grew to $9.68 billion, exceeding forecasts of $8.0 billion and towering above the $1.8 billion surplus recorded for June 2004.

[Andrewksu]

I would argue that unions and the regular upping of the minimum wage has aggravated this situation and price our workers out of the market. These artificial wage controls ignore the fact that we deal in a global market. The only way to deal with this issue is to stop the min. wage farce, which produces no positive effect, only negative. In conjunction, we must institute tariffs to bring some of this back into balance.

The cheap goods are great until China overtakes us and then, due to their communist government, decide that the US is a great resource that they would like to control.

[ran15]

I see what you are saying now, as the US dollar rises against these other places like Indonesia's currency, so too does the yuan.

[Alberta's Child]

I wonder if Mr. Thurow has anything more current than that to say on this subject, particularly when you consider that on two key points he raised -- the prospects for a second Bush term (". . . if the Bush administration doesn't do something, there won't be a second Bush administration. Professional white-collar outsourcing is so scary, and so many of the people affected are Republican voters, that the issue is going to blow Bush out of the water") and interest rates on 10-year Treasury notes -- he was totally incorrect.

[dljordan]

"Keep shopping at wal-mart folks."

No, this is GOOD for America. I'm not exactly sure how but some very economically astute Freepers have assured me it is so. They seem to be the same folks who are pro CAFTA/NAFTA/ILLEGAL IMMIGRATION.

[superiorslots]

Quote: To top it all off, longshoremen are now among the highest-paid blue-collar workers in the U.S., with an average annual salary of somewhere between $75,000 and $85,000 per year



See USA Today several months back about this. Yes, WESTERN US longhoreman have increased their hiring because of the amount of ships coming into the US to UNLOAD. Some ships have to wait out in the harbor 2-4 weeks to unload.

However the Eastern Longshoreman story has been different. The jobs creation you site was only the transferring of Eastern jobs to the west.

It still comes down to we are unloading more than loading.

[Alberta's Child]

There is certainly some danger down the road with China, but I've made the point that the trade imbalance between the U.S. and China is not the root of the problem. If anything, it exposes China's basic weakness -- since its only real economic strength is its cheap labor, it will always be at a disadvantage against anyone who is willing to work cheaper (hence the huge loss of manufacturing jobs they've faced in the last couple of years).

I would argue that unions and the regular upping of the minimum wage has aggravated this situation and price our workers out of the market.

Yes, and you could add a whole list of other factors to the mix -- including the strength of the U.S. dollar against most foreign currencies, the added costs of doing business in the U.S. due to our regulatory environment and legal system, etc.

[Realism]

It's not like we couldn't start making clothes and stuffed toys again.

If you believe that clothes and stuffed toys are the extent of imported items you really need to start reading the labels on the merchandise you buy. To educate yourself read where it's made and the company name and address.

[Alberta's Child]

And the same works in reverse, too. When the price of oil rose dramatically back in 2004, it was primarily the result of a weakening U.S. dollar against other currencies. So if the price of oil (in U.S. dollars) rose 30% while the Euro was gaining 30% against the dollar, then European consumers didn't experience any change in their oil costs at all. But China didn't have that luxury, since they've pegged their currency to the dollar. When the price of oil rises due to a weak U.S. dollar, then the price of oil in China rises, too.

[Paul Ross]

What do you want from a leftwing economist? Nostradamus?

I would take his other rosy scenario as equally suspect, of a 'soft landing' for the U.S. economy with everyone just catching up to us in standard of living, rather than dragging us down.

If you actually followed his policy prescriptions...which are pretty standard Keynsian solutions...you will definitely have major disruptions negatively to the U.S. standard of living. General currency debauchment combined with tax increases on the SHeeple. His argument that they would only be short term is typical big government denial...yeah, right.

[expat_panama]

With very few exceptions, the U.S. has always relied on cheap (sometimes coercive) labor to feed its standard of living....

I usually hear this type of rhetoric from Latino commies.   Do you really mean to say the American people are plundering the rest of the world?

[superiorslots]

Quote: It's not like we couldn't start making clothes and stuffed toys again.



This snipet below shows you where you are wrong. Very sombering that are US Navy has and will continue to buy componets from china at an increasing pace.






While the direction of the U.S. naval shipbuilding industry remains on a downward slope, the situation is the opposite in China. China is aggressively investing in its shipbuilding capacity. It is expected to have a submarine fleet that is twice the size of the U.S. fleet of 33 subs by 2010. It has started building a new class of destroyer that is "believed to match the air defense capability of the DDG-51 class," says Brown. "In 1989, China had essentially no shipbuilding industry or market share. In a little over a decade, China has invested in its shipbuilding industry to become the third largest builder of commercial ships behind South Korea and Japan."

China now has the capacity to produce 16-million deadweight tons a year. Its China State Shipbuilding Corporation recently announced a $3.6-billion shipyard construction project on Changxing Island. "Once completed, the shipyard is expected to have the capacity to produce more than 4.5-million deadweight tons a year, making it the largest shipyard in the world," says Brown.

China is also investing heavily in its component suppliers. It has stated that it wants 100 percent of all systems, components and materials to be produced in China.



"More and more manufacturing of ship components and systems will migrate to China as DOD encourages foreign sourcing in its efforts to find the cheapest sources," says Brown. "This has already begun with regard to materials for naval components. The manufacture of entire components and systems will migrate to China in the next several years under current DOD policy with respect to outsourcing."

[Alberta's Child]

The jobs creation you site was only the transferring of Eastern jobs to the west.

That is absolutely false. Port activity has been growing on the East Coast as well as on the West Coast over the years. According to the latest issue of the Journal of Commerce, containerized imports at Los Angeles/Long Beach are up about 3% for the first five months in 2005 vs. 2004, while imports at the Port of New York/New Jersey are up more than 11%.

Exports through both ports are up about 7% year-to-date.

The combination of a number of factors would usually make the East Coast more attractive than the West. These include the following:

1. The largest consumer market in the world is the Northeastern U.S.

2. Ocean-going vessels are getting larger all the time (more and more ships are being built today that can't fit through the Panama Canal).

3. The fastest-growing manufacturing centers are places like Indonesia and Malaysia -- which are more easily accessible to the eastern U.S. via a direct westbound trip through the Suez Canal instead of an eastbound trip to the West Coast that requires loads to be transferred to trains and trucks.

It still comes down to we are unloading more than loading.

That is true, and I expect that it will remain this way for the foreseeable future as long as we have a much higher standard of living than our trading partners.

[superiorslots]

NEEDS TO BE REPEATED




"More and more manufacturing of ship components and systems will migrate to China as DOD encourages foreign sourcing in its efforts to find the cheapest sources," says Brown. "This has already begun with regard to materials for naval components. The manufacture of entire components and systems will migrate to China in the next several years under current DOD policy with respect to outsourcing."

[KevinDavis]

Plus most of the manufacturing work is done by robots..

[Alberta's Child]

Do you really mean to say the American people are plundering the rest of the world?

No. But the fact remains that historically the U.S. economy has been strongest when we have been able to take advantage of huge disparities (either externally with other countries or right here in the U.S.) in standards of living between consumers and producers. That's been the case regardless of whether the "cheap labor" involved slaves in the South, Irish immigrants in the 19th century who worked in the coal mines of the Northeast, and Eastern European immigrants in the first half of the 20th century who filled our textile mills.

In fact, the presence of cheap Chinese labor on oil rigs in Colorado is really a case of history gone full circle. This country imported tens of thousands of "cheap labor" (in the form of Chinese immigrants!) in the last few decades of the 19th century to build the railroads across the western U.S.

[UnbelievingScumOnTheOtherSide]

While the direction of the U.S. naval shipbuilding industry remains on a downward slope, the situation is the opposite in China. China is aggressively investing in its shipbuilding capacity. It is expected to have a submarine fleet that is twice the size of the U.S. fleet of 33 subs by 2010.

The US is required by Cold War agreements to scrap one sub for every new one we build. If China changes the balance, those agreements, like similar agreements between the powers before WWI, will have to go by the boards.

It has started building a new class of destroyer that is "believed to match the air defense capability of the DDG-51 class," says Brown.

Surface ships are handy against countries like Iraq. But against either the US or Russia they are entirely obsolete. They move much too slowly to avoid being destroyed within hours or days of conflict. If there had been a war between the US and USSR in the 80's or later, neither's surface fleets would have been a factor. Those are old measures of power.

"In 1989, China had essentially no shipbuilding industry or market share. In a little over a decade, China has invested in its shipbuilding industry to become the third largest builder of commercial ships behind South Korea and Japan."...

Well, that's what a large and wealthy country should be doing, isn't it? Somehow, a country that is behind South Korea doesn't bother me.

[superiorslots]

Quote: Well, that's what a large and wealthy country should be doing, isn't it? Somehow, a country that is behind South Korea doesn't bother me.


They are beating us in shipbuilding...

China's shipbuilding went from nada to 3rd place in 15 years. 10 years from now they will be the leader.

[jpsb]

" "bill of bills" "

Typo Bill of Rights

[expat_panama]

historically the U.S. economy has been strongest when we have been able to take advantage of huge disparities (either externally with other countries or right here in the U.S.) in standards of living between consumers and producers.  

Lots of people believe that in order for someone to get rich, someone else has to get poor.  Countries (like communist ones) where everyone believes that stuff, usually end up being very poor countries.  There are other countries (like the US) where we believe that individuals become what they make of themselves -- and that it's not a crime for someone to do really well.  These countries get rich.

Americans in general get richer not when everyone earns the same-- Americans get richer when a few successful people make a breakthrough and then everyone prospers.  'Income equality' gets really good when the economy tanks.   That's why when the economy is good the democrats make a big stink about "the evil    capitalists   rich not doing their fair share."   As if the poor were better off when we had double digit inflation and double digit unemployment.  

People from all over the world want to come to the US not because they want to be exploited, they come because they know that if they hang around rich people that they too can get rich.

[SandyB]

Yep. That's about the size of this "free trade" conundrum. Yep. Its all about the consoooooooomer. Producer and production be damned.

Free trade has nothing to do with the consumer. Nike shoes are still expensive even though they use the cheapest labor in the world. Cheap foreign labor means higher profits, not lower prices.