I'm posting my thoughts on China. I'm trying to figure out where I'm wrong because it seems to conflict with most (not all) of the expert opinions of what will be happening there.
Unlike Japan, S Korea, and most of the developing ASEAN countries, if one considers the area involved, China has a deplorable infrastructure. Much of the industry is by necessity near the coast, particularly those companies that export. The reverse is that it's difficult to get imported goods into the mainland. This obviously benefits mainland manufacturers when competing for the domestic customer and prompts recirculation of currency (Rmb). This trade is taxed into the already large government coffers.
With the exception of Japan, the other Asian countries are weak financially. China is strong financially, can afford to make needed infrastructure improvements, and has plans to do just that to offset layoffs from privatizing and reduction of government labor force. This provides jobs and prompts more money into circulation that stabilizes domestic business and is taxed and returned into more infrastructure.
China is intent on a large export surplus, but they have the basis for a strong internal economy that the other Asian countries don't have and are less dependent on the import/export market. Their export objective is to bring in additional outside currency for circulation thru the economy.
While the other currencies are openly traded, the Rmb is not. No market can force them to devalue. There are no striking unions (SKorea) or other internal forces that can have major influence on PRC decisions. China is influenced by US and Euro policy, but still able to control it's own destiny whereas other nations are primarily subject to market whims and their dependence on each other and Japan.
Where am I wrong in my thinking?
Ron |
