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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: Box-By-The-Riviera™ who wrote (278)	4/19/2003 8:59:56 PM
From: TobagoJack	Read Replies (1) \| Respond to of 4905

Hi Joel, <<rings of information>> Change of topic from Japan to its neighbor China where I spend my working time helping folks to do FDI in China and sometimes to do divestments, and the issue of global commodity demand and pricing. I have a sense that the straightforward factory relocations and less obvious expansion of existing capacities from Taiwan, SKorea, Japan, etc to China have less to do with: (a) State of global economy, and (b) Current PRC domestic demand ... than with China simply becoming the factory to the world, based on its: (a) Accumulation of educated work force, (b) Improving infrastructure, (c) Broadening of upstream supplier network and deepening of downstream global logistics and distribution, (d) Availability of cheap capital, thanks to benighted Maestro Greensputin and enlightened Professor Bernankaput, and (e) Augmented appreciation by the officialdom for business policies and their power to help keep the officialdom in power; ... which then drives: (a) Strengthening domestic demand, (b) Appreciation for more education, (c) Aggregation of more capital, (d) Demand for more business friendly policies, and (d) Impetus for additional value-add. So, I suspect that while China's demand for energy/mineral/food commodities will increase, others' demand for same commodities may fall a bit. Net net, I believe there is and will continue to be global demand gain, barring the depression scenario, which I believe is very possible, and certainly more so today than yesterday. Now, all of the above is referring to the absolute quantity of stuff demanded, as in units, and not total global spend-level, which is a function of unit price multiplied by units. I suppose if global unit demand stays even, and planet-wide supply stays constant, but monetary liquidity deluge washes over us, then unit price and spend-level can still go up. The issue is: possibility of commodity pricing and absolute spend-level going down ? We can restrict the focus to the two things that the central bankers rarely talk about, gold and energy:0) Chugs, Jay