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To: mishedlo who wrote (20748)	10/26/2004 5:12:22 PM
From: jrhana	Read Replies (2) \| Respond to of 110194

I'lL bow to your knowledge and expertise but Im still an inflationist. Inflation has been the reality of my entire life (55 years). Deflation may be around the corner, but I can't see, feel hear or see it. Maybe I'm blind and deaf.

To: mishedlo who wrote (20748)	10/27/2004 6:54:15 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

will be quite a long time before they catch up with US worker pay, and quite a long time before a deflationary trend towards outsourcing US workers will end. what you're missing is that this 40% increase is not going to workers who will be displacing current American productive workers (of which there are very few); the pay raise is going to the productive people who ALREADY make the stuff you buy in WalMart. so you're going to be paying more for it. in the real world outside of Wall Street, this sort of thing is called inflation.

To: mishedlo who wrote (20748)	10/30/2004 10:53:41 AM
From: RealMuLan	Read Replies (1) \| Respond to of 110194

Mish, you are right that even if the pay of Chinese workers increases 50%, it is still a whole lot lower than that in the US. But the issue here is not the pay level per se, there are several reasons why cheap labor in China is exhausting fast. 1) For most rural areas, the surplus labor already almost all moved out during the last 20 years or so. Those who stay behind, are either sick, old, or have dependents to take care. So the new supply is very limited. 2) And those who already worked in cities, after so many years, they either already saved some money, or still very poor and could not stand the exploitation of the sweatshop owners any more. And for those who saved some money, they returned home to have a some family life, went upper level in the labor chain, or simply opened their own business. (I read a couple of days ago, some farmers now go to Shanghai, not to sell their labor, but sell their skills, like teaching someone else for some unique skill…). For those still poor, they either moved on to find a job with higher pay, or just return to their hometown. Due to the new agricultural policy and financial aid of the central gov. since last year, the economic condition of a lot of farmers has improved plenty. Plus, farmers are also benefited from the high inflation rate of agricultural product in cities. So it just does not pay off to leave home unless they can earn much more money. On the other hand, those sweatshop owners are very reluctant to increase workers’ pay and improve the workers working condition significantly. That is why the cheap labor pool in China is shrinking fast. >>The question is: is China overbuilding or not? << Depending on whether you are talking about residential building, office building or 5-star hotels. Office building in ShangHai or Beijing, is most likely overbuilt now. I saw some number from Beijing yesterday, the vacancy rate of the office buildings in Beijing now is already 16%, which is almost 3 times as high as the non-bubble vacancy rate (6%) of international standard. And this is a big risk for the gov. since these buildings are mostly built by gov. loans. And to say the least, without renters, some loans stay as unpaid. And the reason for the high vacancy rate is complicated. One reason is that small/medium size business would rather rent some apartments, which is cheaper and can be used for both living and business. 5-star hotels -- China also has too much supply. And this closely related to the officials' showy projects all over the country. I read that there are only 44 5-star hotels in the US, while there are 175 5-star hotels in China, almost 4 times as much. But most of these hotels were built in the last boom (1992-95), so those bad debt have been mostly written off. As for residential buildings, luxury ones may be somewhat oversupply in some cities, but economic ones (5000-6000 Yuan per sq. meter) are still in very short supply. There are a long waiting list for the later in both Shanghai and Beijing. The demand is there and will be there for the next 20 years to say the least. And gov. loans are playing less rule in apartment building except in economic housing which is far from overbuilt. Most of economic apartment buildings are paid before the construction started. While for higher-end apartment buildings, a lot of them were paid before the construction up to last year, and from this year, some of them only have buyers after the building finished. Another number I read yesterday is that in some areas in Shanghai, more than 16% of apartments are bought for investment purpose. This is no surprise because the stock market is so listless in the last couple of year. Personally I think it is arguable whether this should be considered as oversupply. But even if they are, they place little financial risk on gov. banks, since they are bought with at least 40% cash. And in many cities, the bank refuses to loan any money for people who buy 2nd or more apartment. The reason is obvious, because as an investment they might lose money and the bank does not want to be a part of it. Millions of Chinese would like to buy a decent apartment in big cities; the only problem is the price is rising too fast. As long as the gov. can control the price, then the demand will be there for a long time. I actually agree with that author<g>. The housing price will not have collapse in China. And the last real estate bubble bust has already proved that<g> And BTW, seems to me that Russ did not quote the whole argument of the author<g>. here is the link for the full article. Message 20687185