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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (25582)	3/14/2005 12:19:22 PM
From: RealMuLan	Respond to of 116555

>>For the Chinese, growth considerations are actually secondary to two other over-arching objectives -- reform and stability. << This is only true since late half of 2003 when Hu and Wen come into power. For Jiang and Zhu, growth was everything, and that is why the world saw the breaking neck growth in China in 2003 and the first half of 2004, and that is why most of Chinese were actually worse off during the Jiang-Zhu governing. It is Hu and Wen who start to take care of the less advantaged and the poor, to seriously crack down the corruption within CCP, and to stress on sustainable growth and macro-economic control. As for commodity market, China has realized that China has to speak with one voice to the outside in order not to be taken advantage of by the speculation force. A major factor for the sky rocketing commodity price is that the international market is taking advantage of the internal conflict of interest bet. big Chinese companies themselves. They were bidding against each other. That is why from this March, China starts to control the import of iron ore. Soy bean and other large commodity imports will follow soon. Basically, China wants to have one single voice in the international commodity market, and has some pricing power as the biggest consumer. >>In the end, nothing is more important to the Chinese leadership than stability. Yet for the West, all that seems to matter with respect to China is the extraordinary pace of its economic growth.<< More than 2 thousands years of Chinese history has indicated that stability is everything in China. With it China will success, and without it, China will fail. And that is why China will sacrifice anything to maintain it, whether the West like it or not.

To: mishedlo who wrote (25582)	3/14/2005 1:28:03 PM
From: russwinter	Read Replies (6) \| Respond to of 116555

<If China succeeds in slowing its economy, commodity prices would probably ease -- leading to a reduction in inflationary expectations in most major economies and a related easing of concerns in bond markets.> This is the simplistic view that the cognoscenti may adopt for awhile, when the downturn becomes more evident. I don't agree with it, as once again it ignores that actual outcome of a Train Wreck based China slowdown, is a fracturing of China's money losing export based economy. When these enterprises fail, it will disrupt the global supply chain. Then we will see new trends: perhaps marginally lower commodity prices, but much higher finished goods prices, and a huge trade contraction, combined with acute shortages of imported goods we take for granted.