2009 October 13 Tuesday
China Increasing Export Marketshare

China rises. Expect it to rise and rise and rise.

The most striking gains have come in the United States, where China has displaced Canada this year as the largest supplier of imports.

In the first seven months of 2008, just under 15 percent of American imports came from China. Over the same period this year, 19 percent did. Meanwhile, Canada’s share of American imports fell to 14.5 percent, from nearly 17 percent.

Besides increasing its share of many American markets, China is increasing the value of exports in absolute terms in some categories. In knit apparel, for instance, American imports from China jumped 10 percent through July of this year — while America’s imports from Mexico, Honduras, Guatemala and El Salvador plunged 19 to 24 percent in each country, according to Global Trade Information Services.

All these countries can not compete against China. The engineered high savings and high investment regime of China is grinding out the goods while not buying much in return. What I wonder: At some point will the rest of the world adopt protectionist policies in response?

Chinese exports have dropped less than those of other major exporters.

The results have been impressive. All told, in the first half of 2009, China exported $521 billion worth of clothes, toys, electronics, grains and other commodities to the rest of the world.

Though that represented a 22 percent decrease from the first half of 2008, it compares favorably to other major exporters. German exports have fallen 34 percent over the same period. Japanese exports were down 37 percent and American exports 24 percent, according to Global Trade Information Services.

Japanese exports and German exports were down more than American exports. Why?

Billionaire investor Jim Rogers says the 21st century belongs to China.

According to Rogers, the 19th century was the era of the British Empire and the 20th century was the U.S.’ heyday. But the 21st century is China’s (though the rest of Asia is definitely going to get a boost too).

The reasons for this are many, but some points brought up by Rogers include the following:

1. The Chinese want to live like we do;
2. They are more eager to work;
3. They are better at saving;
4. There are 1.5 billion Chinese citizens (and 3 billion people in all of Asia), and we owe them money. They are, according to Rogers, “among the best capitalists in the world.”

There will be some setbacks, of course, Rogers says, but these are opportunities. “If you see setbacks in China, you should pick up the phone and get more involved,” he advised, before adding his favorite refrain, “The best advice of any kind that I can give you is to teach your children and grandchildren Chinese.”

Which Chinese companies will do best in the long term? Which Western companies will become roadkill?

When will the majority of American people answer a poll and say they believe the United States is less important and less powerful than China? 2030? 2040?

Share |      By Randall Parker at 2009 October 13 10:35 PM  China


Comments
Clarium said at October 13, 2009 11:35 PM:

If a given country wants a high savings rate, it must have a high rate of investment and/or a large trade surplus. Of course, not all countries can have trade surpluses. Maybe the desire for a higher savings rate would be a motivator for protectionist policies.

Blog more about protectionism Randall... say something detailed about it in the comments. I do not like any policy recommendations, but I am more concerned about what will happen.

Randall, do you see any incentive for the Chinese to revalue their currency? If they are concerned with jobs, then they wouldn't do it. I read that even China is losing manufacturing jobs due to automation (and despite the outflow of jobs to China.)

A.Prole said at October 14, 2009 12:48 AM:

As I never cease to comment, China's economic success is largely down to racial reasons, and as such is beyond the nonsense spouted by 'economists'.

Mthson said at October 14, 2009 1:45 AM:

Here's an opinion from the other side:
"A Chinese Century? Maybe It’s the Next One (NY Times, August 19, 2007)


The United States is not standing still. In fact, its per capita income grew faster than nearly all other big countries from 1990 to 2007. Europe's per capita income fell from 85 percent of that of the United States in 1990 to 66 percent in 2007, according to International Monetary Fund statistics.
...
So let's say that the inflation-adjusted growth rate for China is 4 percent a year. This is optimistic. ... Assume, too, that America grows at the 3 percent rate it has averaged for the last 15 years. ... Now project the two growth rates forward: the inflation-adjusted per-capita G.D.P. of China would be less than $40,000 in 2100, versus almost $650,000 in the United States. That's because China starts at $1,000 per capita and the United States at $43,000. If, in 2100, China has four times as many people as the United States, as it does now, China would still not have a total G.D.P. equal to America's.

AMac said at October 14, 2009 7:50 AM:

Mthson --

Thurow's essay has some strong points, especially in looking at electricity consumption as a proxy for GDP growth. However, he ignores that old saw, "Prediction is difficult, especially about the future." Yes, if the per capita GDP and populations of the US and China grow as he forecasts, then the sizes of the two economies in 2100 will be as he projects.

But the various hopeful and ominous factors that go into those forecasts are what the debate is about.

Rohan Swee said at October 14, 2009 8:36 AM:

In the last several months I've noticed a sharp jump in Chinese market share, if anecdotal everyday-household-stuff market selection is any indication. Retailers that used to carry a variety of importers, even if Chinese products predominated, now seem to be all China, all the time.

It'll be, er, interesting to watch how this all plays out. Projections depend on the tolerance of the general populations of current First World nations for the continuance of policies that allow an ever increasing flood of Chinese imports, with the resulting increase in unemployment and poverty. Judging from the state of passivity and emasculation in these populations, and the complete rejection of any concept of national interest by their(our) "leaders", I'd say things are looking pretty good for the Chinese.

Now project the two growth rates forward: the inflation-adjusted per-capita G.D.P. of China would be less than $40,000 in 2100, versus almost $650,000 in the United States.

Hilarious.

Rohan Swee said at October 14, 2009 9:00 AM:

I will add that Rogers' alleged merits of the Chinese worker relative to the American would be irrelevant if the importing nations weren't tolerating their mercantilist program. Or, rather, if powerful interests in the importing nations didn't actively lobby for tolerance of those mercantilist policies. We didn't end up indebted to the gills to them because their workers are just ever so virtuous and frugal.

Glenn Beck said at October 14, 2009 12:45 PM:

http://findarticles.com/p/articles/mi_m0WDP/is_2008_April_7/ai_n25343392/

China has a nominal per capita GDP of ~ $2000. Workers in China are therefore more competitive in wage structure
than those in the United States or elsewhere. Assuming an IQ threshold of 90 to do blue collar work, China has hundreds
of millions of low cost laborers that can compete with ours, but at lower wages.

However, I'm not fully convinced that the entire nation of China is uniformly high in IQ. More likely it seems to be the case that the southeasterners have the intellectual and business skills to run a large scale and technological economy, while the rest of the country can provide low cost and docile labor. Such an IQ distribution is consistent with what we're seeing in China, with the urban/southeastern middle class getting rich and the rest of the country providing the low cost labor.

"Roach cites one study by China's Academy of Social Sciences that suggests that average incomes of the lowest fifth of Chinese urban workers are only about 5 percent of the top fifth. Indeed, it is only since the 1980s that urban poverty emerged as a problem in China with rising urban unemployment and the dismantling of much of the welfare structure. Nevertheless, it is the continuing large spatial inequalities, notably those between city and countryside, and between prosperous coastal areas and poorer inland regions, that shape the distinctive face of Chinese inequality.

Besides, the high IQ jobs in technology are being outsourced to India. India accounts for 2/3 of the IT offshoring from the U.S.

Another issue with China is that it's quickly aging, especially the higher IQ sections in the large cities.

"Deutsche Bank Research has released a report indicating that China's pension system is facing a demographic time bomb--the consequence of the one-child policy--that could seriously damage its future economic prospects. According to the report ("China’s pension system
Caught between mounting legacies and unfavourable
demographics"), "China is greying fast but at a very low income level. Low effective retirement ages will see the working age population already reaching its peak between now and 2010 and will lift the old-age dependency ratio much higher than conventionally thought." Accordingly, China is getting the demographic profile of an advanced industrial country with a mature welfare system, but with an economy still clambering out of developing status."

"By 2043, half of China’s population will be over the age of 48. In Shanghai, 22 per cent of the population is over the age of 60, and by 2020, that number will be 34 per cent."

An additional issue is fertility. In the rural areas, fertility rates are ~2. In the higher IQ urban areas, fertility rates have gone below 1.

There is massive social unrest in China.

"What's more, as China's economy has grown, so has the level of social unrest within the country. The number of what the Chinese government calls "mass group incidents" has risen by about 10 percent a year for more than a decade. In 2004, that number reached 74,000 and involved some 3.7 million people, according to the Chinese security minister. That's more than 200 protests across the country per day, involving an average of 50 people. "

Expect this unrest to rise due to a shortage of females. When rich men from the city and southeast monopolize the scarce supply of women, what do you think will happen?

"A study published last week in the British Medical Journal, based on a survey of nearly 5 million Chinese children and teenagers, bares the gruesome numbers. Worldwide, the number of boys born per 100 girls ranges from 103 to 107. (The numbers later equalize due to higher male mortality.) Among Chinese children born from 1985 to 1989, the number of boys per 100 girls was 108, close to normal. But among those born from 2000 to 2004, the number rose to 124. The authors conclude that as of 2005, "males under the age of 20 exceeded females by more than 32 million.""

Gigantic wage differentials between the laborer and capitalist class (ie southeasterners), rapid aging (especially among the higher IQ in affluent cities), dysgenic breeding, growing civil unrest, and 32 million more young males than females. China is going to look like a more unstable version of Brazil.

not anon or anonymous said at October 14, 2009 5:26 PM:

Clarium, raising interest rates can boost both savings rates and inflow of foreign investments. Protectionist policies are largely counterproductive to this goal.

Rohan:

"It'll be, er, interesting to watch how this all plays out. Projections depend on the tolerance of the general populations of current First World nations for the continuance of policies that allow an ever increasing flood of Chinese imports, with the resulting increase in unemployment and poverty."

The "flood of Chinese imports" is not creating any unemployment or poverty per se. The root cause of our poverty is our level of indebtness. We must stop running government deficits and increase our savings rates; then we'll become wealthier in the long run and our trade situation will improve as well.

A.Prole said at October 16, 2009 1:04 AM:

Glenn Beck,
Income inequality (not least due to massive umcontrolled third world immigration), is probably much worse in the USA than China - something like 5% of the population pay 90% of the income tax.
Secondly if any country resembles the next Brazil it's not the 95% homogenous China, but America, look at LA and Socal, the fture of your nation.

Joe said at October 16, 2009 3:14 AM:

I don't know where you got the idea that southeasterners are the most intelligent. There's no evidence of this. Pull up a map on per capita gdp for chinese provinces, the only pattern you see is that the east is richer than the west, since that's where ports are and that's where the special economic zones started. It would be truly bizarre if that were true, it wouldn't fit the general pattern of northerners being smarter.

kurt9 said at October 16, 2009 3:05 PM:

I would not put much stock in anything Lester Thurow. He has made many predictions, all of them wrong, about how Europe will overtake the U.S. as the economic powerhouse. He also believes in all of the socialistic characteristics of the European society. I don't think this guys has made one prediction that has turned out correct. I'm surprised anyone still takes him seriously.

I would take Jim Roger's advice any day over that of Lester Thurow.

Mark said at October 17, 2009 10:38 PM:

If a decline in American wealth saves us from demographic invasion, then I'll take it. Right now it seems to be the only thing holding back the tide. a richer China and India will keep Chinese and Indians at home, and a poorer America will make us less tolerant of illegal immigrants. It's unfortunate that this is the only way to save our asses, but there you have it.

Glenn Beck said at October 18, 2009 2:08 PM:

In China, the top 1/5th of urban dwellers make 20 times the per capita income of the bottom 1/5th.
American inequality is pretty significant in the racially diverse cities, but even our society
doesn't approach that. This is partly due to the global economy and insufficient government protection of lower income workers, but I bet there's likely quite a bit of IQ variation in China.

China isn't homogenous. Different regions of China have historically enjoyed vastly different levels of wealth
and success on the imperial exams. Some regions of southeastern China produced many imperial scholars ever year, while large parts of China produced few or none. No reason to think all the Chinese are the same.

The wealthiest regions of China are Zhejiang, Shanghai, Beijing, Tianjin, and the Pearl River Delta. Tianjin and more especially Bejing have been pretty wealthy for centuries, as the center for China's political elite and gentry. Also, as access to the large cities was restricted by the national government, it was difficult for those of peasant backgrounds to gain residence in those cities, though the elite predominated there. The other places (Shanghai, PRD, Zhejiang) are in the southeast.

MaryJ said at October 18, 2009 3:26 PM:
If a decline in American wealth saves us from demographic invasion, then I'll take it. Right now it seems to be the only thing holding back the tide. a richer China and India will keep Chinese and Indians at home, and a poorer America will make us less tolerant of illegal immigrants. It's unfortunate that this is the only way to save our asses, but there you have it.

As a native Californian I heartily agree. Since the recession (actually even before that, when some enforcement measures started to take place), I saw all the Spanish-language billboards on my commute route go down. Thank God. My civilization is worth more to me than cheap tomatoes, or the ability to buy all the cheap Walmart crap from China.

A Gentle,Bearded Left-Winger. said at October 19, 2009 1:01 AM:

Glenn Beck,
What you write is highly misleading.The real backbone of China is its peasant economy (at least 95% of Chinese are only a few generations removed from peasantry), and these peasants are largely outside the cash economy.
Once they've moved to the cities they are included in the cash economy - and therefore have no sense of resentment as the feeling always is 'I can make it, it's purely down to my efforts'.
By contrast the USA has a worthless, urban, huge, black/brown underclass that's good for nothing, extreme wealth concentrated at the elite and middle class that is collapsing whipsawed by outsourcing, ccheap imports and unlimited cheap imported 3rd world labor.
In short you're fucked.
Your country is fucked.
China is blessed - don't weasel your way our of it dunderhead.

Glenn Beck said at October 22, 2009 7:10 PM:

keep telling yourself that

"The study finds that the top 10 percent households hold the up to as high as 75 percent of total hidden income. The actual difference of per capita between the top 10 percent and the bottom 10 percent in urban areas is 31 fold instead of official figure of 9 fold. The difference in per capita combining both rural and urban is calculated to be 55 fold between the top 10 percent and the bottom 10 percent, rather than the 21 fold projected by the official statistics. The report also indicates that due to insufficient data, the Gini coefficient is hard to finalize now, but surely reaches the inequality warning standard, 0.45, used by the World Bank."

Glenn Beck said at October 22, 2009 7:17 PM:

For comparison, the income gap between the top 10th and bottom 10th in the U.S. is 11 times.

"According to the Associated Press, the wealthiest 10% of Americans earned roughly 11.4x more than the poorest 10%, which represents the largest such gap in incomes on record. The previous high was set in 2003 (11.22)."

"In Manhattan, the disparity was a chasm, with the wealthiest making nearly 40 times more than the poorest — $351,333 compared to $8,855, or a bigger gap than in any county in the county."

China's rich/poor gap in income is equivalent to the Jewish-NAM gap in Wall Street territory. Extreme gaps probably reflect extreme IQ differences.

not anon or anonymous said at October 23, 2009 4:25 AM:

"The difference in per capita combining both rural and urban is calculated to be 55 fold between the top 10 percent and the bottom 10 percent"

This is highly misleading. The productivity and cost of living in rural areas are most likely a tiny fraction of those in the cities--the situations are not comparable.

Glenn Beck said at October 23, 2009 3:26 PM:

The cost of living in small towns in the U.S. is also different from the big cities.

Anyway, a different cost of living is reflective of an area's economic strength. Shanghai, for example, wouldn't be so expensive if Shanghai residents weren't so economically productive that they could hoard up enough money to drive up land prices. Furthermore, the per capita income gap between rich and poor in the cities is 31 times, so cost of living only explains so much.


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