Countries like Malaysia, Indonesia or Vietnam would be very happy to pick up the slack (and are scared of China).
But I'm not convinced they do it as quickly, or as cheaply. You'd have a significant gap in the mean time.
Is there anywhere in Indonesia that can produce an entire MacBook Pro, for example?
There would be a lot of people very pissed off with China.
Why would the Chinese care? There are a lot of people very pissed off with the US, but that's had a negligible effect on US policy.
Competing economies may not necessarily be able to afford sanctions, so the practical outcome of pissed-off-ness is likely to be a few shipping containers of not very much.
The point is really that this isn't just an economic issue. China and Russia - and to some extent also the EU - all have good political and military reasons for wanting to tame the US. Economic warfare is a much more efficient way to reach that outcome than military confrontation.
And China would care but China falls if it's not running.
Losing access to cheap shirts means that you have to find new cheap shirts at a slightly higher price.
Losing access to sewing machines, means that you have to pay people to sew by hand, or find a way to make sewing machines on your own.
The latter raises the price of shirts more so than the former. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
There's already a disconnect in terms of inflationary pressures felt by different socio-economic strata in the US and the data we hear bandied about (Core CPI). This will make it far worse. Keep in mind that it is precisely the constantly moderating influence of low-cost Chinese imports which has kept CPI in check over the past decade.
Suspect that if you're a family of 3 struggling on $24K/year, you'll be a bit less insouciant about the effects of such a currency devaluation than, say, the typical policy analyst.
Just a guess, of course, though knowing more than a few of the former, a more or less educated one. Fai de bčn a Bertrand, te lou rendra en cagant
Try buying anything not made in China in your typical supermarket or hypermarket. Not just cheap toys, but foodstuffs, clothing.
These are not simply consumer items or luxury goods, but a fundamental part of the basket of goods lower income tranches in the US in particular buy. Yank them off the shelves and CPI will go up quite quickly, and the working poor in particular will feel the effects immediately.
Keep in mind there is virtually no safety net in the US. So when you have to pay 30% more for baby clothing and, say, 10% more for foodstuffs and, this is money you don't have to pay for medical care for your children which, you might not be aware, is not automatically granted in the US. Fai de bčn a Bertrand, te lou rendra en cagant
And, having lived in the US the most of the past 10 years (and residing there as I type), I'm very aware of the health-care situation, thank you very much :)
Primary imports from China
85--ELECTRIC MACHINERY ETC; SOUND EQUIP; TV EQUIP; PTS 64,905,504,814 22.6 % 84--NUCLEAR REACTORS, BOILERS, MACHINERY ETC.; PARTS 62,266,097,460 21.6 % 95--TOYS, GAMES & SPORT EQUIPMENT; PARTS & ACCESSORIES 20,891,814,337 7.3 % 94--FURNITURE; BEDDING ETC; LAMPS NESOI ETC; PREFAB BD 19,358,484,067 6.7 % All Others 120,350,885,249 41.8 %
The biggest effect is that the price of electronics goes up. It's this, clothes, and footwear. All these are products that you can hold off buying for a few months, by which time American companies have pulled out of joint ventures, and have increased American imports from the Latin American countries that have no tariff agreements in exchange for using American fabric. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
Surely you are aware of food scares seen in the US of late related to foodstuffs immported from China? Fai de bčn a Bertrand, te lou rendra en cagant
Chinese food and agricultural imports in the US amount to $4.2 billion (2006). That's peanut compared to the overall US market.
http://www.opencrs.com/document/RL34080
The revenue of Archer-Daniels-Midland alone was 41.35B last year.
It's not like the US or anyone for that matter is going to starve if China stop exporting. China is barely self-sufficient for food.
I know you probably wouldn't notice that you pay $10/month more for food because of a devaluation of the dollar, but there are others who are more than a bit less immune to this. Fai de bčn a Bertrand, te lou rendra en cagant
Are you aware of anyone in your own personal circle who must worry about such things? Fai de bčn a Bertrand, te lou rendra en cagant
What they do export are low value added electronic compenents that are not part of the follow up purchases.
Now I'd be very concerned if suddenly exports from Ireland, Switzerland, Germany, the UK, and France dissappeared. That would have a huge impact. But to be honest profit margins are so high in the US healthcare sector that they can swallow any increase currency changes bring. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
I'm saying that when inflation hits because of a USD devaluation, whether it be sudden or long and slow, it will hit the working poor first and foremost.
These are precisely the people who can least afford it, who by having to pay more for food and clothing will have even less to pay for medicine, doctor visits, much less proper health insurance which many do not have. I did not say that medicine came from China as you seem to suggest.
And yes, I do know people in such straits, my best friend for instance, so I tend to take a dim view of the economically-minded who wave their hands at such things as simple trifles which are of little consequence. Fai de bčn a Bertrand, te lou rendra en cagant
It's the "middle class" who live beyond their means, and either don't know how to save money, or feel it below them. Take for example, food choices. By going to Aldi's I can cut my food costs in half, but it's also known as the place the "poor people" go to shop.
Regardless, particularly in food, Mexico and Latin America is a far larger source than China, and Latin America has the excess capacity to start pumping out shirts and the like with American fabric in a short period. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
If anything, if the dollar tanks, it would probably help the working poor relatively to the rest of the population because it would make light industrial activity in the US more competitive, which where non-service low qualification jobs are. They would either suffer less or even benefit from the repatriation of those jobs in the US.
And that includes the petrol used to transport California produce to Chicago, St Louis and Minneapolis.
Again, I think the two of you are dead wrong about how this plays out.
As for the middle class in America, I could care less if they get taken down a peg or two, they've got it coming. Fai de bčn a Bertrand, te lou rendra en cagant
My original point is not that it would harmless for the US. The point is that it would hurt China a lot more, probably to the point of completely crashing its economy. And, IMHO, if China moved, the political situation in the US is such that it would snowball very quickly and the response would be extremely brutal.
Which is why those Chinese declarations are fairly spooky. Kabuki? Miscalculation? Weird in any case.
We just disagree on who. Fai de bčn a Bertrand, te lou rendra en cagant
In English, that's the IR speak for the difference between people who believe that the rules of things like the WTO are permanent in broad terms, versus realists who seem them as fundamentally variable institutions rather than something structural
Domestically, I think that the problem is that the proposition that markets exist in social contexts that generate social protection when economic activity tries to dismbed itself harming the human aspects of life is given terrible form. The rising cost of Chinese goods in American markets, leads to millions of urban workers being forced out. Unable to subsist off the land as before the great transformation, their efforts to restoret the human character of life take root in religous and cultural fundamentalism.
The Chinese Communist Party either channels this anger into the creation of a virulent nationalism, or falls to those who will. And the horrors of the 20th century live once more. Falun Gong, Christians, Homosexuals, and other groups are made scapegoats, are discriminated against, and then genocide.
It's a question of whether China merely implodes or takes East Asia with it.
Now the happy version of this supposes that enough social capital exists in the Chinese state unions and other elements of civil society to faciliate a social democratic response. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
you are the media you consume.
You also don't have the engineering skills base to do anything too impressive. China and India have engineers, Vietnam mostly doesn't.
Having said that I think it's more likely that China will push for a slow devaulation rather than an overnight sell-off while it develops some new markets.
A slow devaluation is going to be just as unhelpful to the US, but without the PR mushroom cloud.
The point I would simply make, and made above, is that all this talk about how the PRC will do itself in if it hastened a USD crisis is a bit overblown, and all this talk of how easily the US wriggles itself out of discomfiture in the event of a major financial crisis is a bit pollyannish for my tastes, for some of the reasons you are here enumerating.
The PRC is in a stronger position than we think, the US weaker, and the relative position of the former improves with each passing quarter. Fai de bčn a Bertrand, te lou rendra en cagant
Because so many of these Chinese firms are operating on paper thin margins, a 40% rise in cost to American customers could push them over the edge.
Consider that the series of quality issues that we've seen in the past year, may be indicative of an economy that's reached a point at which it can no longer bank on cheap labor, and being unable to increase productivity because that would require greater autonomy for workers they resort to debasing their products. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
You only have to look at Microsoft's Vista or some of the trash produced by the US car and food industries to see that you don't have to be Chinese to produce useless and dangerous rubbish.
The only difference between the Chinese and the US model is that in the US, systemic quality defects are hidden by marketing spin if they're non-fatal, and by lobbying if they're physically injurious. There's also a more direct risk of litigation.
But otherwise the common aim is to cut costs and maximise profits. If customers and workers are endangered at any point, that's only seen as a bad thing if it's discovered and made public and subsequently impacts the bottom line.
Quality systems and regulation are still quite strong in the United States. Particularly in the healthcare industry. While enforcement varies greatly, there are very strict rules about reporting in the healthcare sector. I know. That used to be my job.
If someone so much as got a paper cut from the packaging we had to file a report with regulatory agencies here in the US. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
in china you can get executed for sloppy discharge of responsibility..
their video games allow you to 'kill' corrupt officials, (and their bikini-clad mistresses).
just sayin'... ~"When an inner situation is not made conscious, it appears outside as fate." Karl Jung~
