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 China is Buying

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Posts : 1635
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Join date : 2011-08-09
Age : 24
Location : Αθήνα

PostSubject: China is Buying    Sun Mar 25, 2012 9:51 pm

China, along with many other Asian countries, is buying. This is because, unlike more developed countries whose economies are faltering, China has an economy that is booming.

China is rich in US dollars and in people, but poor in resources. It is no secret that China has been busy buying up oil resources to support its booming economy and debt in the United States and Europe—a fact that is alarming to many.

However, while there is still a gap in the US trade deficit with China, there are some signs that the gap is getting smaller.

While coal production has been stagnated by efforts in developed countries to curb pollution and global warming, the demand for coal in China has been rising. The demand from China accounts for 3 billion of the world’s six million tons of coal mined each year.

As a result, U.S. coal producing companies are looking to open mines in the Rockies and Pacific Northwest as well as new loading ports in the state of Washington. In spite of growing protests by environmentalist, the companies are forging ahead expanding this very profitable business. Doing so means increased jobs in both the mining and the shipping industry, a fact that is hard to overlook in the midst of a recession.

A surprising result of China’s booming economy is the demand for such exports as hay, apples and wine. As wages in China rise, so does the demand for better food, services and products by the growing middle class in China. Demand for consumer items such as milk, cheese and ice cream is growing, which accounts for the fact that the item most exported from the state of Washington is hay. In addition, the state also sells $1 billion in apples and $10 million a year in wine to China.

Hay, soybeans, lumber and other raw materials are only a few of the exports experiencing more demand from the market that is expanding several times faster than the U.S. economy. The lower value of the dollar gives U.S. exporters an advantage that is helping companies like Boeing and Microsoft compete, as well as farmers and winemakers.

Another surprising result of China’s booming economy was pointed out in a Forbes articles by Baizhu Chen, a senior researcher at the Institute of Finance and Banking at the Chinese Academy of Social Sciences.

In the article, he says that in order to manufacture the Apple iPhone, China had to import $10.75 worth of parts from American companies. China’s portion for making the iPhone was only $6.50.

He also pointed out that Apple, an American company that employs thousands of associates in its sales offices and corporate offices, got the majority of the benefit. His point being that American companies and American workers are getting much more out of the arrangement than the trade deficit would have you believe.

Chen felt obliged to make this explanation in response to criticism that China was stealing jobs, a common feeling among American workers. In spite of American workers concerns and American nervousness in general about the balance of power, fact is, China’s continued economic growth may very well be a factor in helping the rest of the world come out of recession.

If for no other reason than the vast opportunity China represent, the feeling is among business onlookers that exporters should be looking into giving China what it wants.



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