China overtakes Japan as world's second-biggest economy

[mpo]

 

[Paul Todd]

Chinese inflation hits 4.9% pushed by high food prices
Beijing Governments and central banks see food price growth as one of the main economic risks

Inflation in China has accelerated in January despite three interest rate rises in the past four months.
Consumer prices rose by 4.9% in January from a year earlier, the National Bureau of Statistics said. In December, the annual figure was 4.6%.
China, and other Asian nations, are battling high food costs. The January figures showed food prices up 10.3%.
Inflation is a concern in China where poor families spend up to half their incomes on food.
January's figure was less than many economists had predicted, but close to November's 28-month high of 5.1%.

Adding to inflationary pressure are factors such as a drought in China's key wheat-growing regions, as well as a rise in global commodity prices.
"The government is battling with all sorts of problems coming from every front," said Jinny Yan, an economist from Standard Chartered
"The peak of inflation is yet to be seen."

Analysts said that an increase in producer prices also highlighted the problems China was facing.
Producer-price inflation accelerated in January to 6.6% from a year earlier, and compared with 5.9% in December, the statistical office figures showed.
In an attempt to rein in price growth, the central bank last week raised its main interest rate to 6.06% from 5.81%.
Some analysts say borrowing costs are set to rise further in coming months.
"Inflation pressures are still very evident," said Jonathan Cavenagh from Westpac in Singapore.

"The PPI firmed to 6.6% and non-food inflationary pressures continued to rise. So I would still expect to see tighter policy in coming months."
Calculation changes
The National Bureau of Statistics also announced changes in how it calculates consumer price inflation.
Housing has now been given a much larger share of the new consumer price index (CPI) basket, and food prices have been given less weight, it said.

[Willy The Londoner]

China overtakes Japan as world's second-biggest economy

http://www.bbc.co.uk/news/business-12427321

What I like is that within 10 years it will be equal to the mighty USA and from then on will leave the USA in second place!

Willy

[David E]

Whaddya mean "Old Willy" ??...10 years from now the USA economy will be about the same size as the Isle of Wight !!!!!!!

[shaun]

Trying to not get political but, what I don't get is why American politicians are damaging the economy here on purpose.

[Vince G]

Don't believe everything you read in the papers. Companies that went under were idiots that didn't take care of business. There business was short term and grab the money now micd set instead of thinking long term. There are still some people spending 40 thousand dollars on a five year olds birthday party. Most abuse there credit and spend on toys (cars, boats,etc) they can't afford to make themselves look good. The problem with the government is they and these companies get away with extortion.

[David E]

The vast majority of Businesses that went belly -up did so because their cash funding from the Bank dried up.
Funding dried up because the reality of the flawed economic model finally came home to roost.
So much of the economic "money" was being made by the clever, smart, unethical and dangerous manipulation of money...such ludicrous practices as Credit Swap Defaults, Naked Short Selling and bundled "dead" mortgage tranches. All of these practices were encouraged by Banks and Govt., but nobody ever got to realise that the only real way to make money is to do stuff.......not by manipulation, eventually somebody gotta pay !!! And the payers were the Mums and Dads whose house got sold out under them, or whose pension fund went broke.

If the US Govt did not bail out the Banks and other big Institutional Money machines, then there would not even be an economy in America today.

As it is, the same players are still in the game, but their heads are down for now, but nothing fundamentally has changed...except the whopping National debt. This debt is not a problem until you cant pay it...same as any debt. When the realisation finally comes (which it must) that the debt is too big to pay...then watch out for the REALLY big crash

Sad but true...you cant get something for nothing all the time, there has to be a day of reckoning.

[Vince G]

They gave Sub Prime Mortgages out like candy. I know of a few people that moved into houses, that are in their 60's and never worked a decent steady job in their life. Also never paid any income taxes so they're not getting Social Security either. They are hardly holding onto the house they have. Who's fault is this? Both the home owner and the bank. The home owner for accepting it and the bank for having it available to them.

A known fact when I worked selling second mortgages, home improvement, and other loans for home improvements was most people will sign anything to get what they want.

Small businesses, that I have done their accounting on more they a few, all thought they had a trick to keep going. Ended up closing their doors. Their tricks were like not paying their supplier but making sure their Mercedes and Hummer were paid. This is their mentality.

Large businesses took the bailout cause it was given out and they paid their bonuses with it. They weren't going under, only said they could.

What I see happening is none of them have learned their lesson yet. 

[David E]

To go one step further in this subject..........

The US National debt is now umpteen trillion dollars, the National deficit is over 3 trillion dollars each year, and despite the rhetoric, Obama cannot afford (Politically) to do much about it. So much of the Country's operating budget is untouchable as far as cuts are concerned (Military, Health and such) he cant do anything realistic about the debt levels...and Congress probably wont let him anyway !!!

US debt paper is held by just about every Country in the World...especially China. That is why the Global economy has not let US go belly up...it has no alternative but to chew on it.........because there is not a vialble alternative economy big enough to soak up this debt level and stay afloat.

BUT....there is one economy that is roaring up the slope, with a certain plan to become the No 1 economy in the World and also be able to absorb this huge US debt level without going under...and it is China !!! Once the World gets to better understand that the Chinese economy can and will eventually be the biggest, then the US Dollar as the Global sheet anchor will collaps and the RMB will take over.

\Many economists i interact with predict from 5 to 10 years for this event...but none of them have any idea what the Global economy will look like when all this happens...and I certainly dont.

But just maybe, having a Chinese wife will put me on the right side of the Ledger  (but thats not why I married her...honest !!!)

[shaun]

David, I am accused of the same thing as your final comment about marrying a Chinese woman.  My only retort is that some people make good business decisions.  They don't want to hear the real answer anyway. 

I disagree with the notion that the US Government had to shore up the banks and many of the big businesses.  If they would have been allowed to fail or fight on their own I think the economy would have improved by now and many small businesses would not have gone under.  Take GM.  They would have had to file bankruptcy but they would have come out the other side a much better company.  There are many Americans that would have been willing to invest in hopes of growing their own assets.  You see that very thing happening now with many other companies.  Have they learned their lesson? No.  But would they have if allowed to fail, I don't think so but it would have wound up under new management, the unions would have not been able to collect their dues and they would be out of business too.  The new investors would be in control and GM would be a stronger company.

Where have the feds been the last two years for me.  There have been two times I have almost closed my doors because there was nothing left.  Oh I had product but I didn't have any money.  I had to fire my one and only employee, I had to reduce the size of my store, I haven't paid myself a salary in over 2 years, and I had to put a stop to future plans for expansion.  But I am here, my store is open and I am beginning to see profit.  Who knows I might even be able to pay myself before Peggy comes to America.  I am hopeful but I also think there are more difficulties to endure.  I am even back to doing business on eBay again; something I thought I would never do again.  I'm even working on a project to bring some product over from China to sell.  I am not telling you all of this to brag I am telling you this because I didn't use or seek government help.  Was I one of those idiots who didn't do business wisely?  Some would say yes.  Yes I made mistakes but I hope I have learned from them.  I know I am a lot smarter than I was before.  Another reason I say all of this is that there are hundreds of people in my city just like me.  They did what it took, on their own and it looks like they are making it.

I remember a person standing in line putting fuel in his company truck and filling up gas cans in the bed of his truck at over $4.00 a gallon.  OK European guys don't say it...   It had gradually grown from $1.59 a gallon to about $2.10 and then it sky rocketed to over $4.00.  I remember that man saying he wasn't worried about gas prices.  I asked him why he was filling all of the cans in the back of his truck.  He said he wanted enough fuel to go snowmobiling over the Christmas Holiday.  I just put my measly $50.00 of fuel in my truck and moved on.  A few months ago I noticed that his shop was called something else now.  I stopped to see what was going on.  He had declared bankruptcy and move back near his parents to work for his father.

It have been tough to lose many of the companies that the government gave money to but you said it David and Vince, they haven't learned their lesson.  This will all be repeated again if America does not fail and come under another country's rule; most like China.

[halfpint]

Okay I gotta throw my two bits worth into the pot.  In the early 1990's a guy named Ralph Klein was elected premier of the Province of Alberta.  He ran on the promise he would balance Alberta's budget, at a time when a recession was happening.  He was elected, he balanced their budget and he became immensley popular even though a lot of people suffered for a few years.  He actually laid off teachers and doctors and lots of other government paid employees.  He cut back on wages, benefits and virtually all governement programs.  He simply stopped spending money they did not have, kind of like what we have to do.  In the end, the province weathered the storm and came out of it much stronger.

Other provincial governments, local governments and the federal government all learned from this and basically began to do the same thing.  They all tightened their belts and became stronger as a result.  They aren't perfect but compared to the USA, they look pretty damn good.

In my view, someone in the USA has to have the balls to do what Ralph Kein did in Canada.   Governments in the US at the federal, state and local levels must come to grips with their deficits.  It means people will suffer in the short term, through lay-offs, wage cuts, benefit cuts and pension cuts.  If they cant find a politician with the balls to get this started, I fear the US will eventually collapse.  Hopefully our ties with China and other countries will have grown so they dont drag us down with them.

[David E]

Shaun

I hear what you say. I know that people like you all over USA...and all other Countries walloped by the GFC will dig in deep and hard, do the difficult things and clamber back from the abyss.
You represent what is good in any economy....the understanding that you gotta work hard, sometimes brutally hard, to get a reward in the tough times.

Problem we have got in today's World is not caused by the "battlers"...it is caused by the high end of town, those people and Businesses that only know how to make a fast buck at somebody else's expense...they never did anything original or never took a chance with their own money...and they never will.

The financial weight of these parasites and their totally unethical and immoral way of screwing  megabucks from nowhere is huge compared to the small leverage that the healthy way of building worth through honest endeavor can exert. Doing Business as you have done and will continue to do is right, but you dont have the horsepower collectively to change the direction of the Titanic !!.

Too much power and influence in high places will always let these guys off the hook...but they should have been hoisted high with the hook through their throats !!!

Half Pints example is exactly what I am on about...any sustainable and meanigful recovery to economic sanity MUST be driven top-down...its a test of Political will.........or wont as the case may be.

Bottom-up led recovery dont work...not enough leverage where it matters in Institutional banditry.

[Vince G]

Well Shaun that guy filling the gas cans to go snowmobiling (toys) is exactly what I am talking about. Instead of working the business he's spending money on snowmobiling. I see to many of these fools. Sorry if anyone gets offended but I just don't get it. There's a saying in Italian saying that I will put in english "Crying hunger with two loafs of bread under their arms". Basically it means being greedy.


On a national level? I can't comment to much because what is learned is Hearsay. Who really knows what is being done behind those doors?

[David E]

Vince....you know EXACTLY what is going on behind those doors...dont kid yourself !!!

Some high end lobbyists are working the Political scenario to find a way that throws a crumb to the masses, that leads them to believe that real changes are afoot...but at the same time the work to preserve the status quo is fast and furious !!!...driven by the high end of town who make all the donations to Political Parties...and now want payback....or am I being too cynical 

[maxx]

You guys know we are not supposed to be talking politics on this forum.That being said.I think I will jump right in.I think David E makes some good points.And it is true to some extent.Sorry David in my own personell opinion.I think you have ben reading to much lame stream media.

In the little hell hole town that I live in.Business is good.It was rough for maybe a couple of months.A couple of years ago.And people were getting layed off.And a few people did loose thiere.Over priced homes.But beyond that.And the increasing cost of fuel.Thier is plenty of work.Some of the buissness around here.Have permanent help wanted signes attached to there buildings.I think the biggest problem with America is nobody wants to work.Thoose kind of jobs.everybody just wants it given to them.

Shaun Gm has never needed the goverment money.They sold more cars the  last 2 years then any other auto maker in the world.Why did they ask for the money.Because one of thiere congressmen buddies told them the money was going to be offerd.Why did the banks fail.Because they were selling bad paper like Vince and David said.And people were dumb enough to sign the notes.

David China a world power? In my own opinion based on nothing but my own thoughts.I think China is going to crash and burn like it has before. The people are tired of working for little or nothing.They want the western lifestyle.They want what we have.It is already starting to show.Thiere has ben factory closing's and some empty store fronts.I think I evin  heard of some Chinese workers going on strike a couple of months ago.The big manufacturs have started to move to Vietnaum.And Cambodia.In a effort to keep cost down.China's inflation rate is out of control.My mother in law tells my wife.That the price of food and other neccesities has come close to doubeling in the last 3 years.

So i think if something isn't done to improve the working conditions in China.And to improve the standerd of living.It is going to come crashing down around thiere heads.Like it did back in the 90s