China warns U.S. over arms sales

I am not surprised. The US is so desperate for money to alleviate its debts that such a huge arms sale to Taiwan would surely be the logical thing to do. Especially since the Chinese are no longer buying those infamous US IOUs by the bushels anymore!

In the longer term however Washington will only shoot itself in the foot. Beijing will definitely retaliate in areas where its cooperation is sorely needed, such as Iran, N Korea and, of course, "Kosova".

Here we have China, which owns a staggering percentage of US assets and is the main investor in US bonds which allows money to be printed to fight wars and try and kick start their economy. So what could the US possibly do to anger and antagonize their No. 1 investor, well just announce that you’re going to sell arms to a “province” in China.
China has threatened to place sanctions; yes that’s right, China has threatened to place sanctions on the US then it will commence its major program of rearmament and weapons testing. In the meantime China can withdraw its money from the US and then watch the value of the dollar compete with the Zimbabwean dollar. For those that think China needs the US; it does not because China’s middle class is bigger than the entire US workforce.
In addition, China can now halt US goods from being sold in China. It can also ban most US corporations from doing business in China and it goes on and on. I wonder how that would affect the US economy when their goods cannot be sold in a market as large as China????
I take all I said earlier about Obama being an intelligent man. They certainly are not the brightest in that White House.

Here we have China, which owns a staggering percentage of US assets and is the main investor in US bonds which allows money to be printed to fight wars and try and kick start their economy. So what could the US possibly do to anger and antagonize their No. 1 investor, well just announce that you’re going to sell arms to a “province” in China.
China has threatened to place sanctions; yes that’s right, China has threatened to place sanctions on the US then it will commence its major program of rearmament and weapons testing. In the meantime China can withdraw its money from the US and then watch the value of the dollar compete with the Zimbabwean dollar. For those that think China needs the US; it does not because China’s middle class is bigger than the entire US workforce.
In addition, China can now halt US goods from being sold in China. It can also ban most US corporations from doing business in China and it goes on and on. I wonder how that would affect the US economy when their goods cannot be sold in a market as large as China????
I take all I said earlier about Obama being an intelligent man. They certainly are not the brightest in that White House.
(sj, 30 January 2010 15:49)


Well said spot on all topics. China give America bonds to buy Chinese products... Simple answer stoping giving Americans money to buy money and leave the money in China with the every growing middle class. It will increase the value of the RMB(Yaun)and destroy the USD. But it doesnt matter, since the US doesnt export anything except inflation

Think of it this way. If China cannot produce it, Mexico will. And if China stops all trading with the US, china's uncertain economy will drop to its knees because China Depends on US investments. If it wasn't for the US china would still be almost a third world country, depressed, beating its people up, and closed like before.

US will sell its arms because it can. No one can stop them. This is not Genghis Khan time when something didnt go right they will cut everything even their lifeline.

China is not as strong as you may think it is. GDP 4 trillion in comparison to US 14 trillion.

Dont be silly US is the backbone of World Economy.

(Chicago, 30 January 2010 20:41)

Sorry, but I have to disagree. The three most used words in Australia are - Made in China. Australians spend substantially more on technology than the Americans do, and Australia has a population of only ~22 million.

If the US no longer buys from China, it will not be a big deal, I promise you that no matter which country you go to, even The Republic of the Congo, there are countless products thate are 'Made in China'.

Chicago

Just watch the rate of the dollar in the following weeks and you will see whether they "can" or cannot.
And BTW the GDP ppp of China is around 8-9 trillions ...

(Chicago, 30 January 2010 20:41)
If that was the case Mexico would have been producing these goods a long time ago, but there are reasons why this has not occurred which are too long to list here. In 2000, China was dependent on the US economy, but not in 2010 – in fact China took over from Japan in December 2009 as the second largest economy in the world and will take over the US sometime this year. For your edification, it was Australia that opened the doors to China and not the US as you seem to think. Richard Nixon came later.
Let me explain to you the dire situation your country is in at present. Firstly, China owns 1/3 of the US – let me repeat that to you in case you have missed it – China owns 1/3 of the US. Secondly, China purchases US Bonds and then your government prints more dollars to pay for the wars in Iraq and Afghanistan; pay for increased social security commitment due to a much higher unemployment, as well as try and kick start your economy.
If you still do not have the picture, well here it is: if China withdraws its money from the US then the US economy would collapse because the US dollar will be comparable to the Albanian Lek – this means it will be near worthless. So you think no one can stop the US, watch and learn.
As China has surpassed Japan’s economy I think your GDP 4 trillion is a tad old. I have a close friend who works for our foreign ministry who loves these debates about GDPs. He likes to use Hungary as an example; according to the western statistics Hungary has a GDP of $18,000 per person while the rest in the region is much smaller. However, only 12 months ago the Hungarian Government was begging the EU for an emergency loan otherwise the country would go broke. The Hungarians threatened to go to the Russians so they got their loan. The lessons of this story is that never, never believe too much of what is said on TV, radio or published in newspapers or on the internet – do your own research.
Up to 2000 the US was the world economy, but not today. Your country is suffering a depression, not a recession, but the Asian countries are going full throttle – ask the Australians; ask them who do they thank for their economy not following the US and Europe - its China.

I have to counter you with facts:
- Hungary's GDP is $15,542 and not $18,000.
- In 2008 Hungary was no way in the position to "treaten" the EU but could only beg. After some 15 billions of IMF money Hungary still needed some 5 billions. Russia was not in the position to lend as much with favorable rate. Otherwise Hungary would have borrowed from Russia not only with the Hungarian greeting "kezicsokolom" (I kiss your hand) but also litterarly kissing Russian hands. As things are evolving in Hungary today one day maybe it will still come to that.
(Joe, 31 January 2010 19:34)

Iam sure this is exactly what
Geitner,Clinton and Obama did
when they visited China.

The truth Joe is "beggars cannot be choosers".

As for the $$, yes it will drop down so then the US will buy its bonds back and recover from the 80% deficit. This is not due to china, its just pure economics and manipulation of the economy.
(Chicago, 31 January 2010 09:31)

Inflation eases the burden of settling debts? That's only true if your income rises faster than your expenditure.
Does the Weimer republic ring a bell?
Other countries that have tried to use inflation to wipe out debt have found that borrowing becomes much harder and more expensive. It would also make banks hesitant to lend, except at interest rates high enough that the yield wouldn’t be devoured by inflation.
Here is a list of negative effects that happen when you inflate your way out of debt,

*Your Citizens lose their savings wiping the domestic economy, the debt laden upper class finds it easier to service it's debt in the short term but the middle class slip easier into the poorer class. There goes the retail sector and sales tax revenue.
*The banking sector takes a further hit and is forced to rise interest rates to very high levels. There goes growth and value of assets.

*Investors rush to invest in commodoties creating a boom in prices further disabling a weak dollars purchasing power, there goes industry.

*Unemployment rises and living standards drop, there goes the great American dream and tax revenue.

*Investors would not return to the US after being burned.
AAA rating disapears and the world would step up processes to replace the US dollar as the reserve currency. There she blows.

Currently Debt to GDP ratio is at 86.5% the only true way out is to reduce military and government spending drasticly and spend a decade paying what you owe.

(Joe, 31 January 2010 19:34)

Point taken, but I have seen it as high as $19,000 and as low as $16,500 depending on who prepares the information. Regardless of whether it is $15,542 or $18,000 my point is that Hungary is broke. However, it is constantly portrayed as being wealthy and prosperous.

My friend told me that the EU/US were very concerned about the influence the Russians would have if they lent money to the Hungarians so the EU overturned its initial decision. In fact he was in Brussels at the time all this was going on and he states that there was great concern on the EU/US side.

Apparently the Russians do have the money, but favourable rates apply if there is something in it for them and the Hungarians were not offering too much on the table.

I agree with Chicago on this one. B92 my comment didn't get published, business as usual.

CG, you're right China's GDP PPP is 8 trill, but Germany's alone is 3 trill. The point is that US - China relations is a 2 way street. China only is able to function if and only if everyone is working. China would have massive riots and chaos if unemployment rates reached half of US's (~18%).

Right the purchasing power is 8 but its exchange which is more important is 4. The ppp is in ideal economy which no one has, the exchange is the realistic. the US both the ppp and exchange are 14 trillion hence why it is the most stable and trusted economy in the world.

As for the $$, yes it will drop down so then the US will buy its bonds back and recover from the 80% deficit. This is not due to china, its just pure economics and manipulation of the economy.

sj,

I have to counter you with facts:
- Hungary's GDP is $15,542 and not $18,000.
- In 2008 Hungary was no way in the position to "treaten" the EU but could only beg. After some 15 billions of IMF money Hungary still needed some 5 billions. Russia was not in the position to lend as much with favorable rate. Otherwise Hungary would have borrowed from Russia not only with the Hungarian greeting "kezicsokolom" (I kiss your hand) but also litterarly kissing Russian hands. As things are evolving in Hungary today one day maybe it will still come to that.

Last I checked, there were still Chinese trying to come over and live a better life in the US, not the other way around.

For those who haven't read history (or watched TV for that matter) there used to be a time when Soviet Union was "way ahead" of the US, and US generals were worried about a "missile gap." Where is the Soviet Union now?

How about when the Japanese bought Pebble Beach? Didn't they once own one third of the US?

The Chinese are particularly vicious though, so I am thankful that Obama's administration is finally recognizing who they are dealing with. More power to them.

I am not surprised. The US is so desperate for money to alleviate its debts that such a huge arms sale to Taiwan would surely be the logical thing to do. Especially since the Chinese are no longer buying those infamous US IOUs by the bushels anymore!

In the longer term however Washington will only shoot itself in the foot. Beijing will definitely retaliate in areas where its cooperation is sorely needed, such as Iran, N Korea and, of course, "Kosova".

Think of it this way. If China cannot produce it, Mexico will. And if China stops all trading with the US, china's uncertain economy will drop to its knees because China Depends on US investments. If it wasn't for the US china would still be almost a third world country, depressed, beating its people up, and closed like before.

US will sell its arms because it can. No one can stop them. This is not Genghis Khan time when something didnt go right they will cut everything even their lifeline.

China is not as strong as you may think it is. GDP 4 trillion in comparison to US 14 trillion.

Dont be silly US is the backbone of World Economy.

Here we have China, which owns a staggering percentage of US assets and is the main investor in US bonds which allows money to be printed to fight wars and try and kick start their economy. So what could the US possibly do to anger and antagonize their No. 1 investor, well just announce that you’re going to sell arms to a “province” in China.
China has threatened to place sanctions; yes that’s right, China has threatened to place sanctions on the US then it will commence its major program of rearmament and weapons testing. In the meantime China can withdraw its money from the US and then watch the value of the dollar compete with the Zimbabwean dollar. For those that think China needs the US; it does not because China’s middle class is bigger than the entire US workforce.
In addition, China can now halt US goods from being sold in China. It can also ban most US corporations from doing business in China and it goes on and on. I wonder how that would affect the US economy when their goods cannot be sold in a market as large as China????
I take all I said earlier about Obama being an intelligent man. They certainly are not the brightest in that White House.

Here we have China, which owns a staggering percentage of US assets and is the main investor in US bonds which allows money to be printed to fight wars and try and kick start their economy. So what could the US possibly do to anger and antagonize their No. 1 investor, well just announce that you’re going to sell arms to a “province” in China.
China has threatened to place sanctions; yes that’s right, China has threatened to place sanctions on the US then it will commence its major program of rearmament and weapons testing. In the meantime China can withdraw its money from the US and then watch the value of the dollar compete with the Zimbabwean dollar. For those that think China needs the US; it does not because China’s middle class is bigger than the entire US workforce.
In addition, China can now halt US goods from being sold in China. It can also ban most US corporations from doing business in China and it goes on and on. I wonder how that would affect the US economy when their goods cannot be sold in a market as large as China????
I take all I said earlier about Obama being an intelligent man. They certainly are not the brightest in that White House.
(sj, 30 January 2010 15:49)


Well said spot on all topics. China give America bonds to buy Chinese products... Simple answer stoping giving Americans money to buy money and leave the money in China with the every growing middle class. It will increase the value of the RMB(Yaun)and destroy the USD. But it doesnt matter, since the US doesnt export anything except inflation

Right the purchasing power is 8 but its exchange which is more important is 4. The ppp is in ideal economy which no one has, the exchange is the realistic. the US both the ppp and exchange are 14 trillion hence why it is the most stable and trusted economy in the world.

As for the $$, yes it will drop down so then the US will buy its bonds back and recover from the 80% deficit. This is not due to china, its just pure economics and manipulation of the economy.

Chicago

Just watch the rate of the dollar in the following weeks and you will see whether they "can" or cannot.
And BTW the GDP ppp of China is around 8-9 trillions ...

I agree with Chicago on this one. B92 my comment didn't get published, business as usual.

CG, you're right China's GDP PPP is 8 trill, but Germany's alone is 3 trill. The point is that US - China relations is a 2 way street. China only is able to function if and only if everyone is working. China would have massive riots and chaos if unemployment rates reached half of US's (~18%).

sj,

I have to counter you with facts:
- Hungary's GDP is $15,542 and not $18,000.
- In 2008 Hungary was no way in the position to "treaten" the EU but could only beg. After some 15 billions of IMF money Hungary still needed some 5 billions. Russia was not in the position to lend as much with favorable rate. Otherwise Hungary would have borrowed from Russia not only with the Hungarian greeting "kezicsokolom" (I kiss your hand) but also litterarly kissing Russian hands. As things are evolving in Hungary today one day maybe it will still come to that.

Last I checked, there were still Chinese trying to come over and live a better life in the US, not the other way around.

For those who haven't read history (or watched TV for that matter) there used to be a time when Soviet Union was "way ahead" of the US, and US generals were worried about a "missile gap." Where is the Soviet Union now?

How about when the Japanese bought Pebble Beach? Didn't they once own one third of the US?

The Chinese are particularly vicious though, so I am thankful that Obama's administration is finally recognizing who they are dealing with. More power to them.

(Chicago, 30 January 2010 20:41)
If that was the case Mexico would have been producing these goods a long time ago, but there are reasons why this has not occurred which are too long to list here. In 2000, China was dependent on the US economy, but not in 2010 – in fact China took over from Japan in December 2009 as the second largest economy in the world and will take over the US sometime this year. For your edification, it was Australia that opened the doors to China and not the US as you seem to think. Richard Nixon came later.
Let me explain to you the dire situation your country is in at present. Firstly, China owns 1/3 of the US – let me repeat that to you in case you have missed it – China owns 1/3 of the US. Secondly, China purchases US Bonds and then your government prints more dollars to pay for the wars in Iraq and Afghanistan; pay for increased social security commitment due to a much higher unemployment, as well as try and kick start your economy.
If you still do not have the picture, well here it is: if China withdraws its money from the US then the US economy would collapse because the US dollar will be comparable to the Albanian Lek – this means it will be near worthless. So you think no one can stop the US, watch and learn.
As China has surpassed Japan’s economy I think your GDP 4 trillion is a tad old. I have a close friend who works for our foreign ministry who loves these debates about GDPs. He likes to use Hungary as an example; according to the western statistics Hungary has a GDP of $18,000 per person while the rest in the region is much smaller. However, only 12 months ago the Hungarian Government was begging the EU for an emergency loan otherwise the country would go broke. The Hungarians threatened to go to the Russians so they got their loan. The lessons of this story is that never, never believe too much of what is said on TV, radio or published in newspapers or on the internet – do your own research.
Up to 2000 the US was the world economy, but not today. Your country is suffering a depression, not a recession, but the Asian countries are going full throttle – ask the Australians; ask them who do they thank for their economy not following the US and Europe - its China.

(Chicago, 30 January 2010 20:41)

Sorry, but I have to disagree. The three most used words in Australia are - Made in China. Australians spend substantially more on technology than the Americans do, and Australia has a population of only ~22 million.

If the US no longer buys from China, it will not be a big deal, I promise you that no matter which country you go to, even The Republic of the Congo, there are countless products thate are 'Made in China'.

I have to counter you with facts:
- Hungary's GDP is $15,542 and not $18,000.
- In 2008 Hungary was no way in the position to "treaten" the EU but could only beg. After some 15 billions of IMF money Hungary still needed some 5 billions. Russia was not in the position to lend as much with favorable rate. Otherwise Hungary would have borrowed from Russia not only with the Hungarian greeting "kezicsokolom" (I kiss your hand) but also litterarly kissing Russian hands. As things are evolving in Hungary today one day maybe it will still come to that.
(Joe, 31 January 2010 19:34)

Iam sure this is exactly what
Geitner,Clinton and Obama did
when they visited China.

The truth Joe is "beggars cannot be choosers".

(Joe, 31 January 2010 19:34)

Point taken, but I have seen it as high as $19,000 and as low as $16,500 depending on who prepares the information. Regardless of whether it is $15,542 or $18,000 my point is that Hungary is broke. However, it is constantly portrayed as being wealthy and prosperous.

My friend told me that the EU/US were very concerned about the influence the Russians would have if they lent money to the Hungarians so the EU overturned its initial decision. In fact he was in Brussels at the time all this was going on and he states that there was great concern on the EU/US side.

Apparently the Russians do have the money, but favourable rates apply if there is something in it for them and the Hungarians were not offering too much on the table.

As for the $$, yes it will drop down so then the US will buy its bonds back and recover from the 80% deficit. This is not due to china, its just pure economics and manipulation of the economy.
(Chicago, 31 January 2010 09:31)

Inflation eases the burden of settling debts? That's only true if your income rises faster than your expenditure.
Does the Weimer republic ring a bell?
Other countries that have tried to use inflation to wipe out debt have found that borrowing becomes much harder and more expensive. It would also make banks hesitant to lend, except at interest rates high enough that the yield wouldn’t be devoured by inflation.
Here is a list of negative effects that happen when you inflate your way out of debt,

*Your Citizens lose their savings wiping the domestic economy, the debt laden upper class finds it easier to service it's debt in the short term but the middle class slip easier into the poorer class. There goes the retail sector and sales tax revenue.
*The banking sector takes a further hit and is forced to rise interest rates to very high levels. There goes growth and value of assets.

*Investors rush to invest in commodoties creating a boom in prices further disabling a weak dollars purchasing power, there goes industry.

*Unemployment rises and living standards drop, there goes the great American dream and tax revenue.

*Investors would not return to the US after being burned.
AAA rating disapears and the world would step up processes to replace the US dollar as the reserve currency. There she blows.

Currently Debt to GDP ratio is at 86.5% the only true way out is to reduce military and government spending drasticly and spend a decade paying what you owe.