#  >  > Living And Legal Affairs In Thailand >  >  > Thailand and Asia News >  >  > Business, Finance & Economics in Thailand >  >  Chinese State Newspaper Urges 'Abandonment' of USA

## bkkandrew

Also posted here:

https://teakdoor.com/us-domestic-issu...tml#post764418

BEIJING, Sept 17 (Reuters) - Threatened by a "financial tsunami," the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.

The commentary in the overseas edition of the People's Daily said the collapse of Lehman Brothers Holdings Inc "may augur an even larger impending global 'financial tsunami'."

The People's Daily is the official newspaper of China's ruling Communist Party, and the overseas edition is a smaller circulation offshoot of the main paper.

Its pronouncements do not necessarily directly voice leadership views. But the commentary by a professor at Shanghai's Tongji University, as well as an essay in a Party journal, underscored official alarm at the turmoil in world financial markets.

China's central bank earlier this week cut its lending rate for the first time in six years, a move analysts said was aimed at bolstering the economy and the battered stock market.

"The eruption of the U.S. sub-prime crisis has exposed massive loopholes in the United States' financial oversight and supervision," writes the commentator, Shi Jianxun.

*"The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States."*

From:

UPDATE 1-China paper urges new currency order after tsunami | Currencies | Reuters

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## gjbkk

The Euro?

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## jim1176

Chinese are greedy twats

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## Mid

for some reason a _Virginia Slims_ ad comes to mind ................

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## Jesus Jones

> Chinese are greedy twats


Nah, just clever and waiting their turn.

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## pai nai ma

The Chinese don't cue. They will take/buy what they want when they want it. After all, they are the center of the universe.

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## Jesus Jones

> The Chinese don't cue. They will take/buy what they want when they want it. After all, they are the center of the universe.


Can't blame the Chinese for their greed when the west over the last 30 years has injected them with manufacturer and production and cheap labour, just so the corporate companies can make a few extra dollars at the expense of employemt in our own countries.

Only ourselves to blame.

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## bkkandrew

*U.S. Meltdown Reflects Regulators' Failures, Wu Says (Update1)* 


By Li Yanping and Nipa Piboontanasawat

Sept. 18 (Bloomberg) -- U.S. regulators failed to manage the risks of new financial products and China needs to learn the lessons to avoid its own meltdown, former central bank deputy governor Wu Xiaoling said. 

``The U.S. crisis reflects regulatory problems in the U.S. and innovative financial products that ignored basic economic rules,'' Wu told a financial conference in Beijing today. ``The U.S. crisis today would be China's tomorrow if financial products such as securitization are introduced without proper risk-control measures.'' 

China has resisted years of pressure from U.S. Treasury Secretary Henry Paulson to open its financial system more quickly and add new products. Those barriers helped the nation limit its losses and writedowns from the credit-market crisis to less than 1 percent of the $516 billion global total. 

``Now is the time for the Chinese to say that `you didn't do it quite right either,''' said David Cohen, an economist at Action Economics in Singapore. ``The world is very dependent on China to help cushion the downturn.'' 

Bloomberg.com: Worldwide

The blame game starts...

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## plorf

Well, no need to accuse the Chinese of greed, they were simply more conservative, and thus, correct, and had to listen to many arrogant lectures on economy from the US before. And now that the US has (hopefully) learnt its lesson and should start to be a bit more quiet when it comes to lecturing others, it's only correct to reasses certain bad habits from the past. Swiss banks heavily relied on the functioning of the american credit system as well, despite many warnings, and weren't as prudent as they are in their home market, but sought to copy american bankers.. Can't blame the americans for your own mistakes, but it's certainly correct to question your engagement in that market.

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## panama hat

> Can't blame the Chinese for their greed when the west over the last 30 years has injected them with manufacturer and production and cheap labour, just so the corporate companies can make a few extra dollars at the expense of employemt in our own countries.


That's far too simplistic . . . the Chinese government kept the Yuan at an artificially low rate for just this purpose; attracting manufacturing contracts and selling themselves as the lowest-cost manufacturer, even outdoing the likes of BanglaDesh and Indonesia.  

Now that there are problems they are, as usual, placing the blame firmly at the feet of the 'west' while proclaiming their 'helpless' situation.

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## Texpat

I wish more second-rate economies would strike out on their own and create their own financial orders.

Then we could ride on their coattails for awhile.  :Banana:  And wouldn't have to listen to them whine all the while.

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## Bugs

Yea, and China is so well known for being the world leaders in corporate transparency, and they have done such a swell job of managing the market that the Shanghai composite has gone from over 5,000 in Jan, to below 2,000 currently (and folks have been bitching about the 4% DOW loss the other day).  If the sky is falling in NY it must have already fallen in Shanghai.   

China should better blend there foreign currency deposits - Dollar, Yen, Pound, Euro.  Especially consdering China's biggest trading partner is the EU and their third biggest is Japan.  However, even with EU companies China still does quite a bit of business in US dollars, and oil trade is in US dollars.    

We saw some of the same type of comments not so long ago when the dollar seemed to be in a never ending dive against the Euro and Pound.  Now the dollar has gained much of those losses back, and all that talk died down, as will this once the financial markets in the US stabilize.  Problem is the talk should not die down, China should have a better balance - but will they?

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## Texpat

> We saw some of the same type of comments not so long ago when the dollar seemed to be in a never ending dive against the Euro and Pound. Now the dollar has gained much of those losses back, and all that talk died down


Zactly.

Much like the efforts in Iraq. When the fighting was going on, all these wankers were up in arms. It was a huge issue. Now that Iraq appears to be making some headway and successes are piling up, the issue has gone cold. Completely.

Next ...

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## jandajoy

> Threatened by a "financial tsunami," the world must consider building a financial order no longer dependent on the United States, and replace it with us. We're really very nice and we dun the olympics and stuff. We're good we are.


..........

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## Spin

> "The eruption of the U.S. sub-prime crisis has exposed massive loopholes in the United States' financial oversight and supervision,"


Donno about loopholes, more like blackholes. The securities and exchange commission under Mr Cox have made some blinding fock ups. Naked short selling and uptick rule being two of them, not to mention comoatose at the wheel.

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## Butterfly

> Yea, and China is so well known for being the world leaders in corporate transparency, and they have done such a swell job of managing the market that the Shanghai composite has gone from over 5,000 in Jan, to below 2,000 currently (and folks have been bitching about the 4% DOW loss the other day). If the sky is falling in NY it must have already fallen in Shanghai.


good point, and it's not like this is the first time, recovery happens. Some takes longer, some are fast. The SubPrime is a big fuckup, we all saw it coming, and yet nothing could have been done to stop it.

Just have to wait for the storm to pass,

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## watterinja

I wondered for how long the US could carry on financing a lost cause in Iraq & Afghanistan. The $ billions lost each day had to eventually erode the nation's bank-balance.

Coupled with the years of negative savings rate in the US, something was bound to give.

The US has always been good at 'smoke-&-mirrors' - this time, the mirrors began to crack & the smoke lifted. Wonder quite how they're going to fix the mess without putting their hands in their own pockets - for a change?   :tieme:

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## Texpat

Have you been living under a rock Wat? Pick up any paper and read up a little about Iraq, hardly a lost cause.

If you don't like how the US markets and financial system is operated ... get lost. Nobody's forcing you to play.

Grow a pair, Man! 
Quit stewing around whining and start your own. 
Don't be _followers_ your whole lives.

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## watterinja

Now, where's that 'under the rock' emoticon when you need it?   :Confused:

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## panama hat

> Much like the efforts in Iraq. When the fighting was going on, all these wankers were up in arms. It was a huge issue. Now that Iraq appears to be making some headway and successes are piling up, the issue has gone cold. Completely.





> Have you been living under a rock Wat? Pick up any paper and read up a little about Iraq, hardly a lost cause.


In a thread about China's position vis-a-vis corporate collapse in the US . . . now I know why people refer to a drinking problem.

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## jim1176

> Originally Posted by pai nai ma
> 
> 
> The Chinese don't cue. They will take/buy what they want when they want it. After all, they are the center of the universe.
> 
> 
> Can't blame the Chinese for their greed when the west over the last 30 years has injected them with manufacturer and production and cheap labour, just so the corporate companies can make a few extra dollars at the expense of employemt in our own countries.
> 
> Only ourselves to blame.


That is the problem, short term political leadership costing the working stiff and his family. The only people making money are the smegma who work for the govt and utility co's: cops, electrical co, firemen, teachers. The regular Joe pays taxes to support their extorted salaries and  gets squat in return.

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## britmaveric

World Economy and we all affect one another - no one is immune. Chinese need consumers so regardless what they say they are stuck with the rest of us.

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## Jesus Jones

> Originally Posted by Jesus Jones
> 
> Can't blame the Chinese for their greed when the west over the last 30 years has injected them with manufacturer and production and cheap labour, just so the corporate companies can make a few extra dollars at the expense of employemt in our own countries.
> 
> 
> That's far too simplistic . . . the Chinese government kept the Yuan at an artificially low rate for just this purpose; attracting manufacturing contracts and selling themselves as the lowest-cost manufacturer, even outdoing the likes of BanglaDesh and Indonesia. 
> 
> Now that there are problems they are, as usual, placing the blame firmly at the feet of the 'west' while proclaiming their 'helpless' situation.


Then if that's the case the west has been far to dumb not to realise the implications. Either way England in particular has closed down successful businesses and manufacturing to line the pockets of corporate companies, that can't be denied.

Why do business that are already succesful within their own company and country want just that little bit more for themselves, and sacrifice employment and stability within their own country, that is greed, and now it's bitting back

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## panama hat

Greed, you said it . . . has nothing to do with the hypocrisy of China

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## bkkandrew

^Correct, an inevitable result of a bizarre plan - outsourcing your manufacturing to China, whilst borrowing the money from the Chinese to fund it.

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## panama hat

The work of only one man

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## bkkandrew

*Main Bank of China in a bit of a bind...* 
It has been on a buying binge in the United States over the last seven years, snapping up roughly $1 trillion worth of Treasury bonds and mortgage-backed debt issued by Fannie Mae and Freddie Mac.

Those investments have been declining sharply in value when converted from dollars into the strong yuan, casting a spotlight on the central bank’s tiny capital base. The bank’s capital, just $3.2 billion, has not grown during the buying spree, despite private warnings from the International Monetary Fund.

Now the central bank needs an infusion of capital. Central banks can, of course, print more money, but that would stoke inflation. *Instead, the People’s Bank of China has begun discussions with the finance ministry on ways to shore up its capital, said three people familiar with the discussions who insisted on anonymity because the subject is delicate in China.*

The central bank’s predicament has several repercussions. For one, it makes it less likely that China will allow the yuan to continue rising against the dollar, say central banking experts. This could heighten trade tensions with the United States. The Bush administration and many Democrats in Congress have sought a stronger yuan to reduce the competitiveness of Chinese exports and trim the American trade deficit.

The central bank has been the main advocate within China for a stronger yuan. But it now finds itself increasingly beholden to the finance ministry, which has tended to oppose a stronger yuan. As the yuan slips in value, China’s exports gain an edge over the goods of other countries.

The two bureaucracies have been ferocious rivals. Accepting an injection of capital from the finance ministry could reduce the independence of the central bank, said Eswar S. Prasad, the former division chief for China at the International Monetary Fund.

“Central banks hate doing that because it puts them more under the thumb of the finance ministry,” he said.

Mr. Prasad said that during his trips to Beijing on behalf of the I.M.F., he had repeatedly cautioned China over the enormous scale of its holdings of American bonds, emphasizing that it left China vulnerable to losses from either a strengthening of the yuan or from a rise in American interest rates. When interest rates rise, the prices of bonds fall.

Officials at the central bank declined to comment, while finance ministry officials did not respond to calls or questions via fax seeking comment. Data in a study by the Bank of International Settlements based in Basel, Switzerland, sometimes called the central bank for central banks, shows that many central banks had small capital bases relative to foreign reserves at the end of 2002, though few were as low as the People’s Bank of China.

*Given the poor performance of foreign bonds, the Chinese government could decide to shift some of its foreign exchange reserves into global stock markets.*

The central bank started making modest purchases of foreign stocks last winter, but has kept almost all of its reserves in bonds, like other central banks.

*The finance ministry, however, has pushed for investments in overseas stocks. Last year, it wrested control of the $200 billion China Investment Corporation, which had been bankrolled by the central bank. That corporation’s most publicized move, a $3 billion investment in the Blackstone Group in May of last year, has lost more than 43 percent of its value.*

The central bank’s difficulties do not, by themselves, pose a threat to the economy, economists agree. The government has ample resources and is running a budget surplus. Most likely, the finance ministry would simply transfer bonds of other Chinese government agencies to the bank to increase its capital. But even in a country that strongly discourages criticism of its economic policies, hints of dissatisfaction are appearing over China’s foreign investments.

For instance, a Chinese blogger complained last month,* “It is as if China has made a gift to the United States Navy of 200 brand new aircraft carriers.”*

Continued in my main thread here:

https://teakdoor.com/us-domestic-issu...tml#post793218

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## sabang

The World needs a second Reserve currency- this would be good for all, including the USA. It cannot be the Yuan- it is not a freely tradable currency.

That leaves either the Euro or the Yen.

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## deepee

Sabang, 
there is at least one other currency- and that is gold !

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## lom

^How do one print more gold?

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## bkkandrew

^I think deepee was referring to the reckless abandonment of gold-backed currencies, noteably by the USD going totally fiat in 1974.

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## Thormaturge

It is laughable for China to comment on America's current problems.

If China were to become a democracy it would suffer similar problems to Thailand, only worse.  With an overwhelming proportion of the country still living a peasant lifestyle the entire country would be run by a peasant-backed government and the industrial base would be bled until the entire country reverted to subsistence living.

When China develops a proper legsal system and a democracy in which everyone is free and has a chance then, and only then, can it seek to criticise the USA.

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## baldrick

> The World needs a second Reserve currency- this would be good for all, including the USA. It cannot be the Yuan- it is not a freely tradable currency.
> 
> That leaves either the Euro or the Yen.


why do you dismiss the "globar" ?  :Very Happy:

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## keda

Look no further than the Euro for the de facto second currency, but must confess not looking good for the $ and can't see it improve regardless who slithers in next month.

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## Rattanaburi

China will soon implement a half-child policy.

The world is rolling down a hill bouncing into rubble along the way.

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## Thormaturge

> The World needs a second Reserve currency- this would be good for all, including the USA. It cannot be the Yuan- it is not a freely tradable currency.
> 
> That leaves either the Euro or the Yen.


Is there some reason why you dismiss the Thai Baht? Surely its current strength makes it a candidate.  :Smile:

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## robuzo

Anybody around ever look at the charts?  The dollar has been steadily advancing against nearly every currency but the yen, which is at a high (yay, I'm paid in yen).  The Chinese "abandon" the US?  Maybe they'll rearrange the ratios in their secret "basket of currencies" against which they peg the yuan, or maybe not.  They own not only nearly a trillion in US debt- not being able to find enough of that to put their US dollar inflows into, they also bought roughly US$400 billion in Fannie and Freddie!  Their little vendor-financing scheme is crumbling around them; of course, that's a bit unfair, since it is really Bretton Woods II, the biggest vendor financing scheme ever, that is falling apart.  Europe is in chaos, hoping the Russians will bail them out.  Funny old world.

Charts: 3-month dollar v Euro- U.S. Dollar to Euro Exchange Rate - Yahoo! Finance

Dollar v British squid: U.S. Dollar to British Pound Exchange Rate - Yahoo! Finance

Check out this blog- a bit technical but here is an especially good recent post: Brad Setser: Follow the Money » Blog Archive » The damage spreads .

"_One friend just read me something which he has received from an fx trader which said that the only things that anyone desires to own are the US dollar,the Japanese Yen, gold, bottled water and bullets 

_I might add "tinned sardines and camp stove fuel" to that, but otherwise sounds like a plan.Best explanation of what's going on that I've heard so far- "Youre in a room with 100 people, and 20 of those people have a deadly disease that is spread by touch. You have no idea who the 20 are, so your strategy is touch no one. The banks have no idea who is toxic and who is not, so lending has frozen."  Not only that, but they might be toxic themselves and not know it.  Can't trust anybody!

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## panama hat

> "You’re in a room with 100 people, and 20 of those people have a deadly disease that is spread by touch. You have no idea who the 20 are,


If Jet is in the room you have a sure fix on one of them . . . 


Owning so much debt is a false positive for China - it sounds scary, but what can they really do with it?  Call it in?  Hardly likely. 

The USD will regain its position as the 'reigning' world currency, I have no doubt . . . with the Thai Baht running a close second . . . 


I am joking on one of these points.

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## deepee

Interestingly the Thai Baht does seem to be holding it's own despite other more respected currencies getting a good old flogging at present.
Maybe  some of this talk about Thailand looming as the  financial hub of S.E.A does have some merit.
 Hey, just struck me we could soon be asking" hows it going in HOSEA these days?" rather than the good old LOS .

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## Thormaturge

> Maybe some of this talk about Thailand looming as the financial hub of S.E.A does have some merit.


I needed a good laugh.

I saw a young schoolboy trying to solve a Rubik's cube recently and his approach reminded me of Thai financial management.

After a while none of the sides showed any material difference from when he began, except the mix of colours had admittedly changed.  Then I realised the problem, he wasn't stopping to figure anything out, he was just twiddling the squares about in the hope the sides would all match up.

Best analogy I have ever seen for Thai management skills.

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## robuzo

> The USD will regain its position as the 'reigning' world currency, I have no doubt . . . with the Thai Baht running a close second . . . 
> I am joking on one of these points.


So long as the world runs on oil, and oil is priced in dollars, this will be the case (the first part anyway).  People talk about the dollar being a "fiat" currency, but that is only partly true- it's oil-backed instead of gold- or silver-backed (despite the appealing image of hulking gorilla dollars).  This is the arrangement that Nixon worked out with the Arabs, and I don't see much happening to change it, however desirable that might be.

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## bkkandrew

*China says lending to US will not go on forever*

BEIJING (AFP)  China warned Wednesday it would not keep lending money to the US economy indefinitely, even as new data showed it had consolidated its position as the top buyer of American government bonds.

"China's increased purchase of US Treasury securities should not be interpreted as an endorsement of the assumption that the US can borrow its way out of the current financial crisis," the China Daily said in an editorial.

The warning from the state-run newspaper, an English-language daily that mainly addresses a foreign audience, came after the US Treasury Department reported a steep increase in Chinese holding of US Treasury bonds.

China held 652.9 billion dollars of US Treasury bonds at the end of October, up 11.2 percent from 587 billion dollars a month earlier, when China became the largest creditor ahead of Japan, according to the data released Tuesday.

China says lending to US will not go on forever - Yahoo! News

Another shot across the bows... :mid:

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## Mid

> Another shot across the bows...


just in front of the bridge windows me thinks ..................

we own you !!!!

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## Rural Surin

They're so subtle, aren't they.

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## Muadib

Yeah, yeah, yeah... China MUST maintain a minimum of 8% growth in order to sustain their economy, which adds 10 million new workers to their labor force annually... What do you think will happen if they cut off they're largest customer??? 

Markets & economies will correct themselves... Not without some pain and much needed fiscal responsibility, but at the end of the day it will be business as usual...

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## Rural Surin

^ Well sure, that goes without saying. Just a game. A game for everyone.

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