Brad Setser

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Back to the future: Is China’s new RMB policy China’s old RMB policy?

by Brad Setser
July 31, 2008

The odds that the US slipped into a recession around the turn of the year have increased. Nouriel Roubini is convinced. Jim Hamilton isn’t. The risk that US growth may slow later the in year are rising. So far, US export growth has remained robust – supporting growth. The pace of export growth hasn’t risen recently — if has been strong for a long time — so much as the pace of import growth has slowed: Imports have contributed positively to growth for the last three quarters, meaning real imports fell (see Dean Baker for more). But there is a growing risk that export growth will slow with a slowing global economy.

Signs of trouble are now visible in Europe. And not just in housing and finance-dependent economies like the UK – where consumer confidence has really plummeted. Anything that includes the phrase “worst since 1974” cannot be good. Europe, writ large (i.e. counting “new” Europe) has been a more important engine of global demand growth that the US since 2005, so a European slowdown matters for the world. Especially if Europe slows before the US resumes sustained growth.

Japan hasn’t had much momentum for a long-time. It isn’t likely to find new momentum now.

Of all the major economies – and with a $4 trillion GDP and $1.4-$1.5 trillion in goods exports this year, China is far too big to be considered anything other than a major economy – China has by far the strongest growth.

Its exports have held up quite well as the US – and Chinese exports to the US — slowed. Thank Europe – and booming sales to India and a host of other emerging economies. Many emerging markets fear cutting tariffs on Chinese goods far more than cutting tariffs on US and European goods. But forward looking indicators* suggest a broader slowdown in exports. Chinese manufacturers and policy makers are worried.

And it increasingly seems like China took a policy decision to slow the RMB’s appreciation against the dollar (and thus to slow the RMB’s likely appreciation against all the other large oil-importing economies) in order to support China’s export sector. That decision came even though China has the strongest domestic economy and the largest current account surplus of all the large oil-importing economies.

China has a larger export sector — and probably more value-added in its export sector, as China’s domestic value-added has increased sharply during China’s boom – than most other big economies. And it has relied more on exports to support its growth (exports contributed over 2% to China’s GDP growth in 2005, 2006 and 2007) than other big economies. So a slump in China’s exports will undoubtedly have an impact on China. And unlike in 2007 – when most emerging Asian economies appreciated by more than China – in 2008 China’s currency has appreciated not just v the dollar but against a host of smaller Asian economies.

Still, I would rather see China – which has a strong fiscal position (it ran a surplus in 07) and the largest current account surplus of the major economies – support its growth by taking policy steps to support domestic demand, not try to support its growth by slowing the pace of RMB appreciation to support its exports.

A chart of the RMB v the dollar (since 2005) shows the various phases of China’s RMB policy.


The initial revaluation was followed by a long period of almost no appreciation. China genuinely seems to have worried that even a small move would hurt its exporters (remember all the stories about their razo-thin margins). It took about two years for the RMB’s value to increase by a cent, from 12.5 cents to 13.5 cents.

As the US slowed, the dollar started to depreciate and inflation in China began to pick up, China started to allow the RMB to appreciate more. Last fall, it allowed a meaningful appreciation for the first time.

But that created problems of its own – not the least hot money inflows, as the RMB was appreciating and Chinese rates were above US rates.

And now China seems to have decided to pause the RMB’s appreciation, at least for a while. Export interests have reasserted control over policy. Special interests aren’t just a factor in trade policy – there are a host of industrial sectors in China that have been “protected’ by an undervalued exchange rate.

Slowing RMB appreciation – the non-deliverable forward suggests an appreciation over the next year of only a bit above 4%, a pace last seen in 2006 – might reduce hot money inflows. But if China really wants to make its monetary policy consistent with its exchange rate policy, it also needs to reduce domestic interest rates.

Ending appreciation, cutting rates and relaxing lending curbs would certainly support growth. It also would risk pushing Chinese inflation up to the levels seen in the Gulf.

While I would prefer that China allow its currency to appreciate (helping the global economy) and use domestic policies to support growth (also helping the global economy), if China is going to slow the pace of RMB appreciation, I certainly would hope that such a policy isn’t accompanied by policy steps to curb demand growth (like tight fiscal policy) in order to limit inflationary pressures. China tried that policy before, back in 2004. It led rather directly to China’s big current account surplus. The last thing a slowing global economy needs now is a Chinese policy that supports the export sector by limiting RMB appreciation while restraining domestic demand growth to limit inflation.

Lest we forget, the RMB has fallen by something like 30% against the leading currency of its most important trading partner since the turn of the century.


The recent appreciation that Chinese exporters have complained so vociferously about hasn’t even pushed the RMB much above its late 2004/ early 2005 lows against the euro. The RMB was down 30% v the euro (from late 2000) in early 2005. It is now only down 26-27% …

China has enjoyed one of the biggest export booms in modern history. Exports are on track to from around $250b in 2000 to $1.4-$1.5 trillion in 2008 now. China’s exporters don’t have much to complain about. In the 1990s, export booms were followed by periods when exports hardly grew at all. The trend wasn’t uniformly up. Realistically , China cannot expect to be able to continue to rely as heavily on exports for growth as it has. It has the policy tools available to do shift the basis of its growth. The political will to do so, though, seems lacking. At least for now.

Update: Michael Pettis and Victor Shih are reporting that the PBoC has created a new Department for exchange rate policy. Exchange rate policy was previously handled by a bureau in the monetary policy department. I have no idea if this means that China is more or less likely to allow more RMB appreciation. I do, though, think that if China wanted to organize the PBoC in a way that reflects its existing policy, it needs to go a bit further: Shouldn’t the monetary policy department report to the exchange rate policy department, as China has decided to subordinate its monetary policy to its exchange rate policy?

* Stephen Green of Standard Chartered has a good research report on this.


  • Posted by don

    Nice post, though I would like to have seen the pictures with real exchange rates.
    I have long maintained that a change in China’s currency policies will not be initiated from within China.

  • Posted by Michael

    I’m amused by how many people expect China to flexibly adjust to trade, currency, growth, and inflation changes by prompt and significant policy changes.

    The U.S. (role model to all emerging markets) is faced with drastic changes to its trade, currency, growth and inflation situation arising out of an excessive cheap-credit policy for too long. And what is its “prompt flexible adjustment” to those changes? Push more cheap credit on everyone everywhere to try to rescue the status quo.

    Desperately staying on the same course when it’s no longer producing the same benefits (and even introducing strains or crises) while talking about how much is being done to adjust to the new situation is a fine old tradition in the developed world. China has learned from the masters.

  • Posted by bsetser

    right now the irony is that the US doesn’t really need to push its credit on the world; a host of countries have decided (apparently) that they want to maintain dollar pegs no matter how ill-suited those pegs are to their own domestic conditions. China prefers subsidizing US consumption of Chinese goods to subsidizing Chinese consumption of Chinese goods. That in effect is what a policy decision to slow RMB appreciation likely means …

  • Posted by don

    Yeah. I agree. And the recent cite by Bernanke in testimony before Congress of a trade piece by Hufbauer et al that finds truly huge gains from trade liberalization has to make anyone in the know wonder about his credibility, or worse, his integrity.

  • Posted by algernon

    Intriguing that burgeoning domestic inflation in China, caused by the peg/floating peg, motivates them so little.

  • Posted by Rien Huizer


    What was that, about Bernanke’s credulity?

  • Posted by Rien Huizer

    It is hard to believe that the wise men in Beijing have not recognized that all the OECD markets for consumer goods are softening simultaneously now, or about to.

    US, UK, AUS, NZ (!!!), plus the brutal combination of (1) flattening catch-up growth weaker members EUR zone (Spain etc growth little to do with TFP, productivity concerns) (2) sharp reduction availability consumer credit (incl housing) due to bank solvency problems and disappearance of competition for assets (negative change in wealth perception from weakening housing market.
    I also expect that the bank credit channel is going to hit the non-EUR new EU members particularly hard (their banks are often foreign headquartered and their headoffices must be much less sanguine about these countries entering the EUR at about the current rates of exchange. Not to mention the countries that are not in the EU.

    All in all then, not a very rosy outlook for China’s immediate export outlook, and management attention required for (a) overt cannibalism between state-related firms and regions with diverse sources of FDI and (b) protectionism. The EU lacks any form of centralized stimulation instrument: all countries are at or over their long term targets for gvt budget deficits, the banking system looks exhausted and given that, official interest rate reduction will have little effect (inflationary, if any). In addition, China would be competing for market share with the “new” countries consumer products exports. Europe and European businesses have a lot more at stake there than in their relationship with China (AIrbus perhaps an exception). With the exception of he UK and the Belelux (both major FDI sources in China) , no country seems to benefit from China’s increasing exports to the EU. Many reasons to worry then, also for the weaker East Asian exporters.
    Sory, cannot afford CNY appreciation, come back next year.

    Could we perhaps get into a trade conflict on top of recession (a bit like the early 1980s?), between East and West? Where would Japan be this time?

  • Posted by Judy Yeo


    left of east perhaps?


    almost everyone expects some sort of weakening of the economy after the olympics. To be fair, no one in central government wants to be the one who starts the big spiral…downwards . Everyone wants to wait and see- stasis on “equilibrium”point, however precarious it may be.

  • Posted by fatbrick


    Demand and production capacity have to be destroyed somewhere to curb the commodity prices. I do not see that China compete with US or EU directly on the sectors China focus on, such as textile and electronics(large employment and low margin). I would hope that the fiscal polilcy will be tight since lots of government spending are in heavy industry, which employ fewer people, energy and investmetn intensive, and pollution.

  • Posted by Dave Chiang

    Let be perfectly clear on the fundamentally economic decision by the China PBoC to slow the revaluation of the yuan. It was the direct result of vociferous grassroots pressure from Chinese manufacturers and workers rather than some arbitrary decision by a faceless government bureaucrat. Isn’t “transparency” in government economic decisions to the populist “will of the people” something that should applauded by the Washington Consensus Elites? Any further rise in the value of the Chinese yuan will lead to a significant loss of global competitiveness that is highly detrimental to the economic interests of Chinese working class.

    China Manufacturing Shrinks for First Time on Record

    Aug. 1 (Bloomberg) — Manufacturing in China contracted for the first time since a survey began in 2005 as export demand faltered and factories closed to clear the air before the Olympic Games.

    The Purchasing Managers’ Index fell to a seasonally adjusted 48.4 in July from 52 in June, the China Federation of Logistics and Purchasing said today in an e-mailed statement.

    The expansion of the world’s fourth-biggest economy slowed for the fourth straight quarter in the three months through June on weaker U.S. demand. China raised tax rebates for shipments of textiles and garments today and the commerce ministry is pressing for slower yuan gains to protect exporters after the currency’s 6.8 percent advance against the dollar this year.

  • Posted by Dave Chiang

    China boosts textile tax rebates to help exporters

    China boosted tax rebates on textiles and clothing Friday to help struggling exporters amid falling foreign sales, while a key indicator showed manufacturing activity slowed sharply in July.

    Analysts had expected Beijing to take steps to help exporters after China’s export growth fell in June. Weakening demand has complicated government efforts to keep the economy growing strongly while also cooling inflation that is battering Chinese families.

    Rebates of value-added taxes on exports of textiles and clothes will rise by 2 percentage points to 13 percent, effective Friday, the Finance Ministry said on its Web site.

    The textile and clothing factories employ millions of workers and a drop in exports has raised the threat of job losses. Textile exports fell 4.2 percent in June from the same month last year.

  • Posted by Twofish

    Note here that the policy debate is now how fast or slow the appreciation of the RMB should be. There doesn’t seem to be any debate on whether to or not to appreciate the RMB. Also how fast or slow the RMB appreciation should be appears to be a tactical issue which could change quickly in response to events.

  • Posted by Twofish

    algernon: Intriguing that burgeoning domestic inflation in China, caused by the peg/floating peg, motivates them so little.

    Not too surprising. The breakdown in inflation is that food prices are increasing while non-food prices are stable. Since the government is subsidizing the cost of fuel and fertilizer for farmers, the inflation has increased incomes in rural areas, which is reducing rural discontent.

  • Posted by bsetser

    Fat brick —

    a) there are ways of spending money that don’t involve spending it on heavy industry.

    b) China hasn’t increased its exports from around $250b in 00 to close to $1400-1500b (end 08, on current trends) by sticking to textiles. It also produces a wide range of goods — furniture, auto parts, electronic components, soon autos — that compete with goods produced in the us and europe and higher income emerging asian economies. China will soon be assembling A320s as well — and plane production is certainly something the us and europe do.

    read today’s NYT as well; it indicates China wants to move into higher technology industries at the industrial and technology frontier.

    that doesn’t bother me. what bothers me is that China wants to compete at the high end while maintaining an exchange rate designed to support employment at the low-end. that has distorted the global trading and financial system.

    this would be a perfect time for China to start rebalancing. Exports do seem poised to slow significantly — tho some of the complains seems overdone when chinese exports are still growing on a y/y basis at close to 20% (faster than US exports, and we in the us are celebrating their large contribution to growth). the textile sector complains loudly, while the sectors that are doing well keep quiet and pocket the subsidy.

    no matter — this is an opportunity to rebalance. but rather than rebalancing, china is taking policy steps to support its export sector.

  • Posted by Dave Chiang

    Economist William Greider on Comrade Hank Paulson’s bailout of Wall Street Banks at federal taxpayer expense. Privatize the profits to the banksters and socialize the losses to the taxpayer.

    Washington can act with breathtaking urgency when the right people want something done. In this case, the people are Wall Street’s titans, who are scared witless at the prospect of their historic implosion. Congress quickly agreed to enact a gargantuan bailout, with more to come, to calm the anxieties and halt the deflation of Wall Street giants. Put aside partisan bickering, no time for hearings, no need to think through the deeper implications. We haven’t seen “bipartisan cooperation” like this since Washington decided to invade Iraq.

    The bailouts are rewarding the very people and institutions whose reckless behavior caused this financial mess. Yet government demands nothing from them in return — like new rules for prudent behavior and explicit obligations to serve the national interest. Washington ought to compel the financial players to rein in their appetite for profit in order to help save the country from a far worse fate: a depressed economy that cannot regain its normal energies. Instead, the Federal Reserve, the Treasury, the Democratic Congress and of course the Republicans meekly defer to the wise men of high finance, who no longer seem so all-knowing.

  • Posted by Dave Chiang

    From BusinessWeek,

    Why China says “No” to the U.S.

    China, for instance, has been trying to alleviate pain in the countryside for several years. The economy in the country’s well-off coastal provinces has boomed, leaving behind rural areas home to some 500 million people (, 2/16/07). When it comes to competing against American agribusiness, “Chinese household farmers are very weak,” says Wang Yong, associate professor and director of Peking University’s Center for International Political Economy in Beijing.

    Certainly, Chinese farmers are not able to supply all of the country’s needs. Imports of soybeans, a staple of the Chinese diet, surged 53% last year, to $11.5 billion, according to statistics from China’s Agriculture Ministry. Total agricultural imports for 2007 amounted to $41 billion, a 28% increase over the previous year. While Beijing has taken some measures to ease the burden on local farmers by reducing taxes, the imbalance still worries leaders such as President Hu Jintao and Premier Wen Jiabao, who have talked frequently about the need to boost development in rural areas. “The government faces very serious pressure from farmers,” says Wang.

    Preoccupied with their own rural problems, Chinese and Indian policymakers have little sympathy for the U.S. and other countries that subsidize farmers. The Americans, Europeans, and Japanese are “asking weaker countries to dismantle their own protection measures without doing the same in their own countries,” says Shi Yinhong, a professor of international relations at People’s University in Beijing. “It’s a double standard.”

  • Posted by fatbrick


    Exchange rate is not going to let you make your own car or plane in that manner. China has begun to invest in these high end sectors, but when China achieve anything in those fields, the exchange rate or exchange regime would be totally different from today’s.

    This is the point: High margin sectors allow you to have a flexible exchange rate, where you can withstand any currency shock in that manner. Low end/margin stuffs are the first to suffer because cost/price is so sensitive to the exchange rate. Thus why you see the low end manufacturing is the first to outsource and constantly looking for the next cheap labor source.

  • Posted by bsetser

    fat brick — china has already moved up the value chain; that’s the point. and now that china produces so much stuff for the us and europe, it is more exposed to their economic cycles — that too is a consequence of china’s development path over the past few years. there is no way china can insulate its export sector from this volatility without adding to the problems of the rest of the world (i.e. depreciating and taking market share from the rest of the world). right now the world needs the big surplus countries to grow on the back of domestic demand, not exports –a nd last i checked, exports were still contributing positively to China’s growth.

    this isn’t just about the us. look at vietnam’s problems — it has a current account deficit and a currency under pressure (market pressure) to depreciate. Or think about the impact of 50% y/y growth in China’s exports to india …

  • Posted by Sam

    DC – why should the US remove agricultural subsidies when China has failed to enforce intellectual property rights on movies, software, industrial equipment, books, etc? this has been a problem for years, and one on which the authorities have done little. Moreover, this is not about Microsoft’s bottom line, this is about encouraging organic enterprise, risk-taking, and innovation in the Chinese economy. Instead, you have academic plagiarism, rampant IP rights violations, and lack of contract enforcement. China cannot manufacture forever, at some point mature economies have to migrate up the value-added scale, particularly with a declining population as China has. If property rights, innovation, and contract integrity are not protected, then the institutional framework will never be in place and China will be stuck in an export-led, manufacturing status quo.

    BSetser – do we have any estimate on what the US trade deficit would be with China if US goods and services were actually paid for and not ripped off?

  • Posted by LC

    “And unlike in 2007 – when most emerging Asian economies appreciated by more than China – in 2008 China’s currency has appreciated not just v the dollar but against a host of smaller Asian economies.”

    Interesting point about RMB appreciating against smaller Asian economies’ currencies. The argument few years ago was that as RMB appreciated, other Asian currencies should also appreciate, but clearly that isn’t the case. Korean Won has depreciated around 8% this year and Korean exports are very strong (according to latest FT article).
    So the question is what happened? Why didn’t that particular prediction come true?

  • Posted by AJ

    It looks like the ‘one big exchange jump’ is off the table. That’s too bad, Chinese policy makers seem to be setting up a game of ‘chicken’ with the hot money crowd. But if they have to raise interest rates to fight dollar-peg driven inflation then it sets up a heads the speculators win, tails the Chinses lose situation.

    They also risk killing off their Golden Geese importers.

  • Posted by bsetser

    sam — most estimates find a small impact from IP piracy; under $5b.

    LC: one word, oil. the countries now depreciating all have seen their current accounts swing into deficit.

    i stand by my argument that the slow pace of RMB appreciation was a constraint on further rupee and baht appreciation in the past. but coutries with current accounts that were in deficit or balanced with oil at $65 are in a rather different position now. especially those that saw big increases in their imports from china after they let their currencies appreciate (Tho other things were going on as well)

    AJ — who knows. Stalling and then a jump is an alternative to steady appreciation. but a big jump would likely cause problems for the exporters, so to the extent the slowdown is motivated by those concerns, not concerns aoubt hot money, a jump is off the table.

  • Posted by Dave Chiang

    The US mainstream media echoing the Washington political establishment promotes the Chinese government as a militaristic, fascist regime bent on dominating the world. Since the Washington Consensus seeks global hegemony, it is perceived that the Chinese must also be seeking global hegemony, therefore the Chinese are considered the primary “strategic threat” to US National Security. Despite the supposed war on terrorism, the really big bucks are spent by the Pentagon on building a “containment ring” of military bases around China. The Pentagon has recently redeployed 50% of the US Nuclear Missile force targeting the China PLA military. Additional US Airforce facilities are under construction in Guam for B-1, B-2 Nuclear strike bombers to be forward deployed targeting the Chinese. Two-thirds of the US Navy fleet is scheduled to be redeployed to the Western Pacific theater in coming years.

    In reality, the Chinese government is a status quo regime that will remain preoccupied for decades resolving the internal social-economic problems. The population problems that China’s leadership has to contend with is on a scale that foreigners cannot comprehend. There are literally hundreds of millions of mouths to feed across impoverished rural China. The core fundamental human rights of food, shelter, clothing, and education for every Chinese citizen needs to be resolved first.

    Please leave the Chinese people alone to solve their own problems. That includes you too Brad :-)

  • Posted by Twofish

    If you look at the overall trend of the RMB prices, they involve a gradual upward trend with bumps and wiggles.

    I do think that the trend will continue for one big reason. Oil. Right now, China is heavily subsidizing the price of oil, but that is expensive, and revaluing the RMB is going to make oil cheaper. The fact that China is starting to be much more agricultural protectionist than in the past also suggests that there is going to be a trend toward revaluing the currency.

    Honestly though, I don’t think that revaluing the RMB is going to make the world economic system more “balanced.” It’s just going to move the imbalances away from China and toward the Middle East.

  • Posted by Twofish

    AJ: That’s too bad, Chinese policy makers seem to be setting up a game of ‘chicken’ with the hot money crowd.

    The statistics seem to indicate that China has won that game. Hot money seems to be trending down.

  • Posted by Twofish

    Yeo: almost everyone expects some sort of weakening of the economy after the olympics.

    For the record, I don’t.

  • Posted by Dave Chiang


    The constant carping by the US mainstream mesdia about bootlegged DVD’s and CD’s in China really borders on the ludicrous. Frankly, the problem of pirate DVDs and software has been largely solved in China because legal versions of movies and software are available at only a slight premium to counterfeit stuff. Pirate DVDs are mostly sold by street vendors for 8-9 yuan on wheeled carts in Guangzhou or Beijing. The reason for the wheeled carts is for the street vendor to make a fast escape when police are around. And buyer beware, alot of the DVD’s are defective. Counterfeit stuff is not sold in major shopping malls in China. Legal version of US movies cost 15-20 yuan, and Microsoft Windows cost 100 yuan. For a few yuan more, you get the real stuff with a money back guarantee.

  • Posted by RebelEconomist


    Since you asked about this last month and may not have read my answer then, I will post it again:

    The Chinese pmi reports are from Li and Fung and are available at

  • Posted by don

    Rein Huizer:
    re your post #6. Very nicely put.

  • Posted by bsetser

    rebel — thanks. I looked at them but didn’t have the time to construct a time series with the pmi data and see if it matches well with the export data.

  • Posted by bsetser

    DC — i am happy to allow China space to address its own problems. I have no problems with things like letting cHina guard against a big surge in rice imports.

    But I would insist that China solve its own problems in ways that don’t create problems for the rest of the world. Solving China’s employment problem by holding the RMB down and supporting exports is an example of a policy that spillover in a big way. Building up foreign assets that have to be invested abroad by the government on an unprecedented scale also has obvious spillovers. I would be thrilled if China found ways of addressing its domestic problems that didn’t create problems/ distortions for the rest of the world. That is what I think I advocating when I encourage more reliance on domestic demand …

    If China wants domestic policy space to find its own model for domestic development, that is its right. But if its solution to its domestic problems involves massive fx asset accumulation, a significantly undervalued XR and a large sustained current account surplus, it puts itself in a position where it starts infringing on other countries’ policy space. that doesn’t work …

  • Posted by Twofish

    bsetser: I would be thrilled if China found ways of addressing its domestic problems that didn’t create problems/ distortions for the rest of the world. That is what I think I advocating when I encourage more reliance on domestic demand.

    It’s not clear to me either China or the rest of the world would be better off today had China increased domestic demand circa 2003-2005. It’s also not clear to me how China has “infringed on other countries policy space.” There’s nothing that China has done that prevents the US from raising taxes or increasing interest rates.

    What China has done is to make it difficult for the US politicians to avoid making “hard choices” by providing “easy solutions.” That doesn’t make the world worse off than if domestic demand hand been increased.

    In any event, the impact of China over the last decade is nothing compared to the impact of China over the next two. By boosting demand, whether internal or external, China and India are going to cause the price of raw materials and oil to skyrocket, and this is going to cause a sustained “imbalance” and “distortion” because raw materials happen to be located in some parts of the world rather than in others.

  • Posted by Twofish

    Question: If China is acting on ways that are so detrimental to the United States why doesn’t the United States do something about it? Why is it so damned hard to do things like raise tariffs if China is messing up the US economy as badly as you say it is?

    Answer: If you look at the politics of the situation, it turns out that lots of people think that what China is doing *isn’t* that detrimental to the United States, and there are pretty large segments of the United States that don’t want fight China because they are getting something out of the export boom.

    The US is going to keep taking cheap money as long as China offers it. The question is when and how China will stop offering it.

  • Posted by Dave Chiang

    Oh please Brad.

    The Chinese government isn’t responsible for the global outsourcing activities by US multinationals that create the large US trade deficit. Walmart with its global procurement headquarters in Shenzhen China is more responsible for the US trade deficit than any Chinese Communist party official. IBM, Dell, Hewlett Packard, Apple, GE and every other US multinational corporation imports from China. In fact, IBM even relocated its global technology procurement operations from New York City to Shenzhen China.

    Add to the list, Barack Obama’s brother living in Shenzhen China who is also an large importer to the US. While bashing the Chinese for destroying US jobs, Barack Obama has gone to extraordinary lengths to hide his family’s involvement in the lucrative practice of outsourcing the US manufacturing. It’s more of the same hypocrisy from the Washington Consensus politicos.

    From the London Times,

    Barack Obama’s brother pushes Chinese imports on US

    BARACK Obama’s half-brother has been helping to promote cheap Chinese exports in a low-profile business career while the Democratic senator has been winning worldwide fame in his race for the White House.

    He has gone to extraordinary lengths to avoid public attention and his family links remain unknown to most of his acquaintances in Shenzhen, a border boomtown in southern China where he has lived since 2002.

    Any family connection between the Democratic presidential contender and the flood of Chinese imports that are blamed by many Americans for destroying American jobs could be politically embarrassing.

    Obama has staked out a populist position on trade with China in the US election campaign, calling in December 2007 for a ban on all toys from Chinese factories until safety inspections were put in place.

  • Posted by bsetser

    DC — do you really think that the undervalued RMB plays no role in the “sourcing” decisions of US MNCs?

    2fish — you are right that many in the US have benefited from the undervalued RMB, and there is a “cheap imports” consistuency and a cheap financing constituency. Corporate America doesn’t mind government intervention that helps their bottom line.

    still looking back on the past seven years, i think it is hard to argue that the boom in cheap credit/ over investment in residential real estate has made the majority of Americans substantially better off. the USG has a deficit that is heading to $500b, the united states big banks are close to broke, many homeowners are underwater, and median real wages haven’t gone anywhere.

    and i think you can also argue quite persuasively that much of China hasn’t benefitted as much as might be expected from China’s boom — labor income for example has fallen as a share of China’s GDP. So i don’t think we live in the best of all possible worlds.

    I do tho agree that China’s future impact wil dwarf its past impact. if China’s foreign asset accumulation continues at $800b a year, it will add $3.2 trillion to its foreign portfolio over the next four years — more than it added in the preceding twenty … that kind of foreign asset growth implies cHina will be shaping a lot of other countries policy choices …

  • Posted by Dave Chiang

    Oh please Brad,

    The entire US Economy is on the financial precipice it is now from the lying, cheating, sniveling, cowardly politicos in Washington DC. Of course, the Chinese also have their equilvalent corrupt politicos. The “Shanghai Faction” City government was so corrupt that Chinese President Hu Jintao had to send in China PLA paramilitary police in a raid to arrest the high-level official crooks and local police officers. But at least some top officials get arrested and executed like the former chief head of China’s FDA administration. In Washington, Comrade Hank Paulson can push for an unbelievably corrupt federal bailout legislation for Fannie Mae and Freddie Mac that would essentially reinburse Wall Street investment banks and Hedge Funds for their financial losses at taxpayer expense.

  • Posted by Sam

    3 trillion in reserves is indeed a lot, and many EM experts think the challenge of managing success is just as difficult as managing failure/crises. The proposition that US consumers and government have been faced with is: we can borrow from Beijing at basically the rate of inflation for 10 years, have no currency risk, and invest the proceeds in assets that appreciate 10, 15, 20%. It would be irrational not to do this under that assumption that 1) funding continues to be available (it is, look at the TIC data, Treasury auctions, China’s FX reserve growth, etc) and 2) assets don’t go down. Obviously the second part is problematic now for over leveraged players and many of the weak hands now are teetering precariously, and some (Bear, Northern Rock, Peloton/Sowood, OC-Hummer-driving refi consumer, etc) have rightly blown up. But as long as global GDP and asset prices go up, I want to emphasize that it is irrational not to take this arrangement. Of course capitalism goes up and down and the most levered / bad business model / etc will go bust when the tide goes out. But in the end, this “carry” trade is entirely rational. Of course much of it has been consumed, Iraq, etc so it’s not all investment, but from an investment standpoint it makes rational sense, whether it’s taking cheap money to invest in real estate, EM stocks, private equity, import/export business (Obama’s brother), etc. The game has stopped for now, but it won’t forever.

    As far as the consumption, which the US has done WAY too much of the last 20 years and conversely China saved too much, I want to remind people of the following:

    If you owe the bank 1 million dollars that’s your problem. If you owe the bank 1 billion dollars, that’s the bank’s problem.

  • Posted by RebelEconomist

    Having read DC’s Bloomberg link, I realise that my impression that Li and Fung compile the Chinese PMI was incorrect. They don’t; they merely provide an accessible report for foreigners at the address I gave above. In fact, the Chinese PMI is compiled by the China Federation of Logistics and Purchasing (CFLP) with the National Bureau of Statistics. My apologies for overlooking the efforts of those organisations.

  • Posted by Twofish

    bsetser: still looking back on the past seven years, i think it is hard to argue that the boom in cheap credit/ over investment in residential real estate has made the majority of Americans substantially better off. the USG has a deficit that is heading to $500b, the united states big banks are close to broke, many homeowners are underwater, and median real wages haven’t gone anywhere.

    But that’s not the correct comparison. The comparison is what would have happened had China not provided financing, and I’d argue that the US would have a deficit approaching $500 billion, stagnant real wages, *and* high interest rates which would have created negative growth and high unemployment.

    I’m not arguing that the US economy is in good shape. I’m arguing that without the influx of cash from China that it would be in much, much worse shape than it is. The reason the US economy is in such bad shape has to do with the $1 trillion that has been used to fund the war in Iraq. Without Chinese money, that war would have ended up hurting people a lot more than it did.

    Without the war, the government would have borrowed far less and you wouldn’t have seen the dollar drop as sharply as it has.

    bsetser: labor income for example has fallen as a share of China’s GDP. So i don’t think we live in the best of all possible worlds.

    Then again a lot of that GDP has gone into infrastructure which would pay off once the population ages.

    bsetser: I do tho agree that China’s future impact wil dwarf its past impact. if China’s foreign asset accumulation continues at $800b a year, it will add $3.2 trillion to its foreign portfolio over the next four years — more than it added in the preceding twenty.

    I really don’t think this is happening, since I don’t think that China is going to be willing or able to continue to fund the United States over the next four years in the way that it has in the past.

    The place where I think China is going to make a huge impact is resource usage. Once you have 300 million people in China with cars, and maybe another 300 million in India, we are going to long for the days when oil was “only” $150/barrel, and the changes in the world that will occur as 3 billion people start trying to live like Americans is going to be interesting to watch, and the stresses and strains on the world economy are going to far more massive than anything we have seen in the last 10 years.

    In particular, once people start looking for oil and other raw materials, then mineral rich countries are going to be running current account surpluses that will make anything that China has had look positively puny.

    I can see how stimulating demand will get the Chinese economy back into “balance” but I do not see how this is going to work for Russia and Saudi Arabia.

  • Posted by Twofish

    DC: Any family connection between the Democratic presidential contender and the flood of Chinese imports that are blamed by many Americans for destroying American jobs could be politically embarrassing.

    Not necessarily. All other things being equal, it makes me much more likely to vote for Obama. On the other hand, I’m sure that if you look at McCain’s family, you’ll find that he probably has deeps links with China that are as deep as Obama’s.

    I doubt that there is a single person in the US political class that doesn’t have deep links to Chinese business, but then again fair is fair since I doubt that there is a single person in China’s political class that doesn’t have deep links to US business.

  • Posted by aim

    DC – You said: “Any further rise in the value of the Chinese yuan will lead to a significant loss of global competitiveness that is highly detrimental to the economic interests of Chinese working class.”

    So then you must believe that the chinese people cannot successfully compete without the crutch of a de-valued yuan? They cannot compete on a level playing field?

  • Posted by koteli

    Dear Brad,

    I’m quite obsessive, but I don’t think the world ends in China.

    Marco Polo brought us pasta from China, among other things (Silk!, Silk!, Silk!, Silk! for the money people), and that it was a good thing, ask to american italians!

    But don’t you think that it’s enough?

    Speak about US of A corporations seeking profit in China.

    Are they less dangerous than SWFs from abroad?

    As you know, I’m in Europe.

    I don’t buy too many things, but I went to buy some cloth for one of nephews’ wedding: I choose a couple of things at 30% the original value or 70% discount, now in summer bargains.

    The trousers are Made in Cape Verde and the shirt is made in Tunisia. Both courtesy of Massimo Dutti.

    What we are talking about, Brad?

    Cheap labour, or US of A corporations seeking for profit caused imbalances?

    The world doesn’t end in China.


    PS: Wide is Kansas!

  • Posted by guest

    Much ado about nothing, for a seasoned international traveler.

    * The U.S. will pick up at least 15 personal data entities about someone coming from Europe through the flight operator. It will keep that data for at least 15 years and may distribute it to who knows who.

    Who cares? As long as border guards aren’t shaking you down after your arrival?!
    If you’re really freaked out about it, rent a cheap flat for a month before you
    depart, get your driver’s license reissued to that address, buy the ticket with
    that license, then what’ve they got? Your name and hair and eye color. Big deal.

    * The traveler will have to fill out some some stupid from on a U.S. government website at least three days prior to boarding the plane.

    Got news for you, all air travelers have had to fill out stupid forms, for years.

    * On arrival the guest’s laptop may be seized without cause and without knowing when, if ever, it will be given back. Data on a mobile phone or memory sticks may get copied.

    Take cheap laptop, wipe the harddrive and reinstall OS etc, wear USB RAM stick.
    Buy a cheap PPM cellphone, download your contacts onto RAM stick, then buy cell minutes at any US grocery store. If you’re being followed, toss the cell phone,
    and buy another one at any video store. Sheesh. Like International Citizen 101.

    * Also on arrival fingerprints will be taken and checked against some mysterious database. Soon the same procedure will apply when the traveler leaves the country.

    Boo hoo. Put a cast iron skillet on the stove, dry. When it starts to just smoke,
    tap your finger pads on the surface until they’re polished down to the grooves.
    If you’re too bawk bawk to smear your pads, dig in the dirt for a half hour or so
    at some park before you hit the airport. They can’t arrest you for having dirty fingerprint impressions. Nothing says you need a manicure first to enter the US.

    * The newest idea in Congress is to charge some $25 entrance fee to the U.S. Guess what for … to promote foreign tourism to the U.S.

    Every damn country has entrance and exit charges, that you often don’t find out about until the inspection official hisses his gap tooth demand for baaksheesh.
    Carry cash, buy a cigar before you check through, it annoys the hell outta them.

    Just whatever you do, when you make it through, don’t try to go back for something!!

  • Posted by Rien Huizer


    Your 300 million cars in China may well be so energy efficient that, together with the 600 million mandarory new cars, fitted with frugal diesels and possibly hybrids, plus of course the effect to the International Environmental Police weeding out people unfit to pollute at any rate (only people polluting usefully will be considered deserving to produce any net CO2), mankind may just be able to keep the various “remember the 20th Century themeparks” open and the 1.5 billion people left on this planet in some form of mobility. But I doubt that the 1.2 billion cars in the plateau stage of Mankind’s sunset period will include many Indian cars. They missed the Bus. Although, Indians would make great International Police officers, of course.

    Just t show how unlikely a linear extrapolation of our extraordinary times would be. I am optimistic that the resource scarcity will be much less, principally s a result of stagnation. But where? Not in China you seem to believe. Why not?

  • Posted by Judy Yeo

    2fish (#26)

    wow, would that be optimism? Sure the markets and property are nothing to scream about now, but do you think they are anywhere near realistic levels such that there won’t be that tendency for a larger scale correction?

  • Posted by Judy Yeo

    Rien (sorry, forgot you preferred to be called this rather than your last nomer?)

    resource scarcity will be much less

    really? demand may fluctuate but as long as supply stays at a certain level, scarcity is not likely to reverse anytime soon. unless you’re expecting a malthusian event , which is awful even as mere contemplation.

    nice double negatives?

  • Posted by Rich


    China is not a free and open trade regime. It is a mature economy now. Why must all auto ventures have a chinese partner at this point?

    Why should the EU and US just open their populace to a loss of jobs when there are more FDI restrictions in China then elsewhere?

    In 2000 I would have agreed with you. Not in 2008.

    If China listens to the will of the people, most assuredly the US hasn’t (about jobs) and the EU is not going to tolerate this much longer. The bells of protectionism are ringing loudly in the EU. It is a direct result of a ONE WAY STREET vis a vis China.

    I know you will tell me to butt out just like you told Brad. China is most fortunate that the Western industry heads moved jobs to China ahead of any rational long term plan for short term gain. The bright Chinese people can now add value and deserve to play in the world. There are limits and we are about to hit them.

    So.. same rules should apply to all. Open markets or not need be reciprocal.

    Enjoy the Olympics and I personally welcome China’s entry as a full member of the world.
    Exports will not continue her proud future without serious repercussions.

  • Posted by Rien Huizer


    First name is Rien ( =French for “nothing”). Thanks for picking this up. My “optimism” is of course not entirely sincere. One the one hand I do not think that current many current so-called trends are more that random movements around some much less scarey trend, but caused by rather complex mechanisms fitted with trapdoors and springboard, which could move the process towards a higher or lower trend suddenly. Probably economy and ecology share similar mechanisms. We tend to reduce those to things that we can conceptualize and then measure, but much remains to be learned.
    The one thing that I cannot imagine is indeed that we will have gigantic migrations without violence. Amigration being for instance moving the Americans out of a position of privilege (say having cars) and the Indians into it without a fair bit of violence in the process. I simply do not assume that lifting the stock of material possessions per capita to include China and India as current western levels (possessions that also consume finite resources or cause gigantic social costs (CO2 itf that is indeed harmful) is going to happen. One reason for spending time on blogs like this one is to hear and if neccesary provoke informal opinions of intelligent -preferably younger- people s to how they feel that we all should deal with the inevitable realloction problems, if and when the pie does not grow fast enough for everyone who counts (i.e. the people living in countries that can influence events and have some form of political expression at their disposal to influence their local dignitaries, people falling outside that category do not count, until their status changes) and things become too hard for markets.

  • Posted by Rien Huizer


    Apologies again for poor typing. gentlemen should not try to handle tools. Hope it comes across nevertheless.

  • Posted by Rien Huizer


    Finally some useful comments. I had no idea what things would cost if I would have the courage to aid and abet intellectual property thieves but thanks to you I now know that even in China buying official stuff makes a lot of sense. Any suggestions for where to go on my next visit to Tongchuan Shi ?

  • Posted by Twofish

    Rich: Why should the EU and US just open their populace to a loss of jobs when there are more FDI restrictions in China then elsewhere?

    Because at least in the US the argument that “China is costing Americans their jobs” doesn’t work everywhere. It works in Michigan and North Carolina. It doesn’t work in California, Texas, and New York where you have entire industries (shipping, semiconductors, computer hardware/software, and finance) that are dependent on Chinese trade.

    I don’t know about the politics of Europe, but lot of the “loud calls for protectionism” strike me as politicans that are making loud noises that they are planning on doing something so that they don’t have to do it now.

    Rich: If China listens to the will of the people, most assuredly the US hasn’t (about jobs) and the EU is not going to tolerate this much longer.

    The problem here is that people are saying different things. If there was a national consensus to limit trade with China or cut the trade deficit, it would have happened years ago. There isn’t since there are just too many people in the United States making too much money with Chinese trade, and that is just political reality.

  • Posted by Twofish

    bsetser: Corporate America doesn’t mind government intervention that helps their bottom line.

    Nobody objects too strongly to government intervention that helps their bottom line. That includes Corporate American, farmers, average people, everyone. If they get a benefit from the government, then government intervention is wonderful.

    When people complain about corruption and welfare, it’s usually because they aren’t getting any of it.

  • Posted by Twofish

    Huizer: But I doubt that the 1.2 billion cars in the plateau stage of Mankind’s sunset period will include many Indian cars. They missed the Bus.

    China has missed eight or nine busses over the list four hundred years, so whatever economic mistakes India is making can be corrected. I’m fascinated with the Indian economy, because it is so different than the Chinese economy. Just about everything that India does is completely different from what China does, yet it all manages to more or less work at generating economic growth. Some with Vietnam, there are a lot of differences between Vietnamese economic policy and Chinese economic policy, but it seems to be working in Vietnam.

    Also changing technology doesn’t eliminate the problem of resource use. Suppose China were to use electric cars. Great!!! Less demand for oil. More demand for coal, copper, and battery metals. Right now, I’d be very interested in the economy of Zambia.

    Suppose China were to create 100 million hyper-efficient cars. They may use a lot less resources, but they are going to be using something.

  • Posted by Rien Huizer


    One does not have be neo-malthusian to accept that the relatively sudden increase in the production of energy consuming hardware for personal transport where previously there was no such need, to the tune that the world’s stock of cars would double in say 10 years would meet a few resource and environmental constraints, if all these cars were as heavy, thirsty and dirty as the world’s current average one (it does not have to be, there is a relatively roomy 4 seat Audi diesel hatchback that seems to get 75 miles p g, Three of those would consume as much as my SUV and use about half the weight in materials).

    Possibly this could lead to a more or less 19th century type of competition for raw materials etc that would be difficult to handle for the existing international institutional features (assuming no one would be willing to invest in something that could do multilateral rationing…

    My idea of India missing the Bus is based on the fact that there is just not enough infrastructure for rapid expansion of car ownership like China’s right now. India has severe domestic political obstacles to any form of infrastructure development. So, it would take quite while for India to reach the rapid growth phase in the logistics curve where China is currenly. Before it gets there, we may well be living in a different sort of international environment, with China an increasingly important stakeholder in a new form of stratification.

  • Posted by Rien Huizer


    For some reason I missed the significance of the alleged new POBC department in your post. Must be because I was also listening (after having walked way from the video) to a Turandot performance apparently recorded in the People’s Palace Museum in Beijing. Bombast drowns out meaning.
    I think that it simply means that the POBC has reached a level of enlightenment previously reserved for the Monetary authority of Singapore. This is becoming serious: 1.3 billion people mimicking the policies of my beloved and exemplary City State. If you want to manage the exchange rate (for what? control inflation? make sure buddy’s factory stays competitive? suggesting to laobaixing that gvt is looking after his interests?) you cannot, according to standard undergraduate theory, manage interest rates independently, and, if you are Spore with a wide open economy, why would you want to have a monetary policy anyway. But what if you have an economy open only selectively and it is a bit large? Good Grief. Looks like the End is nigh.

  • Posted by Twofish

    Huizer: My idea of India missing the Bus is based on the fact that there is just not enough infrastructure for rapid expansion of car ownership like China’s right now.

    China built its first freeways in 1989. It’s not that difficult to create a massive network of highways, if that is what you want to do, and whether India should have massive networks is something that I’d be interested in hearing Indian perspectives on.

    Huizer: India has severe domestic political obstacles to any form of infrastructure development.

    So did China, but the political obstacles were worked around. The big political obstacle is funding, but on the other side, infrastructure creates lots and lots of jobs.

    Something that I find amusing is that one of the few cases in which the Communist Party leadership got their hand slapped on was the fuel tax. The State Council and Politburo wanted to create a US style trust fund system in which highways would be funded by a gas tax, and the National People’s Congress said no since any gas tax could hurt farmers. The way that freeways in China are funded is by state owned corporations which charge tolls.

    Huizer: So, it would take quite while for India to reach the rapid growth phase in the logistics curve where China is currenly.

    India has been having sustained growth rates of 8-9% over the last decade. It has a much different economic and political model which is why no one seems to notice. One question that I find interesting is “why do we always seem to be talking about China so often when India is growing so quickly?”

  • Posted by Rien Huizer


    Why do we always seem to be talking about China ..?

    Good question. Personally, I think that GDP is far from perfect as a comparison tool, both level and delta. Much of my knowledge of both countries is anecdotal, but if I had to make a bet, it would not be on India, and I guess that goes for many people.

    India has very poor initial conditions (it would take at least 1000 words to elucidate this) and only perhaps 200 million people who are highly socialized, artciculate and educated. Many of those work in (developmentally) wasteful professions like law, religion, arts and finance. If you take Japan from the Meiji period till say 1985 as the gold standard for industrialization (and please include that remarkable performance in Manchuria as well, anyone with an open mind, even a Chinese, should, remember Deng’s cat), India’s in vestment of elite human capital is completely wrong for a low-GDP country. In addition, many of its best minds work abroad. The higher levels of society sem to have a vester interest in keeping the rest poor (the scourge of Latin America). In the Japanese playbook the state beats the law often and the state listens to successful entrepreneurs but not to industry lobbyists. They kept the farmers (who grow food) on the land until needed them, had them socialized (women too), gve them tough military service and you would balance the urban and rural population and their diets in such a way that the rural produces a surplus and that the cities do not waste it.
    You keep this up for say 50 years and then you can start worrying of what to do next..You may need different people for he country you’ve created..

    I am not so sure that China can do something similar (or invent an even better mouse trap), but I strongly doubt India can do it. Both countries have one handicap: human noise in the industrialization process. In fact, some people call that democracy.

  • Posted by bigdog


    Michigan and North Carolina have been fairly aggressive in seeking foreign investment.

    Don’t stereotype them just because one is the home of car manufacturing and another a state where historically the textile industry was big. There is a lot more to the economies of both states – North Carolina is the home to probably the best and highest concentration of biotech and medical research in the Research Triangle. And other southern states – SC, Alabama, etc have been very prominent in soliciting foreign manufacturing investment.

    California is home to some of the most right-wing, anti China neo cons and Texas is – well Texas.

    The US is too diverse to make these type of assumptions, but of course the politicians do and pander to the voters (and unions) that way.

  • Posted by ThreeFish

    I cannot understand why Dave Chiang seeks to defend China so aggressively at every turn. The downturn in manufacturing in southern China, such as it is, is the direct result of a conscious Chinese government decision to try to reduce reliance on high-polluting, low-margin exports. The screams of pain that he says the central government is now taking notice of come from the bosses – who want to keep paying the workers as little as possible – and not the ‘working class’ he talks about. The workers actually want the higher wages which their bosses – and the multinationals (yes, the horrible foreigners) are complaining about. Earlier, Dave said the foreigners pushing RMB appreciation on China didn’t care about Chinese workers. Let me ask him – did Zhu Rongji et al care about Chinese workers when they put tens of thousands of them out of work with state sector reform in the late nineties? Yes, they did, but they also understood without a policy change, the jobs would have disappeared anyway. The same applies now – the current model is not sustainable and the central government in Beijing recognises that, even if Dave does not.
    And finally, on IPR, Dave is wildly out of touch, probably because he doesn’t live in China. Very few of the great range of DVDs on sale in China can be bought legally in China, because the Culture Ministry does not approve them for release. This is a FACT. China has solved nothing in this area, except to give people like me incredibly cheap and plentiful DVDs. It is great for us consumers…………

  • Posted by Rien Huizer


    Excellent comments!

  • Posted by Twofish

    bigdog: Michigan and North Carolina have been fairly aggressive in seeking foreign investment.

    Great!!!! So it looks like “China is costing US jobs” doesn’t even work there.

    bigdog: The US is too diverse to make these type of assumptions, but of course the politicians do and pander to the voters (and unions) that way.

    Which was my point.

    Also in the end a politician has to vote one way or another, and you can tell a lot about how a politician is going to vote by looking at their district. They are usually under competing pressures which means that the way they vote can be surprising and not easily categorized.

    One other thing, politicians often intentionally seem a lot more stupid than they actually are. About anything that involves re-election, they tend to be very sharp.

    At the end of the day you add together all of the votes and see if you have enough support for what you want to do, and there isn’t support for large scale tariffs on China.

  • Posted by Twofish

    Threefish: I cannot understand why Dave Chiang seeks to defend China so aggressively at every turn.

    I find it odd how he defines “defending China.” I tend to “defend China aggressively at every turn” in the sense of supporting policies which I think are in the Chinese national interest. The difficulty here is defining “national interest” and once you have defined it then figuring out what policies advance it.

    One thing that is the case about China is that there is no one definition of “national interest” and hardly a consensus in China about what policies support the national interest. This is what happens when you have a large nation.

    Threefish: Very few of the great range of DVDs on sale in China can be bought legally in China, because the Culture Ministry does not approve them for release.

    But this points out how specific industry concerns are. The IPR and politics issues with entertainment DVD’s are not the same as the IPR issues with industrial software or consumer software, which means what happens with DVD’s may have nothing to do with what happens with oil production software.

    IPR protection isn’t a huge issue for the people I know that sell industrial software since the high margins come with training and support, and the software is useless without those.

  • Posted by ThreeFish

    Twofish, I agree with you. There are many diverse opinions in China. Many policymakers here do NOT support caving into the demands of the manufacturers on RMB appreciation. Such a policy is not a western plot. The ritual abuse regularly handed out by Dave on behalf of ‘China’ does not in fact reflect the diversity of Chinese views. He only speak for himself.
    Re piracy, I was referring to DVDs. Of course, it is a complex issue and not one I am trying to address at length here.

  • Posted by Judy Yeo


    aaah, finally a male who admits that the legend of men and tools are really just that, legend. Calling in the experts do not neuter the male, at least not to sensible psyches :p

    but seriously, ill feeling perhaps but then again, you would expect that of certain elements in every society whatever the colour of their necks but violence over consumerism and wealth in a world tearing itself apart over other vicious issues, would that really happen, are the various sides in this violence you picture really for war or violence, war tends to make people poorer unless one happens to be in the defence business. Sigh and one would have thought bthe luke skywalker/darth vader obsession went away with the star wars prequel.

    incidentally, just how young are you? why the focus on younger people? was just thinking about some of the views expressed by some of the regular bloggers really doubt if they fit in your category of young?!