China moves from Dollars into metals

Discussion in 'Current Affairs, News and Analysis' started by armchair_jihad, Apr 17, 2009.

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  1. In full

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5160120/A-Copper-Standard-for-the-worlds-currency-system.html

    From here in China I can confirm that the metals sector has its foot on the accelator, major plants that were worried about surviving the downturn a few months ago, are now order assured for the next few years at least. None of the output can be explained by commercial orders - its all down to Beijing tip toeing away from the Dollar, Euro etc.

    Gold will be the last thing they buy in bulk and when they do its all over for the world as we have known it.
     
  2. What will change for us?
     
  3. Yes, but it's hardly a new thing: since global trade began the country with the biggest pot of money has been able to influence global trends in their favour, it's just up until now we in the UK have been beneficiaries of it as either we or the country we have a "special relationship" with have had that pot of money. Now, a huge country we're at best suspicious of has that power and we can do nothing but go where we're taken as we have neither the financial power nor diplomatic influence to counter it.
     
  4. From memory, the Chinese Investment Corporation is only the 4th largest sovereign wealth fund and controls about a quarter of the total assets the Abu Dhabi one does. Just goes to show what you can achieve with brains and vision.

     
  5. Ok so again what impact will it have on OUR day to day life? Will we end up a third world country struggling to feed ourselves? Or will life just carry on as normal with China being the major superpower?
     
  6. If people start storing things like copper and gold as a reserve, instead of paper money like pounds and dollars, it will likely mean that each pound or dollar buys less copper or gold.

    This is the worst kind of inflation, because stuff in the shops gets more expensive, without your wages going up in step.

    Normally inflation where your wages go up in step is bad enough, because it discourages people from saving money and really hurts people living on fixed incomes like pensioners.
     
  7. We and our allies won't be able to dictate the terms of international trade, for one thing. We in the west set up the international financial system and we set it up in the way we wanted business to be conducted. This gave us a pretty huge advantage in global terms over countries which weren't set up to do things in out way. Now somebody else has learned the rules and it looks like they're becoming a pretty handy player.

    Look forward to the day when it's not our ball to take away and go home with if we don't like how the run of play is going.
     
  8. If it contributes anything to the discussion China is buying into the Australian mining industry hand over fist. There's also a story in the media that they have 1000 spies in Australia. Whether our Mandarin speaking Prime Minister is one of them is hard to determine as he's rarely visited Australia since he was elected.

    The way I see it is that every billion dollars China invests in a company like Rio Tinto means a bigger share of the company for Beijing. Which means a bigger share of the profits for the Chinese. Which means less of the company generated wealth flowing through to the traditional shareholders in the West, especial in 'old money' financial centres like London.
     
  9. Many, many things, here's a quote from Frank Feild;

    in full

    http://www.spectator.co.uk/the-magazine/the-week/3540376/politics.thtml

    China, Japan and the Arabs used to be the ones lending, now Japan is bust and has the printing presses on, the Arabs are knifed in the guts by the collapse of the oil price and their investments in 'sure bets' like wall street, only the Chinese have the cash but they are buying metals to use over the next 50 -100 years, THEY ARE NOT GOING TO BUY OUR DEBT.

    So as carrots said the rules our forefathers created that allowed us to tilt the financial game in our favour are now fading fast, the game will NO LONGER FUND OUR BULLSH1T! We have spent all of possible earnings of our kids and grandkids, on utter sh1te and all on the never never.

    So carlbcfc, what you have now is the once in a life time experience of living through the 'gilded age', everything you think now as being usual and common place you will look back on as a luxury. A wonderful memory for your declining years.

    Good luck.

    PS I really do blame the 60's generation; think your going to be able to retire and not pay the bill for your vandalism you hippy cnuts? Like fcuk, you and yours will live like hunted lice.
     
  10. They have been doing this for years. When I got out of the mob I worked in spring engineering for 10 years. Many a time I have had problems sourcing raw materials from my normal suppliers for making springs from Nickel alloy and high tensile carbon steels just beause the Chinese had bought every scrap we had on the shelf at the time.

    They have even tried to sell me back British processed steels (Inconel X750, BS5216 M5's and BS2056 302's normally) for crazy inflated prices!

    Basically if they buy your materials they hope to stop you from making your products and sell you their crap instead - fortunately for me the stuff we used to make needed true skilled tradesmen to actually meet the tolerances we worked too (small specialist runs for F1, Indy, GT and WRC etc) and not just any old crap of a CNC machine in China.
     
  11. How long before they can produce stuff that's as good as anything any Western company can produce? They were developing their skills base at a phenomenal rate, even before we had all these skilled western craftsmen looking for work - any work.
     
  12. Cheers for the info, I ask as im 26 and still learning about the world every day and have never experienced a shite economy before. Now i realize why all those toys i had in the 80's were made in China.

    I ask another silly question..........what is the solution for us...if any?

    My head is a sponge, i like to soak up what is happening in our world.
     
  13. They won't be able to do it before issues of rising cost (and demographics - they only have a birthrate of 1.77 children per wpman being born) catch up with them. The former is a bigger problem than most think because the high-end stuff is skills, as oppose to labour, intensive. The rule of thumb is that the more complex and expensive something is, the less the labour cost matters. This is why a haircut in China might be 10% of the cost of one in the West, but a plasma TV is likely to be 60% of the cost. In the end prices converge, starting with the most expensive and complex things and finishing with the simplist. If China wants to get as many out of poverty as possible, it will focus on employment that will provide for the most people possible and conserve its comparative advantage for as long as possible. The high-end products are important for it to move into, but they'll be entering a crowded market that won't provide much for the people.
     
  14. If you view things in the round, this is pretty much of a reassertion of a basic rule of human societies: numbers count.

    600 years ago, China was the global superpower, economically, militarily and intellectually - the reasons why are many and various, but boil down to having such a ****ing enormous number of people all working away under a single government, producing stuff and thinking of how to produce more stuff and do it better.

    400 years ago, we thought up some pretty nifty ways of doing things that gave us in the west massive technological and social advantages over the large populations of the east. For a comparatively brief period of time we were able to assert control over them by using our technology and industrial backup, and exploiting their divisions as in India.

    Now, the technological gap has been closed and the old rule of 'quantity counts when all else is equal' dictates that we're once again an insignificant piss-wet rock off the edge of a divided continent. Swings and roundabouts. If you want a solution, the only realistic one is to hang around for another few centuries and see what happens. With any luck, as a species we'll have wised up considerably.
     
  15. Can you just confirm the country origins of these metal sector companies, I ask as I know there is a substantial amount of German companies are out there, in particular a friend works for one in the metal sector. Is this a re-occuring theme?