[A]lthough the [U.S.] can't match China's gazelle-like 9.5% clip...

It's easy enough to grow 10% a year when you start at a per-capita GDP of $ 1,000. Likewise, a baby grows much faster than a college student, but nobody finds that remarkable.

Further, the Chinese economy is growing at a 10% annual rate largely because of the U.S., both directly and indirectly.

Directly, because the U.S. trade deficit with China is around $ 120 billion a year, which is 1.5% - 2% of China's GDP.

Indirectly, because the U.S. also has trade deficits with Taiwan and Japan, and both of those nations are heavily investing in Chinese industrial capacity.

Thus, after adding up direct transactions, indirect transactions, and the multiplying domestic effects of the foreign inflow, the American economy can be credited for between 40% and 50% of the growth in the Chinese economy.

Mike - you made my point better than I would have.

The US economy is doing very well by almost all measures yet recent polls show the public thinks the economy stinks. Either the polls are wrong or the MSM is doing a decent job of making people believe things are worse than they actually are (like Iraq).

Be careful what you say OJ. What happens when things can't get better?

and this is what enrages lonbud, amazing.

Michael:

Your points are well taken. They assume, however, that Chinese economic figures are reliable. I don't share that assumption.

Fred: There was a story somewhere or other in the last year that if you added up all the Chinese regional economic reports, their economy grew by something approaching 20%. This number was so ludicrous that Beijing scaled it down to a more believable number for the national report...

Can it be said that China is our manufacturing sector now? Instead of outsourcing directly as we do with India, we let China figure out how to make products we want as cheaply as possible and then pay them such a ridiculous low price for their high quality goods, it sometimes boggles the mind.

You men may not take notice, but many of the clothes made in China are and have been for a long time far better made than those made elsewhere including the U.S. In fact, some of their products are so well made, they rival the fine quality formerly seen only in the high end 5th Avenue stores.

So far, they're happy and we're happy with that arrangement, but how long can it last before Chinese workers demand higher wages and the prices go way up or the quality goes way down?

Let's enjoy while it lasts.

b:

I think I may have included that in a comment here. The Beijing regime would announce, in advance of provincial reporting, the national 'average' GDP growth (say 8%). Lo and behold, when the provinces reported, not a one was under 8%. Moreover, several months ago, it was reported (I forget the source) that Chinese foreign investment had increased by 20%. If your economy is growing by 9.5%, who in their right mind invests elsewhere, assuming the 9.5% is reliable.

erp:

I was in China for two weeks last year with 48 eighth-graders (and survived to tell about it). There were a number of parents along with lots of free time (the kids lived with host families and attended school in Beijing). The women went wild shopping, not simply because the prices for clothes and accessories were so ridiculously low, but that the quality was so high (I had to take their word for it).

Fred Jacobsen, b:

Excellent point.

Looking at how they handled SARS, fictional economic and demographic data are a given.
My bad.

erp:

If anything's going to upset the applecart, it'll be political. (Or a war, a von Clausewitz-ian extension of politics).

Chinese workers are paid, in wages and benefits, the equivalent of 64¢ an hour, on average; that could easily triple or quadruple before American consumers noticed much of a price increase per item of Chinese goods.

Plus, they have maybe 100 million unemployed people, which keeps a bit of a lid on rapid wage increases.

Currency fluctuations are probably the biggest risk to cheap Chinese stuff, now that they've kinda-sorta de-linked the yuan and the U.S. dollar.

In the long run though, say 2030, if things go just right for China, the U.S. will be buying uber-cheap stuff from Africans.
(If things also go just right for Africa).

Michael, no doubt you're right about prices, but it's the quality that will suffer. It's easy to produce cheap junk.

I don't know how to compare things for you boys. Perhaps the difference between a fine, well made watch and the kind sold by hawkers on Times Square. Imagine finding it dangling on a display in your local Wal-Mart's with a price tag of under 20 bucks and not just one, but dozens all of equal quality.

When a woman buys a garment at a store like Target and notices that the seams are finished (that means they're turned under so the frayed end of the cloth is tucked in and sewn down and different parts are fitted perfectly and the button holes aren't unraveling and the buttons are actually where they are supposed to be to close properly, it comes as a shock, especially when said shirt is selling for $8.98.

Sorry, erp, not impressed w/China zippers, they broke.