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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 08/19/2008 : 17:56:16
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I Happened to catch part of the news from NBC while flipping through channels.
The meat of the China story-
one third of Chinese factories in Guangdong have shut down
The new business in China, scrap metal sales of materials scavenged from closed factories.
There is no longer an endless supply of young workers from the countryside, they are better informed and they shop around for the best pay, the minimum wage in China, while cheap by American Standards, has doubled in three years.
If China starts to stall out manufacturing wise, will the price of base metals stall out as well?
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
 Posted - 08/19/2008 : 18:59:57
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"the minimum wage in China, while cheap by American Standards, has doubled in three years."
If I read that right, the problem in China is not high unemployment but a lack of workers and possibly foreign competition due to higher Chinese wages. It would be ubber bullish for commodities priced in US dollars if the Chinese got rich enough to raise their standard of living no matter who was making the goods. Who knows, in a few years it might be us working for peanuts to make stuff for the Chinese.
The million dollar question for copper and other commodities remains "will the world economy disconnect from the faltering US economy or will the the rest of the world get drug down the toilet with us?" Place your bets and take your chances...
Edit: this say 20% unemployment in guangdong...
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Edited by - horgad on 08/19/2008 19:03:04 |
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 08/20/2008 : 01:17:09
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There may not be an endless supply of young workers from the countryside, but it is nearly endless. If factories are closing in Guangdong (and that is a city I've not been in yet) then it is likely because they are shifting production to new factories in rural areas instead, mostly to access lower labor costs. I have been in a number of rural areas that are receiving these factories. In addition to cheaper labor there are all kinds of local and state government loans, grants and incentives to set up factories in rural areas now.
A few years ago a chinese worker's dream was a bike and a tv. Today they dream for a car and a vacation. This is indeed driving huge amounts of consumption. Home appliances and cars are really big business - lots of metal there. Construction of buildings is running fast and furious - copper, steel, etc there too. Infrastructure development is in full swing. They are building highways with metal bridges and guardrails everywhere. Underground services are being installed (pipes and electrical). Whole neighborhoods are being torn down to make way for huge apartment blocks.
China is investing heavily into places like Vietnam and Africa - countries with even lower cost labor. However, the days of manufacturing in China are FAR from over. True wages are going up, but many factory workers live in company provided housing that they pay the company rent on. As Horgad correctly stated, it does not matter where the goods are made, increasing consumption in China will drive commodities up and up. |
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 08/20/2008 : 17:49:22
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quote:
Originally posted by legacypac
There may not be an endless supply of young workers from the countryside, but it is nearly endless. If factories are closing in Guangdong (and that is a city I've not been in yet) then it is likely because they are shifting production to new factories in rural areas instead, mostly to access lower labor costs. I have been in a number of rural areas that are receiving these factories. In addition to cheaper labor there are all kinds of local and state government loans, grants and incentives to set up factories in rural areas now.
A few years ago a chinese worker's dream was a bike and a tv. Today they dream for a car and a vacation. This is indeed driving huge amounts of consumption. Home appliances and cars are really big business - lots of metal there. Construction of buildings is running fast and furious - copper, steel, etc there too. Infrastructure development is in full swing. They are building highways with metal bridges and guardrails everywhere. Underground services are being installed (pipes and electrical). Whole neighborhoods are being torn down to make way for huge apartment blocks.
China is investing heavily into places like Vietnam and Africa - countries with even lower cost labor. However, the days of manufacturing in China are FAR from over. True wages are going up, but many factory workers live in company provided housing that they pay the company rent on. As Horgad correctly stated, it does not matter where the goods are made, increasing consumption in China will drive commodities up and up.
Don't forget the one child policy. For the past thirty years, Chinese couples have faced large fines/taxes if they had a second child. This policy has/will roughly half the population of China in a little over one generation. Here is a very good article on the psychological (misspelled, sorry)consequences of that hideous policy:
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The jist of it is that there is a generation of young Chinese, 30 and younger, who are over educated for any of the work available to them.
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"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 08/25/2008 : 13:58:37
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I wonder how this system will end. After a few generations it should drop the population numbers and since they have to many workers vs the amount of jobs, then could be a good thing. The fact that everyone over there is trying to get as many skills as possible is another good thing. I would guess this could be very good long term for them. Business will start trying to hire that talent, and it still seems cheap on a world pricing scale. I wonder what happens when they balance out jobs vs population? Will they remove the policy or just remove it for the successful people?
It could end up with China being a major world power in economic terms. The U.S. population is still in the mind set they are entitled to a job vs they need to get the skills to get the job. I would guess it will end badly for the unskilled.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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The Chinese juggernaut is losing steam
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