monty wrote:
I have heard that a lot of these Chinese companies moved their production to Vietnam. Not sure how many, maybe the rest after this latest round. So we get our cheap bikes, China gets all the profits, and Vietnam gets badly need jobs..Winners all around!!!
I largely agree with this though there is a caveat: domestic employment is the core of the Chinese economic model. If you don't play ball with the Communist Party's goals... you might die mysteriously or outright get executed without a trial. Crazy stat:
between 2003 and 2011 a Chinese Billionaire died every 40 days. Quote:
Mortality rate notwithstanding, what's more disturbing is how these mega wealthy souls met their demise. According to China Daily, 15 were murdered, 17 committed suicide, seven died from accidents and 19 died from illness. Oh, yes, and 14 were executed. (Welcome to China.)
So, yes, right now certain Chinese companies are setting up manufacturing operations in foreign countries but, IMO, there's a limit to this from the perspective of China's political system. For the time being it's acceptable because China is facing a dollar funding crunch so whatever mechanism gets dollars into the country is acceptable (the on-shore dollar denominated funding market is $900 billion, China's liquid dollar denominated FX reserves are ~$1trillion so you can see that the buffer is discomfortingly small especially given how... ahem... "loose" lending standards are in China.) However, once China eventually devalues the Renminbi the impetus to bring in dollars will become secondary to employment considerations again.