Friday, September 27, 2013


The story of rag to rioches is known by every one but the story of the safety of securities andf urges for that is less known. China is the biggest holder of US treasuries is an old fact but now the same china is very much conservative in its dealing with US economy. Concerned over the safety of its US bonds worth USD 1.2 trillion, Beijing, has  asked Washington to take decisive steps to end the debt crisis and protect its investments. China, which has foreign exchange reserves of over USD 3.2 trillion, the largest in the world, invested about USD 1.2 trillion in US bonds and currency, making it Washington s largest creditor.

 Well the story doesn’t end here. It just the beginning of the US grand childrens to be the future servent of China. Since an economy like US has no plans for its revival busy at the back of cookinh numbers of employment and spooking only political war fare with other economies for the sake of its own security is bound get an future of an servant life. In my reseach US is not creating much genius and is now fully dependent on low wage cheap labour of different nations. US ctizens have been exploited so much that they cannot adjust to the same pay pacakage of the overseas citizens. They have been taught ove rthe several years that borrow and leave extravagently. Now one fine morning the decade old startegy of living life cannot be changed. The social shutdown is less in the air of the US streets and more on the media page.
 On the other side chinese economy becoming an super power within a very short span of time has lead to an massive asset bubble across the globe through its investments. It sounds pretty much aggressive when an economy does investments duirng an global turmoil but when the investments chases too many assets with less option then that’s becomes a threat. China would be the next destination of bubble to get burst. China government’s $586 billion stimulus package entered the economy post-2008 created the mess which is quite atomic in nature to get blown off.

The above graph suggests that the level of investment as a percentage of GDP relative to consumption as a percentage of GDP may have become excessive. In particular, the resurgence in China’s investment post-2008 crisis, bringing investment to post-1982 highs as a percentage of GDP, is cause for concern. Plus, fixed investment continues to grow as a percentage of GDP, while consumption as a percentage of GDP continues to wane. While growth in fixed investment has been responsible for the rapid growth in China’s economy, rising from around $1 trillion in the year 2000 to over $8 trillion today, the continuation of such high levels of investment relative to slowing consumption is disconcerting. This is the place where the entire drag down of the world economy from Asian perspective is going to happen. I prefer to stay away from wild guess but it can be like Japan economy which is struggling decade old for its growth. Inventory-to-revenue ratios have reached record highs in the first quarter of 2013—rising from nearly 70% in 2007 to nearly 140% today—essentially doubling. Low cost productivity have already created unemployment accross the globe now the same products would be consumed by China is an hard call. From export  to Consumption driven economy might be an dream but hard to be  realistic.    Skeptical consumption pattern is a the ground rule of every economy after the 2008 debacle.

Chinese investments in other economies are mainly for the natural resources and food for power/electricty. Singapore state investment giant Temasek and Chinese oil group Sinopec aim to snap up a multi-billion-euro stake in Spain's Gas Natural. They are interested in buying its 4.7-billion-euro ($6.4 billion) stake in Gas Natural. Well this is just a small piece of the their shopping bag. Please read my last article to find the larger space of their shopping items


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