China Says to America "It's On Like Donkey Kong!"
Uh Oh Here we go
Buy China’ policy set to raise tensions
By Jamil Anderlini in Beijing...
China has introduced an explicit “Buy Chinese” policy as part of its
economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world.
In an edict released jointly by nine government departments,
Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.
“From a domestic political perspective this makes some sense because local governments do tend to favour foreign products in some categories,” Dong Tao, chief China economist for Credit Suisse, said. “But given how important free trade is for China’s economy this is not the right message for them to be sending to the rest of the world right now.”
Just a few months ago Beijing was raging against a .... proposed “Buy American” clause included in the US economic rescue package
“We are puzzled by this discussion, especially since most European companies operating in China are locally incorporated and have not benefited directly from the government’s stimulus package,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China. “
Requiring government procurement to favour Chinese goods and services certainly won’t help to address China’s trade surplus of €170bn...” "
Tasty's commentary- Oh (EXPLETIVE DELETED) ! Smoot-Hawley Trade War II: The Staring Contest has made it past the opening credits! Oh Joerg you silly silly man, the Chinese never had any intention of addressing that surplus. Why would they? Would you if you were them? I don't think I would. Think the Chinese gov't isn't serious about this?
Here's exhibit A that's possibly to the contrary
http://www.chinadaily.com.cn/china/2009-06/16/content_8288001.htm "For the first time in 11 months China's holdings of US Treasury bonds fell - to $763.5 billion in April, US government data showed. The figure, down from March's $767.9 billion, was the lowest since June 2008. They do not include US Treasury bond holding in Hong Kong Special Administrative Region, which climbed to $80.9 billion in April from $78.9 billion the previous month. The decline in the China holding " seems to stem from net selling of Treasury bills," said Chirag Mirani of Barclays Capital Research." "
Hahaha hoooo well that's not good, when you consider how much supply we are putting out there right now. I didn't think China was that stupid to pick a fight like this while the US still has this much punch left in the tank. I thought they'd wait a couple years when we are weaker and more dependent on them holding our debt (if the current course holds true) It appears to me that the US and China are heading for a showdown
Think Geithner knew this when he went to China two weeks ago? I bet he did.I bet it's why he went at all.
While I doubt even China is suicidal enough to dump all their US holdings at once and one datapoint does not a trend make, this bears watching. If this continues and/or accelerates our dollars may not be worth very much.
Oh and guess what Brazil, India and China and Russia met today today
without the US to discuss a new int'l reserve currency... http://themessthatgreenspanmade.blogspot.com/2009/06/decline-in-treasury-holdings-by-chinese.html
That should be fun.I think they are planning a secret birthday party for the US (shhhh our birthday is coming up next month!) don't you? What you don't think that's what they are doing?
I don't know about you but all this makes me more than a little nervous. It's far from being a full blown problem at this point, but the seeds are starting to germinate.
Personally I was expecting a corrective small move up in the dollar in the short term but when geopolitical chicanery on this scale gets involved I'm not sure Economics, fundamentals and TA really matter as much.