| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

Asia Economy Last Updated: Nov 3, 2010 - 5:51:34 AM


China holds only 9% of US sovereign debt contrary to misperceptions; China's export surge is also subject to misinterpretation
By Michael Hennigan, Founder and Editor of Finfacts
Nov 2, 2010 - 4:40:22 AM

Email this article
 Printer friendly page
Li Changchun (r), a member of the Standing Committee of the Political Bureau of the Central Committee of the Communist Party of China, attends a breakfast meeting with Irish Enterprise, Trade and Innovation Minister Batt O'Keeffe in Dublin, Sept. 27, 2010.

China holds only 9% of US sovereign debt contrary to misperceptions; China's export surge is also subject to misinterpretation

China holds only 9% of US sovereign debt contrary to misperceptions and scare scenarios that the US risks being beholden to the reemerging Asian giant (see CNBC video clip below). The story of the exports surge is also not what it may seem to those who go with the flow of conventional wisdom.

Apparent facts become the received wisdom through repetition despite not being  true and commentators repeat them because it's easier than verifying them.

The Japanese are big savers, which they are not. The data will show they were in 1990 but that is history. Germans are often referred to as saver outliers in Europe but why did Italy survive the financial crisis relatively unscathed, despite its high public debt? 

It is also common to use a foreign comparison to support an argument. The facts can be true but not relevant. More common is to use selective facts or examples as a domestic audience would not likely know what is true or not.

In August, China held $868.4bn worth of US Treasury securities, down from $936.5bn in August 2009.

The total outstanding US public debt was $13,668,825,497,341.36 at the time of writing this article.

China also holds about $376.3bn of the bonds issued by agencies guaranteed by United States government, such as federal mortgage guarantors Fannie Mae and Freddie Mac, which account for almost 7% of the total bonds issued by the mortgage firms.

In early September, the European Chamber of Commerce said in a report that China relies on compulsory certification schemes to regulate its large and growing market. Such practice unduly restricts access to the Chinese market for European companies in a range of key industries such as the automotive, auto component, IT and telecommunication equipment, healthcare equipment, electro-technical and power transmission industries. In the service sector, licensing requirements continue to exclude foreign companies from entire sectors. Nearly ten years after China’s WTO accession, and despite clear commitments to increase competition in service sectors, European companies are still denied fair market access to several of them, the chamber said.

Days later, Chinese vice president Xi Jinping, who is expected to become president in 2012, said in a speech in Xiamen in southeast China's Fujian Province, that the sustained and fast development the Xiamen special economic zone has achieved since its establishment 30 years before, proves that developing an open economy is the right thing to do and illustrates the importance of attracting foreign investment and conducting mutually beneficial cooperation.

Xi said in 2009, China attracted a total of US$90bn in foreign investment, ranking it the second in the world. In the first half of this year, China approved 12,000 new foreign-invested enterprises with a paid-in investment of US$51.4bn, up by 19% and 21% year-on-year respectively. Also in 2009, domestic investors from China made direct investment in 111 countries and regions, and China's outward direct investment in non-financial sectors totaled US$17.8bn, which represents a 44% year-on-year increase.

He said by July 2010, a total of 698,000 foreign-invested enterprises had been established in China, registering a paid-in capital of US$1.05trn. These enterprises account for 22% of tax revenues, 28% of added industrial value, 55% of foreign trade, 50% of technology imports and some 45m jobs.

Discussing the risks of borrowing from China, with Tom Schatz, Citzens Against Government Waste, and Keith Boykin, The Daily Voice:

Exports account for over 40% of GDP (gross domestic product) in China and Germany; 12% in the US and 18% in Japan.

However, in common with Ireland, China has a dual trading system with foreign enterprises responsible for more than half its exports and this rises to over 80% in the consumer electronics area. 

For example it has been estimated that if China's Apple IPod's export value is converted to value added by removing its export content, only 2.6% of the IPod's gross export value remains.

The domestic content of trade processing exports has been estimated at 18.1% compared with for traditional products such as textiles and shoes at 88.7%.

The share of processing exports in China's total exports has risen from 30% to 53% in the period 1988-2006.

If only the domestic share of its content is included in China's exports, its export/GDP ratio fall to 21% (pdf.)

Related Articles
Related Articles


© Copyright 2010 by Finfacts.com

Top of Page

Asia Economy
Latest Headlines
IMF defers renminbi reserve decision; Devaluations losing firepower
Japan's trade deficit widens and GDP falls despite 33% yen devaluation
China's exports slide in July; Fx reserves dip $42.5bn in month
Chinese manufacturing PMI falls for 5th straight month in July; Japan at 5-month high
China's overseas investments to surge; Ireland got €99m of €46bn invested in EU in 2000-2014
China to overtake US economy in 2026; Income per capita will be 50% of US in 2050
Manufacturing activity in China and Japan contracted in June
China's manufacturing contracted for third straight month in May; Japan in slight rise
Asia accounts for 40% of global output, two-thirds of global growth
China's exports unexpectedly fell in April 2015 after March dip
China's growth in 2015 at slowest since early 2009
China's 2015 foreign trade continues to slide
Singapore remains world’s top location for business on 50th anniversary of independence
China's manufacturing activity fell to a 11-month low in March
China in surprise rate cut to boost sagging economy
Chinese Lunar New Year: Year of the Wood Goat begins this week
China’s manufacturing shrunk in January; Regional rise except Indonesia
Profits of Chinese industrial businesses plunged in 2014
China's growth in 2014 fell to a 24-year low
Services activity in China, Japan and India in moderate rises in December
China’s manufacturing industry remains competitive despite rising wages
China revises 2013 GDP up 3.4% to 56.5% of US economy size
China's manufacturing contracts in December; Japan's grows
China's imports slide in November; Emerging markets slow
Manufacturing PMI stalled in China in November; Fell in Korea, Indonesia , grew in India
China's manufacturing output contracted in November; Japan's accelerated
Ireland not among top 67 destinations for Chinese outbound FDI in 2014
Japan fell into recession in third quarter of 2014
Services slowed in China, contracted in Japan and stagnated in India in October
Manufacturing in South Korea/ Indonesia contracted in October; India in slight rise
Two Chinese manufacturing reports show trading near stagnation levels
Bank of Japan raises money printing target; Spending and wages plunge
China's manufacturing stagnates, Japan in moderate growth
China’s economy in third quarter grew at slowest pace in five years
Chinese exports jump in September; "Sadness will return soon"
World Bank cuts growth forecasts for developing East Asia including China
Japanese business confidence slightly improves; Manufacturing sector weak
Developing Asia remains fastest-growing region in world in 2014
Chinese manufacturing PMI rose slightly in September
Japan reports 26th straight monthly trade deficit; Public debt tops ¥1,000tn