China

[BeggarSo]

I know your comparisons are off 5 to 700 in a shared apartment? That is having a roommate where I live 1 bedroom apartment 500 square feet are $2000.00 Per month and that's not counting insurance and utilities nor 1st last and deposit.

I have also heard this from fellow employees in Colarado as well.

The cost of living in the United States is very high.

[BornIn1500]

A dozen eggs in China averages about 12 yuan, which converts to roughly $1.70. In the U.S., the average price is about $1.90. So the real-world prices are in the same ballpark.

But $1.90 is the FOB (Free on Board) rate. The retail price for us grocery shoppers is higher. I'm currently paying $2.70 per dozen for the store brand large white eggs.

[Naperville]

I know your comparisons are off 5 to 700 in a shared apartment? That is having a roommate where I live 1 bedroom apartment 500 square feet are $2000.00 Per month and that's not counting insurance and utilities nor 1st last and deposit.

I have also heard this from fellow employees in Colarado as well.

The cost of living in the United States is very high.

I do agree with you, but apartments are very hard to nail down. I am looking in 4 different states and average price for a 2br range from $1000 to $2500. If I were looking in the Bay Area of California, it could be double that. I remember renting a small studio in Foster City, CA (Silicon Valley) for $1100+ in 2002.

It depends on location, age of the building, size of the apartment, and quality of apartment amenities.

[SpyderEdgeForever]

To be honest, I don't think we're having a problem with our makers. I think the biggest problem the world will have is the value of the Yuan, which yesterday was 7/1 to the $. In my opinion, raise the Yuan, let's have an even playing field and do good business, We'll all pay more so now we deal with that new problem in an intelligent manner.

I don't think the Chinese Knifemakers want to take over the world. That's for the "elites".

I've said that the opposite of war isn't peace, it's trade. Makes for a better World and we solve real problems?

sal

I love your insights on this, sal, and that of others here.

I will say this, as I have said before, and it is from my heart. You and your team at Spyderco won me over as a loyal customer and friend for life.

Trying to keep on topic here: I am 100 percent a believer in capitalism, though I believe it needs humane compassion as a balance, as you and others have ethically demonstrated by charity and customer care in action.

I am also interested in the social psychology of individuals and groups. Especially how that ties to culture and manufacturing.

I have confidence in your company and quality control so that, all politics aside, when I purchase even the China made knives, such as Byrds and the upcoming Button Up which I plan to get, I know I am purchasing a winning product.

If I may ask, how would you assure a Spyderco customer who were to ask to you, ""Sir, I have read alarming news articles about some manufactured products coming out of China that contained toxic finishes, paints, and materials mixed in with the product. Do you have methods of testing the knives produced there to filter out any such items?"

[sal]

Hi Fixall,

With all due respect,

The cost of living in China would not change if the Yuan was 10/1 or 1/1. It's the export market that is affected by the value. I can buy a completed knife in China for less than I pay for the steel in the US.

While driving through China, one can see multiples of large apartment complexes with tall buildings, all empty because the Chinese folks can't afford them.

sal

[Bolster]

I'm not sure this WSJ graphic adds anything of significance to this thread's conversation or not, but it's interesting...in a "we're all doomed" sort of way...

[RustyIron]

The cost of living in China would not change if the Yuan was 10/1 or 1/1. It's the export market that is affected by the value. I can buy a completed knife in China for less than I pay for the steel in the US.

I'm going to have to side with @fixall on this. Or at least I understand what he's saying and concur. I'm not really sure I get what you're saying.

The People's Bank of China fixes the parity rate to stabilize the value of the Chinese yuan. It's not in their interest to allow wild fluctuations in value. This makes sense. How does it matter if seven yuan is equal to one U.S. dollar? I pay about twelve bucks for a six pack of beer. It's not like the Chinese can come over and buy the beer for twelve yuan. It doesn't work that way. It's going to cost them about 84 yuan. The yuan and the dollar are just two different units of measure. We can do the conversion. . I'm 71 inches tall. King Charles is 178 centimeters tall. He's not taller than me.

[RustyIron]

Walter Williams was both bright and eloquent. He understood complicated economic stuff had an ability to explain it in ways that regular folks could understand. I used to read his weekly column, back when newspapers were a thing. Sadly, Williams fell off the perch about five years ago. Luckily, just about everything he ever wrote can be found on the interwebs. Here's a bit that he wrote about twenty years go. Clearly, people have been wringing their hands over so-called trade deficits for quite some time.

=-=-=-=-=-=-=-=-=-=-=

Walter E. Williams: Flip side of trade deficit bodes well for America

I buy more from my grocer than he buys from me, and I bet it's the same with you and your grocer. That means we have a trade deficit with our grocers. Does our perpetual grocer trade deficit portend doom? If we heeded some pundits and politicians who are talking about our national trade deficit, we might think so. But do we have a trade deficit in the first place? Let's look at it.

Insofar as the grocer example, there are two accounts that I hold. One is my "goods" account, which consists of groceries. The other is my "capital" account, which consists of money. Let's look at what happens when I purchase groceries. Say I purchase $100 worth of groceries. The value of my goods account rises by $100. That rise is matched by an equal $100 decline in my capital account. Adding a plus $100 to a minus $100 yields a perfect trade balance. That transaction, from my grocer's point of view, results in his goods account falling by $100, but when he accepts my cash, his capital account rises by $100, again a trade balance.

The principle here differs not one iota if my grocer was located in another country as opposed to down the street. There'd still be a trade balance when both the goods account and the capital account are considered. Imbalances in goods accounts are all over the place. For example, my grocer buys more from his wholesaler than his wholesaler buys from him. The wholesaler buys more from the manufacturer than the manufacturer buys from him, but when we put capital accounts into the mix, in each case, trade is balanced.

International trade operates under the identical principle. When we as consumers purchase goods from China, and the Chinese don't purchase a like amount of goods from us, it is said that there's a trade deficit. But instead of purchasing goods, the Chinese might purchase corporate stocks, bonds or U.S. Treasury debt instruments. Just as in my grocer example, there is a balance of trade.

The deficit in our nation's goods and services account, sometimes called current account, is matched by a surplus of equal magnitude in our capital account. A large portion of surpluses in our capital account consists of U.S. Treasury debt instruments held by foreigners. As of June 2004, China held nearly $200 billion, Japan over $1 trillion, and Europe combined held over $2 trillion.

Some politicians gripe about all the U.S. debt held by foreigners. Only a politician can have that kind of audacity. Guess who's creating the debt instruments that foreigners hold? If you said it's our profligate Congress, go to the head of the class. If foreigners didn't purchase so much of our debt, we'd be worse off in terms of higher inflation and interest rates. What about the possibility of foreigners dumping our debt? Foreigners aren't stupid. Dumping large amounts of Treasury bonds would drive down their value. Foreigners as well as we would take a hit.

The fact that foreigners are willing to exchange massive amounts of goods in exchange for slips of paper in the forms of currency, stocks and bonds should be a source of pride. It means America, with its wealth, rule of law and the sanctity of contracts, inspires foreigners to hold large amounts of their wealth in U.S. obligations. Their willingness to do so means something else: Trade increases competition. Ultimately it's competition, many producers competing for his dollar, that truly protects the consumer.

What protects producers, at the expense of consumers, are restrictions on competition. The quest to restrict competition is what lies at the heart of the trade deficit demagoguery. When's the last time you heard a consumer complaining about his buying more from a Chinese or Japanese producer than that producer buys from him?

[Naperville]

Hi Fixall,

With all due respect,

The cost of living in China would not change if the Yuan was 10/1 or 1/1. It's the export market that is affected by the value. I can buy a completed knife in China for less than I pay for the steel in the US.

While driving through China, one can see multiples of large apartment complexes with tall buildings, all empty because the Chinese folks can't afford them.

sal

Without getting political and just stating facts.

The reason why China is able to beat The West at Capitalism is because of Central Planning. The CCP uses all of their assets, numbering in the Trillions of US dollars to target an industry and then they are off to the races in every region of China to capture that market.

The same reason led to their current economic crisis with the over-development of housing, making something like 10 million condos when the local market isn't there to buy those units. The CCP allowed banks to make loans to developers and citizens to construct massive amounts of projects all over China, and now they sit empty. The citizens were promised condos, and the developers driven by Central Planning, started and completed many many more projects than they had demand for. Hence the over supply, and the bankruptcies of the builders and banks.

Central Planning is what remains of Communist China, even though China by and large has adopted manufacturing from Capitalists. China is not a true Capitalist society.

GOOGLE SAYS THE FOLLOWING:
During China's housing boom (roughly 2008-2020), tens of millions of units were built, with a massive surge in social / affordable housing (around 70M units 2008-2018) and huge private sector builds, creating an oversupply and leading to millions of unfinished pre-sold homes by developers like Evergrande (800,000+ units), causing buyer protests and a current crisis of vacant properties (65-80 million empty homes) alongside stalled projects.

Scale of Construction (Pre-Crisis Boom):
* Massive Output: China built vast numbers of homes, with projections suggesting enough housing for 3 billion people, leading to huge vacancies.
* Social Housing Drive (2008-2018): Around 70 million public housing units were constructed, including low-rent, affordable, and rehousing facilities, according to CGTN.
* Early 2010s Surge: The government aimed to build 36 million units by 2015, with significant increases in construction starts, notes Wikipedia

[Naperville]

Walter Williams was both bright and eloquent. He understood complicated economic stuff had an ability to explain it in ways that regular folks could understand. I used to read his weekly column, back when newspapers were a thing. Sadly, Williams fell off the perch about five years ago. Luckily, just about everything he ever wrote can be found on the interwebs. Here's a bit that he wrote about twenty years go. Clearly, people have been wringing their hands over so-called trade deficits for quite some time.

=-=-=-=-=-=-=-=-=-=-=

Walter E. Williams: Flip side of trade deficit bodes well for America

I buy more from my grocer than he buys from me, and I bet it's the same with you and your grocer. That means we have a trade deficit with our grocers. Does our perpetual grocer trade deficit portend doom? If we heeded some pundits and politicians who are talking about our national trade deficit, we might think so. But do we have a trade deficit in the first place? Let's look at it.

Insofar as the grocer example, there are two accounts that I hold. One is my "goods" account, which consists of groceries. The other is my "capital" account, which consists of money. Let's look at what happens when I purchase groceries. Say I purchase $100 worth of groceries. The value of my goods account rises by $100. That rise is matched by an equal $100 decline in my capital account. Adding a plus $100 to a minus $100 yields a perfect trade balance. That transaction, from my grocer's point of view, results in his goods account falling by $100, but when he accepts my cash, his capital account rises by $100, again a trade balance.

The principle here differs not one iota if my grocer was located in another country as opposed to down the street. There'd still be a trade balance when both the goods account and the capital account are considered. Imbalances in goods accounts are all over the place. For example, my grocer buys more from his wholesaler than his wholesaler buys from him. The wholesaler buys more from the manufacturer than the manufacturer buys from him, but when we put capital accounts into the mix, in each case, trade is balanced.

International trade operates under the identical principle. When we as consumers purchase goods from China, and the Chinese don't purchase a like amount of goods from us, it is said that there's a trade deficit. But instead of purchasing goods, the Chinese might purchase corporate stocks, bonds or U.S. Treasury debt instruments. Just as in my grocer example, there is a balance of trade.

The deficit in our nation's goods and services account, sometimes called current account, is matched by a surplus of equal magnitude in our capital account. A large portion of surpluses in our capital account consists of U.S. Treasury debt instruments held by foreigners. As of June 2004, China held nearly $200 billion, Japan over $1 trillion, and Europe combined held over $2 trillion.

Some politicians gripe about all the U.S. debt held by foreigners. Only a politician can have that kind of audacity. Guess who's creating the debt instruments that foreigners hold? If you said it's our profligate Congress, go to the head of the class. If foreigners didn't purchase so much of our debt, we'd be worse off in terms of higher inflation and interest rates. What about the possibility of foreigners dumping our debt? Foreigners aren't stupid. Dumping large amounts of Treasury bonds would drive down their value. Foreigners as well as we would take a hit.

The fact that foreigners are willing to exchange massive amounts of goods in exchange for slips of paper in the forms of currency, stocks and bonds should be a source of pride. It means America, with its wealth, rule of law and the sanctity of contracts, inspires foreigners to hold large amounts of their wealth in U.S. obligations. Their willingness to do so means something else: Trade increases competition. Ultimately it's competition, many producers competing for his dollar, that truly protects the consumer.

What protects producers, at the expense of consumers, are restrictions on competition. The quest to restrict competition is what lies at the heart of the trade deficit demagoguery. When's the last time you heard a consumer complaining about his buying more from a Chinese or Japanese producer than that producer buys from him?

I don't have the numbers in front of me so these are not accurate values. This is just an example.

EDITED: I found approximate numbers.

American Citizens hold probably 3 times the amount of debt through the US Central Bank, than all foreign governments, foreign corporations and foreign citizens. The US Central Bank, AKA THE FED, for more than 20 years has been buying US stocks / bonds / US Treasuries to prop up the USA. The USA is bankrupt.

I just Googled this so it also may not be accurate

Total Debt Held by Public: Around $29-30 trillion.
Foreign Holdings: Approximately $9 trillion (about 31%).
Federal Reserve Holdings (WHICH ARE US CITIZEN HOLDINGS): About $4.2 trillion (around 15%