China's achilles heel

Oil and the cost of transport.

A thought provoking article from the Telegraph (Via Yves Smith).




Oil price shock means China is at risk of blowing up

By Ambrose Evans-Pritchard
Last Updated: 2:00am BST 08/07/2008

Have your say Read comments

The great oil shock of 2008 is bad enough for us. It poses a mortal threat to the whole economic strategy of emerging Asia.

Oil price shock means China is at risk of blowing up
An oil rig in China's Bohai Sea

The manufacturing revolution of China and her satellites has been built on cheap transport over the past decade. At a stroke, the trade model looks obsolete.

No surprise that Shanghai's bourse is down 56pc since October, one of the world's most spectacular bear markets in half a century.


The bad news is that this adds inflationary pressures. China was a net exporter of cheap goods, and that is gone, the products are now expensive. The good news it that some of those jobs are coming back onshore in US and EU.

Comments

Roy Russo said…
So where will we get our lead-painted toys from now?!?!
Tom said…
I guess it becomes harder to export our inflation. Yes, this will create some jobs but I see job creation also happening from alternative energy and perhaps even some more domestic drilling. I think China is the one that will end up on the short of the stick perhaps? Now if we can just get our monetary policy in order and start jacking up interest rates to save the dollar.
Anonymous said…
"So where will we get our lead-painted toys from now?!?!"

Through LoopFuse? :-) ....
Roy Russo said…
"Through LoopFuse?"

Ahem... this is a post on China, so its then "WoopFoos"
adt43wt342 said…
Look who is trying to remain on topic for once :)

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