China's Trade With Japan Is Now Bigger Than Japan With USA

Elaine Meinel Supkis

China is copying Japan's fiscal and trade actions and not only does China have a gigantic trade surplus with the USA but now the 'trade' between Japan and China is greater than the trade between the USA and Japan and this is bad news for the Japanese workers because 50% of this trade with China is Japanese rich men building factories in China and then exporting stuff that used to be made in Japan, back to Japan, thus keeping the 'inflation' rate at depression levels.

From Market Watch:

China has nudged the U.S. aside as Japan's largest trading partner for the first time since World War II, a preliminary trade report by the Japanese finance ministry showed Wednesday.
Japan's total trade with China, excluding Hong Kong, rose to 25.43 trillion yen ($214.95 billion) in the fiscal year ending March 31.

Total trade with the U.S. was 25.16 trillion yen for the same period.

The trade ministry data showed Japanese trade with China rose 16.5% on year while trade with the U.S. rose 10.3%.

As I have said before, the 'depression' in Japan is strictly only with the workers there, the upper classes are enjoying a huge boom, one of the biggest on earth. They are getting fabulously rich and the profits that come from the differential between the working class in China and the sales of Japanese goods made in China means big bucks for the industrialists.

For fiscal 2006, Japan's trade surplus widened 16.4% to 9.1 trillion yen, bolstered by brisk exports of cars to the U.S., a weaker yen, and a growing tendency for Japanese companies to shift production to China to take advantage of cheaper labor costs

Thus, the working class in Japan, far from being cared for and coddled by the upper classes, has been cut loose to die in the streets quite literally. So far, it is in the lower levels of manufacturing this is happening. The Japanese workers who toil for Toyota, for example, are still employed...for the time being. They were told, factories had to be build in the USA in order to fool the Americans into allowing free trade that is strictly one-way and this saves their jobs.

But starting in 2004, Toyota has begun to build factories in China. The profit margin, selling Toyotas made in China to the Japanese, is such a temptation, they and other manufacturers are now doing exactly that. The Chinese communists knew this would happen. They planned for it.

Why has the USA hammered ONLY China over the low value of the yuan? I have often written about this and today's news confirms I am right: Japan has bribed our rulers into acting against China's interests and for Japan's interests while not working to stop Japan from dominating us economically. Namely, the Japanese need a strong yuan so they can hammer Chinese industrialists while at the same time, making even bigger profits off of their own importation back of their own products. Namely, they can build Toyotas in China, sell them in Japan and still make a greater profit off of it because the entire process will be in yen, not yuan.

In other words, they want China to ape the stupid USA situation. They need EVERYONE doing business with them to have a stronger currency so they can't trade two ways. Namely, the Chinese right now build Toyotas for export (to the USA!) but they can't ship Chery's to Japan because the yen will be too 'weak' to purchase any foreign goods. Namely, the Chery, which is 'cheap' when traded in Europe or the USA (when they begin to export) but will be 'expensive' if sent to Japan.

This is how the Japanese lock out all trade: a cheap yen means anyone who isn't Japanese, can't make a profit trading with Japan! Bingo! What a scheme.

Alas, the Chinese are doing what the Japanese are doing: sucking up dollars so they don't circulate except as IOUs sent to hedge funds. So the USA has to bellow at China demanding they make their currency strong but is not only silent but cooperates with Japan in making the yen much weaker than even the yuan.

Indeed, the reason the yen is plunging against the weak dollar is because of this war between the Japanese and the Chinese: the Chinese, to placate the USA, raised the value of their currency but they also expected the USA to do this to Japan. But at the latest G7 meetings, the people in charge of global trade conspired with each other to enable Japan to continue this scam because the excess funds raised by raiding USA markets is flowing into banks in Europe and hedge funds in the USA and these clowns and criminals negotiating with each other own these funds or have a stake in these banks and so they want this to continue since it also weakens unions in the USA and Europe and these guys hate unions with a passion.

But China has something Japan doesn't have: lots and lots of well-educated, dynamic, energetic youth who learn fast and work hard and who have a deep hunger to better themselves in all ways and they are the source of power the Chinese communists control and they have a centralized government that is pushing things ahead rapidly and I have this rule of thumb: Dynamic systems that have energetic people always win against systems that oppress the people.

We mix up 'oppression' with 'dynamics'. Namely, Americans think they are free and can organize to do things but this is fake: we are sad sacks who have given up and when factories are shut down, the unions don't go bezerk and attack the homes of the rich industrialists! They don't flood into DC and shut the place down! They hang their heads and shuffle off, seeking ever-worse paying jobs and they watch helplessly as our borders are open to undocumented labor while border guards work hard to keep out various professors or reporters who are leftists and might cause problems.

From CNN:

Cutting back or closing plants that GM was keeping open just to make unprofitable vehicles has been one of the keys to GM shaving its losses, so that its North American auto business nearly broke even by the end of last year.

But the troubled, shrinking automaker that is still GM at home is a contrast to the growing, successful GM overseas.

People tell me GM is doing badly because they make crummy vehicles. But the truth is, their market overseas is growing and it disturbs Toyota and the other Japanese automakers. GM makes a fine profit off of these vehicles for they are opening plants like crazy in China while closing them here. For political reasons, GM doesn't want to import GM cars made in China back to the USA but eventually, they will. Just like NAFTA allows them to tap into Mexico to make cars to sell here or tap into the Canadian national health system to make cars and then ship them here, they will eventually want to do this with China.

I am frankly puzzled by the inaction of our native auto companies vis a vis the Treasury and other officials who are negotiating the death of American auto industries but then I remember who the real enemy is: unions. These American companies which are increasingly owned and controlled by foreigners since we are selling all our native assets, would rather kill off ALL manufacturing in the USA in order to make a profit. The rub here is easy to see: if there are no unions here and if the working class is reduced to Japanese-levels of poverty, mired in perpetual depression, who will buy all this stuff?

And again, one turns to China and its huge potential customer base.

From Forbes:

Chinese automaker Geely Group unveiled a flashy gold version of London’s black taxi cabs at the Shanghai auto show over the weekend, and it hopes that the iconic symbol of the British capital will strike gold when it hits the road in China and the United States.

Geely inked a joint venture agreement with Britain's Manganese Bronze (other-otc: MBZHF - news - people ) in October to produce about 20,000 London cabs a year from 2008 onwards.

The alliance allows Manganese Bronze, which makes about 3,000 vehicles a year in the U.K., to expand sales overseas from a cheaper production base, and it has helped Geely Group upgrade its technology and product quality.

England is moving everything to China. Up until last year, they tried to lure Chinese investors into taking over their car manufacturing but every time they sold these to the Chinese, the Chinese would remove the factories to China, naturally. Now, Britain has given up just like the USA. The unions are rapidly disappearing and the people there have chosen the 'strong currency' game, they get to buy Chinese stuff cheaper and cheaper as the pound shoots up in value.

They are told, this is the road to riches. Ring up increasing debts against future asset values and spend it on Chinese goods. And this works...briefly. For twenty years or so. Once all the value is turned into dross via debt and all the manufacturing jobs vanish, the now wealthy Chinese won't need the British or the American markets for they will be the market, not the other way around.

I keep saying this: China, unlike Japan, has a huge potential customer base. If you take the USA and Japan's population together, it still isn't even one fifth of China's! If you add Europe and England, it is barely one third of China's! Amazing.

The Japanese have saturated their own market and they can't sell to their working classes or this would mean inflation so they have set up a system where it is always gloomy, a depressed native economy that has everyone frantically saving for their last years because there is little government support for them and they get only .5% return on their savings! Bah. Talk about depressing.

From Bloomberg:

Boeing Co., the world's second- largest maker of commercial airplanes, said profit rose 27 percent as it delivered on record orders and bigger rival Airbus SAS struggled with delays.

Net income climbed to $877 million, or $1.13 a share, from $692 million, or 88 cents, a year earlier, beating analysts' estimates. Sales grew 7.7 percent to $15.4 billion, the Chicago- based company said today in a statement sent by PR Newswire.

Boeing is our major value-added export item. The Chinese have made it quite clear, they intend to force Boeing to shift their production to China. Because it is our final bastion in sales, the USA's government has become the sales staff of Boeing and they press all nations with trade surpluses with us to buy these expensive items. So far, so good for Boeing.

But Boeing has unions who did give back benefits after 9/11. They are getting angry about being totally cut out of the revenue stream here and might cause problems. Or maybe not. Since strike breaking is easy as pie today in modern America, unions can't shut down factories anymore. And since unions have chosen to support political parties that hate unions and work to destroy them, they are dying. And they don't pay attention to currency games which are being used to destroy them. This is because the mainstream media hides simple facts from people.

Because the media owners hate unions too and the newspaper guilds are being relentlessly destroyed even as various 'pundits' get paid more and more, the actual reporters are not. And they are beginning to outsource reporting in business news to India and China. Many of the 'news reports' I quote here are now being 'written' elsewhere especially the stuff that appears first thing in the morning over hear.

From the previous Forbes story about Geely, UK:

Yet Geely has been facing tough competition from Chery Automobile, the top Chinese automaker, as well as global auto giants such as Toyota (nyse: TM - news - people ) and General Motors (nyse: GM - news - people ), whose joint venture are dominating Chinese market.

Most of the multinational auto companies participating in the Shanghai auto show have plans to expand in China. General Motors CEO Rick Wagoner said his company would double its production capacity in China by 2010.

Ford China Chairman Cheng Meiwei said that China would become the most important parts sourcing center globally for Ford, according to Xinhua News.

Toyota, Honda (nyse: HMC - news - people ) and Volkswagen are moving more research and development projects into China.

Note how GM is firing here and hiring in China! Note how Ford is moving their parts manufacturing to China. See how Toyota is no longer going to hire young engineers and designers in Japan but only in China. I read in the Japanese news that they hope to ship Japanese engineers to China because it is cheaper to house them there rather than in Japan but that is just so much hot air designed into tricking the Japanese into passively accepting their fates for these positions will be filled by Chinese after only ten years.

From the Nikkei:

Stocks: Fall On Growing Worries Over U.S. Economy

TOKYO (Kyodo)--Tokyo stocks fell Wednesday as investor confidence deteriorated, due partly to weak U.S. economic data that stirred concern about the economic outlook in the country.

OK: today, our own stocks, fed by tons of IOU money flowing out of hedge funds that came from the Bank of Japan processing American imports, is supposed to shoot even higher. Because Amazon.com, an online discount house, is making more money. When Walmart and other discounters make more money by selling obscene volumes of stuff at steep discounts, this is NOT good news if they are the main machine generating stock market values. They are a sign that people are desperately trying to down-price products.

The Japanese recognize this which is why they are gloomy. They know this game is crashing into a wall of serial bankruptcies as American ATM home machines go blank. Even though Japan is triumphing over the USA in the capitalist game, they know the winnings will decline in the future. Note how their own stock markets reflect reality while ours is utterly insane!

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Comments

[teddy]

I had read reports about 2 years ago that Japan was sending China only low end jobs like low tech manufacture and assembly and keeping the value added jobs like design and engineering to maintain their trade surplus with China. So, you are saying that times are a changin.

[blues]

About two years ago, I read that US CPU manufacturers were avoiding sending their very fastest chip technologies to Chinese manufacturers. I guess they think that the Chinese are just not smart enough to keep up with them. Maybe it's just that the US manufacturers are really not smart enough to realize that there are others who can do this stuff too. We got big trouble in River City, and it sure as hell ain't the pool halls.

[Elaine Meinel Supkis]

I used to work at a technical college and 99% of the graduate researchers were from overseas and a significant number were Chinese.

As I keep saying, China was the most sophisticated culture up until 1800. They are not stone age savages. Ditto India! They understand money and numbers. Indeed, much of what passes for modern mathematics and financing was created by India and China.

[teddy]

I read a report a year ago that the US was running a trade deficit with China in value added high tech products. Also, I find it hard to believe that the Japanase Warlords would abandon their people. I feel that they are at "economic war" with the world since their carry trade extends globally even to New Zealand and Australia. When you are at war, the people must live frugally for the nation to win.

[Elaine Meinel Supkis]

Ohhhhhh------um, go look at the history of Japan! When the warlords wanted to shut down trade in the past, they forced the peasants into terrible poverty which then sucked in the samurai themselves!

When Perry showed up, most of the nation was in rags, they were starving in many places and the samurai had to wear turtle shells as helmets, and the peasants wore haystacks as coats in the rain and winter.

I have many photographs from back then, the poverty is horrific. And once the people were allowed some freedom and international trade, the economy revived rapidly and took off! The Japanese are a great people, just like the Chinese. But alas, they are falling into a very old trap today.