If I owe you a dollar you own me. You can go up and down main street telling my friends what a deadbeat I am.
if I owe you a million dollars I own you.
Balance of trade deficit means China is constantly accumulating more dollars. And they come back at us by buying up critical raw materials like rare earths or lithium or solar panels, etc. Not to mention big loans to countries like Sri Lanka and in Africa. China continues to spread its influence economically.
If China ever decides to stop accepting US dollars as payment, then what? Or if they dump them on the market for sale to others?
China benefits from sales to the US. A stable economy is in their best interest. China supports business as usual in spite of tensions on some issues.
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The tensions are in the press. The US and China will go about their respective business.
China does not loan any foreign countries money for projects. Instead they insist Chinese bankers lend the money. We give goods to other countries. There is a big difference.
There are hints in Africa particularly the Congo of nationalizing mines and other resources. We saw that with oil after we came to dominate it. Countries forced us out and took their property back. Not competing with China to lock up the resources means we did not waste our money this time. We are in the midst of forcing China out of the Congo.
China has much bigger internal problems than anything we can do to them short of a nuclear war. I am not worried about China.
When we give USD for Chinese products in econ that is recognized as an interest free loan. Devalued dollars will be spent eventually over the decades to come with us for our goods. The public does not see it that way. That is the problem with the public v the trained money managers. The money managers and economists do not fully inform the public. Many in the public would then be armed to mess things up out of ignorance. The public is forever trying to mess up as it is.
There are profits in the American public messing up. Who’da thunk it?
Seriously this is why taking a Public Finance Class to discuss economics is important.
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Buyer and seller set the sale terms, not the US govt.
Dumping US $$ sounds great !! I will give them one gram of dirt for every metric ton of US $$ (cash currency, of course). Dirt they can use. But not apparently US $$. So, it is a fair exchange.
Meanwhile Missouri state legislature is considering laws to regulate foreign companies buying up farm land. This after China bought Smithfield. Farm land here is up to $15000/acre. Full time farmer wants 2000 acres. 3 sq miles. Worth $30MM. You have to inherit. And its tempting to sell out and live off of trust fund money.
Corporate and foreign buyers buying land drives up prices threatening the family farm. A very sensitive subject in rural areas.
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I have no idea why the Smithfield deal was ever okayed. Never should have been. But it goes to honesty. I know where that stops and starts.
Pork is popular in China. China wanted access to Smithfield technology to improve quality. Pork is a good market for American grain. Hog farms are smelly. People object to all the manure. Midwestern corn fits right in. But I think most hog farms are in the Carolinas. Its the Farmland div of Smithfield in Missouri. They are apparently expanding hog farms here.
But of course family farms object. And in Missouri they have lots of voting power.
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In China pork is 85% of their meat intake.
The Chinese were facing swine flu and a shortage of pork. I get that. Old news. Why we allowed this sale to go through was probably corruption.
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The family farm is in Missouri. 17800 pigs run through the facility every 8 weeks. They are all destined for China. Their feed is cracked locally and shipped in by truck multiple times per week. Their manure is aged and spread on the 1200 acres surrounding the 8 buildings.
China doesn’t own the buildings, they own the pigs and provide the feed and water per contract. Trucks come in/ trucks go out - all day, every day.
Land locally does not cost more than $3300/ac unless is prime tillable. There is no corn grown on the premises, only milo, wheat, soybeans and lespedeza.
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That’s because the buyer of the land was a Chinese company, the Fufeng Group, based in Shandong, China, and the property is just about 20 minutes down the road from Grand Forks Air Force Base — home to some of the nation’s most sensitive military drone technology.
The base is also the home of a new space networking center, which a North Dakota senator said handles “the backbone of all U.S. military communications across the globe”…
Both the Democratic chairman and the Republican ranking member of the Senate Intelligence Committee told CNBC they are opposed to the project.
DB2
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We should mention that Missouri north of the Missouri river has a large expanse of prairie (known as the Grand Parois) stretching down from Iowa. Excellent farm land but Missouri tends to be hilly making it less suited to mechanized farming. Great in spots, not in others. South of Missouri river tends to be rocky is more mining and recreation like Lake of the Ozarks and Tom Saulk Mountain, Meramec Caverns, etc.
Missouri is one of the leading cattle states. Livestock is a long standing tradition here.
In the OPEC days there were stories of Saudis buying of Missouri woodlands, selling timber, and converting to pasture land for cattle. Don’t know how big it was but foreign buyers is not new.
Hard woods in Missouri forests go into barrel staves for bourbon.
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