Oil price shock means China is at risk of blowing up

[Mugu]

By Ambrose Evans-Pritchard, telegraph.co.uk

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

Asia's intra-trade model is a Ricardian network where goods are shipped in a criss-cross pattern to exploit comparative advantage. Profit margins are wafer-thin.

Products are sent to China for final assembly, then shipped again to Western markets. The snag is obvious. The cost of a 40ft container from Shanghai to Rotterdam has risen threefold since the price of oil exploded.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/07/ccview107.xml">Complete article

[Skittles]

1. I'm trying hard not to bring it out but

:nopity:

[daleo]

2. This is the flaw in globalized trade

Taking advantage of cheap labor requires cheap energy.

[alfredo]

3. Can you say "shakeout"?

[FredStembottom]

4. I pray that this article is right.

To avert coming turmoil in the streets, we need jobs. Good jobs. And designing and building our own stuff once again would do it.
Maybe not just goods by and for Americans - but maybe, regional goods with far less pointless distance to travel in any part of the production and distribution cycles.

And think of the environmental benefit of parking those damn container ships!:thumbsup:

[Fovea]

5. Goodnight Walmart.

Will the last sales associate on foodstamps close the door on the way out?

[spag68]

6. I'm sorry about China

NOT, and as for walmart, they can't go bankrupt soon enough for me.

[aquart]

7. If China needs cash, can they call in our loans?

We are intricately linked with the Chinese economy right now. If they fall, we do not necessarily rise.

[seriousstan]

9. Nationalize, or whatever international F U looks like today.

[CreekDog]

11. if they call in our loans, the dollars we pay China back will be worth a lot less

so China would be screwn more than us.

[ProdigalJunkMail]

13. they cannot 'call' a loan in that manner

the loans are instruments that they have purchased that have a fixed maturity date...you cannot make a call on a loan(s) of this nature...

sP

[XOKCowboy]

8. I'm glad I bought my HP laptop a year ago..

After I ordered a custom laptop I got the shipping confirmation. I clicked on the link and found out that it was shipped from Shanghai. I paid a pretty penny for it but it looks like I actually got a deal for once. In today's economic times you have to take pleasure in all the savings you can.

[Doctor Cynic]

10. They'll have to create more domestic demand for all their stuff then.

BUT as for Wal Mart and Target, it's just :nopity: .

[Jack_DeLeon]

12. Thats great...

I'm glad China's economy is hopefully going to get shutdown big time by this, shipping shit across the world just because you could literally pay their workers pocket change was in no way sustainable.

Hopefully our own manufacturing economy will rebound to fill the needs of our nation and other nations will do the same.