It had to happen.
The Chinese people…One and One Half Billion People ! (21 percent of the world’s population!) are earning more than they ever have in their history.
Using Chinese standards, the Chinese people are also wealthier than they have ever been throughout their five thousand year history.
China is the manufacturing center for the entire planet.
Look at your shirt. Where was it made? Look at any household item in your house. Where was it made?
Within a short period of four decades, most of the factories of the planet have been closed in their original countries and have been re-opened in China with the following changes:
1. Almost no Governmental regulations.
2. No taxes from the Chinese government.
3. An intelligent, hard working work force, almost entirely made up of women. These women do not strike, complain or leave their benches without permission. Most have small families which are dependent on these women to provide the essential necessities of life.
4. This work force has the lowest cost in the entire world. The cost of labor is the largest cost in the manufacture of anything. Price is the most important ingredient in the sale of any product. Products “Made in China” invariably outsell their competitors.
Under these super-favorable conditions, the factory owners of the world were compelled to move their productive facilities to China.
Those factory owners who did not move to China were forced out of business by the competition of the price and quality of the Chinese manufactured goods. Only those factories protected by patents, subsidized by governments or making products impossible to make in China, such as military equipment or large aircraft, remained functioning outside of China.
Of course, there was an immense hoard of accumulated wealth in the rest of the world.
And, there were industries involved in service, agriculture, finance, tourism and scientific research that continued to operate outside of China. Yet, these industries were and are controlled tightly by governmental bureaucrats who work for whomever pays them the most.
NEW WEALTH AND PIGS
The Chinese have a very strong culture in food and cuisine.
Every city in the world has at least one Chinese restaurant. The owners work hard, save hard and send part of their earnings to their close relatives in China. This increases the cash that is flowing, like a thousand rivers, through the Chinese economy.
With this additional cash, the products that the Chinese want the most, started to rise in price. The products that the Chinese want the most are items of food. The Chinese culture in intimately entwined with dining.
There is no scene so enchanting as a large Chinese family eating their dinner; either at home or at one of the incredibly numerous Chinese restaurants throughout the cities of China.
The scene is always the same: Ten or fifteen people, from infants to ancient elders. All seated around a round table, which at its center has a round rotating central board, filled with heaping pots of delicious food.
Everyone takes just little from the various pots and places it on their own plate. Adjoining the personal plate is a small round bowl of white rice. Between gulps of the food from the big pots, the small bowl of rice is raised to the lips and the rice is shoved by the chop sticks into the mouth.
For drinks, tea, with a beautiful orange or golden color, is sipped from a very small cup.
On every face, from the two year old to the eighty-two year old, there are smiles and friendly words and nodding and gesturing and twirling of chop sticks.
The family resembles a concert orchestra playing some lovely piece by Mozart.
THE IMPORTANCE OF FOOD IN CHINA
It astonished me, when I first began to learn Mandarin, that a very common form of greeting a friend was:
“Have you eaten?” Not, “How are you?” If the answer was “No.”, the reply was immediate: “Let’s go and eat.”
These expressions demonstrate the importance of food in Chinese culture.
The meat of the pig has been a major ingredient in Chinese cuisine for thousand of years. This because the pig is an easy animal to grow and harvest.
There are thousands of Chinese recipes which have pork as the major ingredient. Other meats, such as beef, lamb or veal are rarely used. These animals require large areas of land to grow and consequently were unavailable to a population that farmed less than an hectare of land.
Since pork is used so prevalently, it is not surprising that its price has gone up over 86 percent in the last year! The price of pork is a prime indicator of a new force in the Chinese economy…
INFLATION AND THE CHINESE GOVERNMENT
Controlling inflation is a well studied science. The government orders its banks to raise interest rates. By raising interest rates, loans are diminished and people buy less, forcing prices down.
This method rarely works. The Chinese government has raised rates six times in the last year and inflation continues to rise.
Another method, employed only by the Chinese government, is the selling of gold through the banking system. If a saver buys gold, he rarely sells it. The precious metal has an indelible word called: “Security” engraved on its body.
The Chinese think of their future more than any other race. Security in old age is delegated to the youth of the family. But, now, with the advent of only one child per couple, the youth are disappearing. Instead, gold is taking their place.
Here is an interesting brief article from Wealth Daily:
“Word on the street is the Greeks are buying up gold as they are afraid of their banking system. But the Chinese are the ones buying gold by the bucket load.
The Chinese are getting hit hard by inflation. China announced on Saturday that inflation surged to a three-year high of 6.4% in June despite five interest rate hikes since October.
As we know, it is much easier to create inflation than it is to tame it…
The Chinese now have the option of changing their savings accounts into gold at their bank, and they are taking advantage of this convenience.
It is estimated that China will surpass India as the world’s largest gold buyer this fall.
Chinese gold buying has grown in the double digits annually for the past decade, and it is expected to grow 10% to 15% this year.”
China is earning more money from its exports than ever before in its history. China has become the manufacturing center of the world.
The Chinese population whose cultural passion is food, is driving the price of food higher. The same population is driving other prices higher as well.
The Chinese government has introduced the sale of gold by banks as a means of defeating inflation.
With 21 percent of the world’s population buying gold, the price of gold will soon soar above two or three thousand dollars per ounce.