Your Questions About How To Invest In China

Maria asks…

Why does China buying USA bonds therefore peg the yuan to dollar exchange rate as low and stabilise the ER ?

I am not an economist. If the USA runs up debt serviced by bonds, at present China buys the debt as bonds, gilts etc. This sounds ominous. This encourages US debt and keeps bond yields low, as they can easily find a buyer at present ? Surely it can all go horribly wrong if China, amongst others, stop buying ? My real question is why do they buy up US debt? What is the advantage for China in terms of dollar yuan exchange rates ?

John answers:

The advantage for China is that it keeps exports high, keeping the economy growing and the people happy.
They have a lot of US dollars from the export business, so they invest in US dollar assets. They keep thier reserves of US dollars high to keep thier currency peg in place.
If China stopped buying what would happen? I suspect that the US dollar would loose value, and imports to the US decrease, exports increase, a bit inflationary for the US, and might push up interest rates a bit, increasing the savings rate at home, would not be a bad thing. I doubt it would spell any sort of catastrophy.

Daniel asks…

Why African Americans doesn’t donate money to Africa & boost development like overseas Chinese do?

Many 3rd and 4th generation Chinese donated large amount of money and invested back in China when it was a developing country, why doesn’t African Americans do the same?

John answers:

It’s not that easy. Overseas Chinese dont donate money to China, they set up businesses to exploit their own people. Second, even if African americans donate money to Africa for the purpose of boosting development, it will be no match to the imf shock therapy imposed onto African countries. Virtually the entire African continent is controlled by Africom, an imperialist group headed by the u.s.. Western countries do not want to boost developement in Africa, and no amount of donations can change that. The reason why the west does not want development in Africa is because the west wants to keep Africa poor so western multinational corporations can extract natural resources to build weapons of mass destruction so that it can continue extracting wealth and natural resources from most of the world with the use of force

Ruth asks…

What is WOFE in China? Is WOFE the best form of corporation when venturing real estate business in China?

What to lookout for when venturing into China? How do you inject capital and repatriate profit if you are an International investors?

John answers:

Don’t expect return of your capital if you are investing in China. REMEMBER it is a communist country and they have a habit and proven treact record of nationalizing foreign investments. As for getting your profits out ouf the country good luck. Remember, American investment in China is small. We simply agree to buy their cheap goods. Why would they want to give you an ownership in their stste owed property (the whole country).

Helen asks…

What has been the impact on China of the accession to the WTO?

We know that China has benfitted greatly but any facts and figures about this? Trend of Exports? FDI? How has accession to the wto effected these factor and if anyone has a relavant article please post it.

John answers:

WTO benefits China’s customers like Europe and the U.S. As it establish free trade issues like prohibiting government subsides and tax breaks for export products and provides leverage for quality and safety. The only benefit for China is the impression of legitimizing their trade activities. They have no shortage of customers as long as they have money to purchase which is not the case now.

China will now focus on it’s internal market, making the WTO redundant and make them less inclined to help our situation. Given the same situation would you invest in your country or someone else’s? Will you fix-up your house or your neighbors?

Sandra asks…

Do you define irony as blaming someone for failing to stop something you yourself do?

Romney attacks Obama for failing to stop China . . . but Bain invested in China while Romney ran it and still profits from it, as does Romney.

John answers:

It’s one thing to invest a small portion of your interest

It’s another thing entirely to sign over our sovereignty.

It’s like because I have a beer with my dinner a couple times a week, you’d say I can’t talk about the guy who is homeless because he spends his whole disability check at the liquor store.

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