Saturday, July 23, 2011

"canada is in trade surplus and does not need china to fund its debt." -- oh really?

A Canadian court is handing a Chinese national back to his government, which any thinking person realizes is a death sentence. "Lai's lawyer, David Matas, said Lai's brother and his accountant both died in prison of unexplained causes and argued to Shore on Thursday that the same fate could await Lai."

Some idiot wrote in the comments: "robby and arthur show ignorance of canada.canada is in trade surplus and does not need china to fund its debt. on the other hand china desperately needs canadas oil ,timber, and natural resources."

A trade surplus. Really? This is news to the rest of the world: "Canada reported a trade deficit equivalent to 814 Million CAD in May of 2011." This was a narrowing after April's widening.

But perhaps this person is talking only about trade between China and Canada. Oops, he's still a moron: Canada imports almost four times (in CND terms) from China as it exports to China. Ordinarily I'd just call the person "misinformed," but I call him an outright moron for calling others wrong, when data establishing the truth is so easily obtained.

And what does China do with the surplus? Well, that's in part how China gets Canadian dollars to acquire operations in Canada that develop natural resources. China doesn't prop up national debt for Canada like it does for the U.S. While the Canadian dollar for quite some time now has been over a 1:1 ratio with the U.S. dollar, China would prefer to continue with U.S. Treasuries -- at the very least to help preserve the value of all they've bought so far.

There's nothing wrong with China buying up Canadian holdings, though. Canadians by and large buy the same inexpensive China-made plastic goods, electronics, textiles, etc., that Americans do. And in return, they sell to China natural resources (or the rights to develop the natural resources) that Canadians wouldn't be able to use themselves.

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