China engages in uneconomic activity. Is their gold purchasing any different?

Bayard1908

China constructs buildings and cities that nobody needs in order to boost their GDP. This is uneconomic activity, aka wealth destruction, when the finished product is worth less than the cost of the inputs.

I don't think China can avoid uneconomic activity, as it necessarily happens in any centrally planned economy. Is China's stockpiling of gold another example of uneconomic activity? If the only thing propping up gold prices is the Chinese bid, what happens if China stops buying or even decides to start selling?

Everyone seems to think that China is so smart and has a master plan to dominate the world with a gold backed yuan; however, they engage in some monumentally dumb uneconomic activity which makes me skeptical of their financial brilliance.

jmski52

There are a lot of variables in play, and gold is only a small part of the total picture. If China succeeds in assimilating enough technology and production capability in the most strategic industries, they could be in a position to dictate the terms of trade or the definition of money. Their influence has been growing in several geographical locales.

It's not as if the Fed is lilly-white.

bronco2078

This is a major problem for china

cohodk

China will amass all the worlds gold and be the Almighty, or so I've been told, LOL.

China stockpiled lots of copper. Look what happened when they stopped buying.

Or maybe China knows its currency has very little trade value and needs to collect gold to offset its own political and demographic risks? After all, peasants have been overthrowing governments for millennia.

Let China have all the gold, and the USA all the food. I wonder then who will set the value of gold?

renman95

Smoe thoughts: China needs resources and will get them without conscience.
They are not dumb.
All of China is not under the Beijing smog cloud. I see this first hand.
China has been active buying huge amounts of gold since 2006.
The symbol of China is a circle with a vertical line through it....meaning it is the center of the Earth.
They feel that China has had a bad 150 years and are anxious to return to leadership...saw this discussed while in country.
I get better service in hotels and restaurants there than in the US. Their motivation and hard work reminds me of the US a few years back.
Their building and innovation is relentless.
They will build a city for a few million capacity with the necessary infrastructure before anyone moves in. I don't know how long that can continue but I see new names of mega-cities popping up a lot.
I get through immigration faster there than in the US (but it still requires a Visa.)
Hong Kong dreads the full turnover to Beijing in 2047. They fear a total loss of freedom (of speech) then.

derryb

Malinvestment is a common theme of all economies that are guided by central bank planning. Spending is their goal. They could care less where the spending occurs, it's not like it's their money being spent. Their job is to keep the money flowing. Money velocity creates jobs and tax revenue.

dpoole

<< <i>Money velocity creates jobs and tax revenue. >>



...and bubbles...

mkman123

A lot of chinese citizens are buying up american property too with cash! I think China has plenty of food......afterall they have a lot of open land, here in the US, so many farms are closing and being built over.