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Quick Note: The Far East, Trade Surpluses and the Copper Bowl

February 13, 2012

Today’s Note discusses a Forbes.com story on copper. Apparently China is stockpiling copper.

Copper? Really? As I read this, I had to wonder, “What are they going to do with it…make 50 billion pennies?” (I have no idea if China uses a copper coin, although if they do I’m sure they don’t call it a penny.)

Fortunately, Gordon Chang, author of the article, “China Is Hoarding Copper. Why?,” can explain.

So why are Chinese enterprises buying copper like there’s no tomorrow?  Some maintain Beijing sees shortages of the metal while others think the Chinese are just trying to take advantage of recent price declines.  Then there are those who believe that central bank officials are tired of holding U.S. government paper and would like to get their hands on hard assets.

Yet there is another reason, this one buried in the January trade numbers released Friday by the General Administration of Customs.

[all italics are added by me, to show quotes from the article]

This is an interesting look at the how and why of international economics in today’s political environment. It is definitely worth a look!

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From → Business

6 Comments
  1. Mary Landrieu said, ‘a penny saved is not a penny earned if at the end of the day you still owe a quarter.’

  2. TaxCoach permalink

    So, what’s the real reason? It would be better if the next sentence is included. Thanks.

  3. The world is definitely becoming more complicated. I have given up trying to understand this kind of stuff.

  4. Copper is at a recent low and is used in many building projects. I would interpret it two ways: 1) China is expecting continued growth 2) China expects growth to pick up across the world, thus driving copper prices up in the future. Just my two pennies worth.

  5. Gregory Jackson permalink

    China economy is exploding and using the bulk of all world natural resources. In addition, We as a Nation would default tomorrow if China would call our paper debt. They own our Bond market.

    The Copper angle is a strategic move by China, in my I opinion, (to acquire at depressed prices due largely to our manufacturing down turn and construction industry depression) to corner the U.S. in a very strategic hard commodity asset market, furthering our vulnerability to China.

    This trend began when the NAFTA and GATT proposed U.S. policies went into effect two decades ago against large opposition. Auctioning off and shipping U.S. jobs overseas. We are now reaping the world wind.

    Gregory Jackson

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