>>My logic goes this way, Chris...
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>>Virtually all of the increased demand by China is related to the manufacturing moved to there.
>>That manufacturing pays low low wages, giving them tons of 'room' to pay extra for oil (i.e. for the commodities they need) is the logic.
>
>Who is your "them" in this theory? Are you talking about the Chinese who buy the oil from Russia and other countries? While it is true they are paying low wages, this is a double-edged sword. If all the chinese were paid low wages, they would not have enough money to pay for gas, much less enough to pay for a car.

"Family ecomonics" do not apply in these situations, Chris.
Yes, "them" is 'the Chinese' (government, I would GUESS) who, just like here, buy their oil based on what they NEED to satisfy their manufacturing/population requirements. Here, of course, the government is a bit-player and the companies buy based on what they will sell.
Yes, ALL of the Chinese can be low wage earners and still they can afford higher priced oil. That's what COMMUNISM is all about. China happens to have so many people that labour is just another commodity like oil or copper or...
Now, of course, not "all" Chinese are low wage earners. Let's allow that 1-2% of the population is some party big-wig and has dough and cars, etc. They probably are all millionaires+. That's still a 'market' bigger than the U.S. in terms of spending power.

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>But the biggest point is that your assumption that someone in China has "more room" to pay for more is highly questionable at best. The U.S. as a country has so much more wealth than China. While employess are paid higher wages here than in China, we have some much more money in the first place that your "more room" to pay more theory doesn't work.

You're just not reading withy an open mind, Chris < s >.
The "room" comes from what it COSTS to make an item versus what consumers (ALL outside of China except for the big-wigs) are willing to pay after middle-men etc.
When you pay someone $5 per day and then take at least half of that back for 'room and board' you've got far more 'room' to pay extra for oil compared to a U.S. company with workers earning $20. per hour. When you push those workers 12+ hours per day and you have them living in barracks and eating rice for their 3-squares you have even more money compared to our way of doing things.
Remember, only a paltry fraction of what's made in China gets bought by Chinese, virtually all of it being exported to those who have dough (for now, at least).
Do you see it now?

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>>It is also likely (but pure speculation on my part) that gasoline prices, for car, is subsidized by the state, keeping it lower priced for that purpose. After all it is the "in crowd" who have cars and use them.
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>If in fact gasoline prices are subsidized by the state, that money is coming from somewhere, right? It's not as if that money the Chinese government is spending to subsidize gas prices isn't being pulled from somewhere else in the Chinese economy.

I don't know that they are subsidized, but if they were in Iraq I imagine that, in a Communist country where cars are for the 'in crowd' only, they've taken care of themselves.
The money IS coming from the Chinese government as far a ssubsidies for gas would be concerned. And China has always had lots of 'money'. Especially now, their cash is growing by leaps and bounds. Do you think the companies relocating there do so for free??? They pay fees. They pay bribes. They pay lots of money, and it's worth it for them to do so for the low cost and totally controlled work force they are furnished. I figure for sure that each worker, both directly and indirectly, represents some income for the government.

That Walmart is now #1 on the Forbes 500 list should be a huge concern. This company produces NOTHING and in fact makes most of its profits by forcing manufacturers to move to China to meet the strict price demands imposed by Walmart itself! The more Walmart makes the more jobs that are lost in the U.S. But, before they are lost forever, they of course go through down-sizing and wage rollbacks and tax breaks from municipal/state governments. Only once those have been milked dry do the manufacturers move.
It's a great system and the financial community continues to heap praise on Walmart. Trouble is, it will collapse on itself when all the work has been moved and there is no one around with money to buy those nice cheap good. Especially now that outsourcing has hit the white-collar arena too.

Jim

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>>I think it fits rather nicely, don't you.
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>>By the way, other commodities prices are also well increased, likely for the same reason. All of which only adds to the costs of manufacturing HERE, accelerating the move to off shore.
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>>And, statistically, it all LOOKS like increased productivity here... more money being made and fewer people (of the resident here variety) needed to make that money!