$70 oil and Chinese demand

ST7699: Further, the Chinese won't be able to sustain buying oil at $70+USD for oil either, thus a major drop in demand and a dramatic drop in prices.

China's GDP per capita is growing in the high single digits annually, with salaries following in lockstep. This means that the ability of the Chinese consumer to buy more gas (than the limited amount he is using today) is increasing in the high single digits. This is why demand from China for various commodities is likely to increase for decades, because it is starting from extremely low bases, and growing its output per capita very rapidly.

Another important point is that the average Chinese consumer only recently graduated from the bicycle just over a decade ago - to the motorcycle. Even motorists live no more than 2 or 3 miles away from work. Chinese industry is extremely decentralized, meaning that people generally live not far from where they work. Bottom line, the average Chinese doesn't have a 2-hour commute to work, and he certainly doesn't drive an SUV. The average motorcyclist might spend 5% ($12.50) of his $250 monthly (two-income) household salary on gas*. If oil goes to $150 per barrel, that means he'll spend 10% of his salary on gas. That'll hurt, but it won't be crippling.

This actually brings to mind a curious Chinese arrangement. There are Chinese who work far from their homes (say, an hour's drive each way). The Chinese solution involves some hardship, but is eminently practical - employee dormitories next to the workplace. In fact, employee dormitories are an almost universal Chinese institution - government departments, hotels, garment factories, heavy industry - all have them. The big negative is that couples where one spouse works far away may see each other only during the weekend.

* How does he cart his only child around? China has no child restraint laws. The husband drives the motorcycle while child is squeezed between husband and wife.

ST7699: Nimble merchants will be shifting production from the mainland to elsewhere as the 'Central Committee' will be living in the classical 'interesting times' trying to deal with their first [and probably last] major recession.

The expression "may you live in interesting times" is not of Chinese origin. It may have originated either from Hollywood studios or from Western authors who wrote chinoiserie* in what they imagined was the Chinese style - probably cribbing from Western translations of Chinese classics.

* From Wikipedia: The term is also used in literary criticism to describe a mannered "Chinese-esque" style of writing, such as that employed by Ernest Bramah in his Kai Lung stories, Barry Hughart in his Master LI & Number 10 Ox novels and Stephen Marley in his Chia Black Dragon series (it should however be noted that Marley rejects the chinoiserie label in favour of his own term "Chinese Gothic").