Wikinvest Wire

A rising standard of living cures many ills

Thursday, March 04, 2010

The one thing about the Chinese economy that makes them hard to bet against over the long term is the simple fact that they're moving up off of such a low base when it comes to developing a robust consumer class, the latest evidence of such coming in this USA Today story about rising auto sales and the nation's growing fascination with private transportation.

Ahead of the lunar new year holiday that rates as this nation's biggest party, buyers packed the Huaxiang car market in southwest Beijing. Some wanted to drive home a new car in a physical sign of their success in the soon-ending Year of the Ox; others wanted to trade up before the new Year of the Tiger that began Feb. 14.

Lu Guozhi, 50, a retired railway official, helps a friend shop for a car. They eye a Geely CK sedan, a popular Chinese brand, which comes with an attractive price tag — 39,800 yuan, or about $5,800 U.S. — and qualifies for a government tax break for smaller-engine cars. "I'd prefer a BMW, but I'll never be able to afford one," says Lu, who bought his first car a year ago. The Geely's "exterior looks good, and it doesn't use much fuel."

Slightly more than a decade since China's auto market took off, it's at an enviable place: It overtook the U.S. last year as the world's largest auto market. The upheaval ended more than a century of dominance by Detroit's auto industry.
You can have a lot of booms and busts and both businesses and the government can make lots of costly mistakes, however, when you've still got decades of rising standards of living ahead of you, that is one very strong wind at your back.

Bookmark and Share


Anonymous said...

If only we could buy $5800 cars here. All they ever do here is to try and increase the price (burden on the consumer).

Dan said...

I wonder if that $5,800 price tag is subsidized.

But What do I Know? said...

Good point, Tim. Mr. Lu would be looked down upon in the US because he only recently bought a cheap car after working for thirty years--but in China, he is a success. The expectations of the populace over there is so much lower than here that they will be able to endure economic hardship much better than we will--they are not accustomed to living with the luxuries and amenities that we are (not that I would want to give them up). For most people, wealth is not what they have, but what they used to have and what their neighbors have.

Anonymous said...

I love my BMW. But in the end, a car is a car and the best things in life you cannot buy.

Anonymous said...

And if the revalue the RNB like they should their cars will be even cheaper.

  © Blogger template Newspaper by 2008

Back to TOP