01/12/10 Hong Kong, China – China as the biggest exporter in the world? Aw c’mon…that’s, like, so yesterday’s news. Today’s buzz is that the Middle Kingdom has convincingly usurped the US as the world’s largest auto market; something that would surely have ol’ Henry Ford turning in his grave.
Vehicle sales in China jumped 46% for 2009, compared to a 21% slump in the American market. Sales of passenger cars, buses and trucks rose to a whopping 13.6 million. The US managed to move only 10.1 million vehicles during that same time. Figures in the now-number-two market haven’t been that lean in almost three decades. And, thanks to C.E.Obama’s “Cash for Clunkers” meddling, the US has already spent a good portion of tomorrow’s demand, too. Our own Reckoner-in-Chief, Bill Bonner, explained as much in yesterday’s issue, The Little Clunker That Couldn’t.
“The fellow with an old pick-up truck may have judged his truck good for another six months of service. But with the lure of a federal bribe before him, he junked the truck six months early. Any sensible person can see that this is a waste. A valuable asset has been lost – six months of truck service.
“But the elite economist thinks he has saved the auto industry,” continued Bill. “Because the ‘demand for trucks has been stimulated.’ Jobs have been saved. Detroit has been given a boost.
“What kind of nonsense is this? Not only have useful resources been sent to the scrap heap prematurely, but the auto industry has been given a bum steer, too.”
Of course, China is not without its own government meddling. Feds are feds are feds, no matter where in the world you go. Eventually they all become aware that their position would be better left vacant. Upon realizing this they all seek to protect their jobs with make-work programs for others funded by the spending of everyone else’s money.
An article in this morning’s South China Morning Post warns that the Chinese economy may soon reach a “superheated 16%” growth rate if the country’s loose monetary policy is not reigned in. The report, prepared by a government agency, no less, comes just two weeks after Premier Wen Jiabao promised a year of “moderately loose” policy. An “appropriate” rate of growth, according to the authors of the report, would be exactly 11.6%. How do they know this, we wonder? Why not 11.2%…or 12.4%?
Either way, history cares not for economists’ or politicians’ definition of “appropriate.” It will decide that in due course…with or without the meddlers approvals and warnings.
Joel Bowman
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
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