Chinese Hummers Just a Sign of the Times
As you’ve likely heard, a Chinese company will soon own the Hummer brand. Heh, let’s count the ways this transaction epitomizes the new economic landscape:
1. A Chinese company now owns an automaker that will build and sell cars in the U.S. – a first.
2. That company – Sichuan Tengzhong Heavy Industrial Machinery – doesn’t even make cars. For its first foray into passenger automaking, it’s chosen Hummer, perhaps the world’s most challenging and polarizing brand.
3. Business is so booming at Tengzhong HIM (its core is road construction and energy equipment) that the company will completely self-finance the deal…not one yuan borrowed from the Chinese government.
4. While neither party will disclose the price, Hummer was likely sold for a song…less than $500 million.
5. The White House is billing it as a victory: It’s “good news for the 3,000 Americans who will be able to keep their jobs, the two American plants that will remain open and the more than 100 Hummer dealers that should be able to stay in business all around the country,” said Bill Burton, a presidential spokesman.
6. Tengzhong claims its long-term goal is to make Hummer a legit brand in China, where there’s already demand for the vehicle that embodies American excess and overcompensation.
We’d be delighted if the Hummer takes off over there…nothing wrong with making something that China wants to buy. And if Americans stop buying them, even better…
Commodity futures transactions on Chinese exchanges are up 60% from this time last year, reports the Chinese Futures Association. Chinese traders and resource users traded 138 million lots in May alone, worth $1.3 trillion. That’s a 60% spike in volume from 2008 and an 85% leap in cost.
“The Chinese national strategy,” explains Byron King, “is to go around the world and secure energy and other natural resources for the balance of the 21st century.
“The Chinese are buying up oil and natural gas resources, as you surely know. They’re making deals with the Venezuelans and Iranians for energy development. They’re making deals in Iraq for energy. They’re financing the development of Brazil’s deep offshore oil deposits.
“And the Chinese are locking up other natural resources. They’re making deals from Australia to Brazil over coal and iron ore resources. They’re building copper mines from Congo to Afghanistan. They’ve secured 97% (no typo, 97%) of the world’s known deposits of rare earths. And the Chinese are buying up entire forests in South America.
“Meanwhile, China is the world’s largest gold-producing nation. Yet China’s net exports of gold are zero. China imports far more gold than it exports. China keeps its gold at home. China is building its own national gold reserve, and monetizing it by buying and allocating much of its mine production of yellow metal to the state bank. China trusts the U.S. dollar about as far as Tim Geithner can throw the Great Wall.”