China update
GM's China sales pass US for first time in history
General Motors Co. sold more cars and trucks in China last year than it did in the U.S., for the first time in the company's 102-year history.
But despite GM's gains in China, Toyota Motor Corp. managed to hold onto the title of world's largest automaker. The Japanese company reported 8.42 million sales worldwide last year. That's 30,000 more than GM's 8.39 million in global sales for 2010.
Factions in Beijing appear to think that China will win a trade war if Washington ever imposes sanctions to counter Chinese mercantilism. That is a fatal misjudgement. The lesson of Smoot-Hawley and the 1930s is that surplus states suffer crippling depressions when the guillotine comes down on free trade; while deficit states can muddle through, reviving their industries behind barriers. Demand is the most precious commodity of all in a world of excess supply.
The political reality is that China’s export of manufacturing over-capacity is hollowing out the US industrial core, and a plethora of tricks to stop Western firms competing in the Chinese market rubs salt in the wound. It is preventing full recovery in the US, where half the population is falling out of the bottom of the Affluent Society. Some 43.2m people are now on food stamps. The US labour force participation rate has fallen to 64.3pc, worse than a year ago. Only the richer half is recovering.
The roots of this imbalance lie in the structure of globalisation and East-West capital flows – and no doubt the deficiencies of US school education – but China plays a central role, and this will not tolerated for much longer if Beijing is also perceived to be a strategic enemy. China’s economic and military goals are in conflict. One defeats the other.
China released a slew of important economic data on the evening of Wednesday, Jan. 19, and markets were paying particular attention to China’s inflation. In order to put out the wild fire of inflation, China's central bank raised interest rates twice, and increased the reserve ratio for lenders four times in the span of just last two months.
Those tightening measures have prompted great concerns about the major growth engine of the world. Partly on speculation (based on leaked information) that China’s inflation eased last month, emerging market stocks and the MSCI EM index climbed to its highest level in two and a half years just before the official data release.
Why China Thinks Hu Jintao's Visit Was A Success
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