Those who have an ideological beef with China should keep one thing in mind: Without China, the car industry (to name just one segment) would be dead. China’s unbridled appetite for cars keeps the whole industry humming. Two examples:
Jaguar announced that they doubled their sales in China in the first half year of 2010. Sure, selling 1,521 Jags in six months may not be much in the grand scheme of things. But it’s an indicator of China’s buying power. China already is the world’s largest market for Daimler’s S-Class and makers of luxury cars the world over would be collecting welfare checks would iut not be for the Middle Kingdom. Jaguar celebrates the best half-year sales record in the seven years they have been in China. The second quarter was even better: Up 129 percent year on year. Their best-selling car is the Jaguar XF, selling 1,370 vehicles. The new Jaguar XJ added 140 units to the count, reports Gasgoo.
In not quite related news, The Nikkei [sub] reports Japan’s trade deficit with China shrank to a paltry $5b in the last fiscal year. That despite of a very strong yen, and without the daily drama of calling China a currency manipulator. Since the mid-1990s, Japan had a whopping trade deficit with China. Not only was Japan flooded with cheap Chinese goods. Japanese companies added to the imbalance by shipping materials and parts to China, where they were turned into finished goods and came back to Japan.
Now, Japan more and more exports expensive goods to China. Passenger vehicles, trucks and other transport equipment accounted for 10.12 percent of the value of Japanese exports shipped to China last fiscal year. Around 96,400 vehicles were shipped to China in the January-May term, up 50 percent from a year earlier, according to the Japan Automobile Manufacturers Association. “Japan could very well enjoy trade surpluses with its neighbor in the near future,” says the Nikkei.
“That despite of a very strong yen, and without the daily drama of calling China a currency manipulator.”
The Yen:Yuan exchange rate floats freely on world markets. The US Dollar:Yuan exchange rate does not.
Mr. Horner, a question for you:
Would you say that the USDJPY exchange rate “floats freely on world markets?”
The Yen:Yuan does not float freely on world markets. The yuan does not float freely. Period.
Also, the FOREX market doesn’t operate on a per currency basis, there is no loop-hole where the yuan is freely traded. If all it takes to trade yuan was to trade the yen as an intermediary then the currency is as good as being freely traded.
Accusations of ‘currency manipulation’ is always dubious if not down-right hypocritical. For instance, the US in the last year has taken similar policy of what Japan was accused of; excessive debt and bond issues, near-zero interest rates, bailouts of a financial system through QE instruments (TARP). Bernanke likes to call it “credit easing” rather then “quantitative easing” but a rose is a rose by any other name.
China’s currency situation is vastly different. They have absolute control over how the currency is traded. Outside of the common method of shouldering US debt (Japan and UK are the other two big ones doing this), China limits the flow of cash entering/leaving the country as well as limiting Chinese FDI abroad. However, other developing counties like India also have similar policies.
So ‘currency manipulation’ isn’t about ‘what’ you do, its about ‘who’ does it. Since the end of Bretton Woods this is after all what currency is about; public debt, money supply, and inflation- and how countries manage it.
L’avventura: Many thanks for obviating the need for me to keep stringing things along.
There are an increasing number of Chinese millionaires. Regardless how the currency is traded, some of them have figured out ways to have more of it than others. I lived in China for a while on business – THIS PLACE AIN’T NO COMMUNISM.
As for the Jaguar XJ, its a beutiful luxury car and the interior feels more lively than the S-class and pretty much any other car in that price bracket.
http://www.epinions.com/content_512392400516
The owner of luxury cars in Middle Kingdom only cares about the sticker price anyways, most of the cars only be driven not all that fast so any cars will hold up for many many yrs.
Unlike cars sold in the land of Flowery Flag, one day driving will put more miles than a car there in 6 mths.
The car market of Middle Kingdom is becoming like the habit of a Kleptomaniac, u can just give him anything. And anything will do, as long as it has a high sticker price.
I can see my apartment in that picture!
Jeez, you can afford a place in the Park Hyatt?
Lord no, I’m across the street.