Chinese Auto Sales

Chinese economic data are sometimes viewed as NINJA loan applications--you need to look to other sources to verify the data. Still the growth in Chinese auto sales, verified by GM (ok, another government enterprise) looks promising in two ways. First, it indicates that china's stimulus and incentive plans may be having some positive demand, and that consumers are spending in China. As the US consumer retrenches from a low savings rate, it is possible that China's consumers might move in the other direction.

What is most interesting about strong auto sales, and it is possible that auto sales in China this year will be greater than in the US, is the transformational effect the automobile can have on society. So much retailing in China consists of very small shops, in walking distance of customers. There is little room for increasing efficiency or developing scale economies in distribution. Walking customers are limited in their shopping by what they can carry, and how far they can travel to find a better price. The automobile changes all that, and begins to facilitate large-scale retailing, as customers develop the means to travel to a mall or supercenter and take advantage of the lower prices and broader merchandise selection. This is also good for the growth of of consumer products manufacturers, as consumer savings can be plowed into more goods and services. As retailers scale, manufacturers will co-evolve and grow as well, and there will be more investable opportunities beyond the typical emerging market menu of power, telephone, and banking companies.

This process should take considerably less time than it did in the US.