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  • 2019.11.11 Monday
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  • by スポンサードリンク


Procrastination to Catastrophe

 Japanese cars are selling very well in China. However, I don't believe it's a good long-term growth strategy for Japanese car makers. The more Japanese car makers benefit from sales in China now, the more they will be adversary affected when the Chinese economy inevitably crashes.

 During November, Nissan sold 122,700 cars in China, an increase of 21.9% compared to the same period last year. Similarly, Honda increased sales by 32.7%;Toyota, 13.5%;and Mazda, 10.3%.

 As the Shanghai Stock Market has been gradually recovering from its plummet in June, Chinese consumer spending has revived. In addition, China reduced taxes paid on the purchase of new cars with engines smaller then 1,600 ccs.

 Nissan's sedan 'SYLPHY' sold 38,491 units, an increase of 59.3%. Even Nissan's 'EXTRAIL' SUV, which is not eligible for the tax break, sold 16,431 units, an increase of 65.8%.

 Chinese Premier Li Keqiang admitted that China's GDP is often inflated. Instead, he makes policy decisions based on rough GDP shorthand indicator composed of electricity consumption (40%), outstanding bank loan balances (35%), and railway freight transport (35%). China officially states its economic growth as 7%. However, electricity consumption is flat, and the railway freight transport is negative 10%. According to his metric, China's economic growth is, in fact, around 2%.

 Capital investment for public and private use is calculated into GDP. Already in 2013, investment for fixed capital accounted for 46% of Chinaユs GDP. Private consumption was only 36%. In Japan, private consumption accounts for around 60% of its GDP, and the U.S., it amounts to 70%.

 Useless capital investment leads to excessive supply capacity. This year, China's domestic auto production capacity increased to 50 million cars, whereas expected demand only amounts to some 25 million units.

 First, the real estate bubble burst, and then the stock bubble burst in June. Now, the capital investment bubble entered a period of adjustment. Until excess capacity lessens, the Chinese economy won't recover properly. And, in order to reduce the excessive production capacity, capital investment will nosedive. Consequently, China's GDP will drop into negative territory.

 The longer China prolongs the problems of its chain of economic bubbles, the more difficult a soft landing becomes.


  • 2019.11.11 Monday
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  • 10:20
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  • by スポンサードリンク


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