Now that the index has come down from the 3000 level, I suggest waiting for a while and then get back in. I’m locked and loaded.

As for the real estate market, it had been in the dumps. The tier 2 cities are seeing a little pop, which is another good sign for the economy. I’m down on buying here. No land to buy.

It’s just the beginning of a market that has five times the population of the USA. (The official 1.3b number is widely believed as lowballed.)

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Size itself is not an advantage. For each person that can create products, he also needs to consume. It’s an advantage only if the value he produces exceeds what he consumes. We only need to look at GM to get that idea.

The best China can do depends on
1) The total amount natural resources it can obtain (This is a bottle neck. The unlimited man power would be useless if there’s nothing for them to do.)
2) It’s efficiency of using those natural resources.
3) The efficiency of the social system.

China could not beat the [declining] US in any of the 3 areas. So I would say the best China could do is like 80% of US, unless there is a major political reform/revolution to make the social system more competitive than the US system.

so are the cars dirt cheap in china? I cant see then paying buick prices compared to those in the states. And i didn’t know ford was in china that good, so maybe that will help them too.

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No, they are not dirt cheap. Using the current exchange rate, they are way more expensive than in the US. Yes, the Chinese Yuan is over-valued (for non-Walmart items, at least).

People don’t use HLOC to buy cars per se. But a large number of them do have an outstanding mortgage balance that’s greater than the amount of cash at their hands. Real estate going up in price gave them more confidence in spending that cash on a car.

If I were you, I wouldn’t tell anybody to get out of the stock market or the real estate market. Why? The risk of either one is about a 75% decline; they will still have 25% after a crash and if they are patient they will make even in 10 years (inflation adjusted). The risk of not getting into the market and holding cash is much much greater. See, China, unlike the US, never really cared about persevering RMB’s value. Where US uses income tax as a major form of revenue, China has to depend on printing money as revenue. The cost of food has gone up 5000~10000% in the past 30 years. Those who didn’t participate the real estate “bubble” in the early 2000’s probably will never be able to afford a property in a large city, ever.

You need to disassociate yourself from the American way of buying a car. Most of the Chinese cars are paid by cash. Actually, the number of cash purchases is going UP. No, the Chinese didn’t take a home equity loan to buy a car. (I don’t even think such a beast exists.) Also, the real estate market did NOT go up in China, it is quite soft. The Shanghai index nosedived in August from 3400 to 2700. It’s been at 6000 in October 2007, and when I saw my maid trading stock between doing the dishes and wiping the floor, I told everybody to get out. A lot of people lost a lot of their money.

What is happening is that slowly but surely a moderately well to do (by Chine standards) middle class is evolving that has enough cash to pay for a small car. That middle class was shell-shocked last year, because it thought China would go to the toilet with the rest of the year. It did not. Now, consumer confidence is back with a vengeance.

Triple digit growth is unsustainable. What we see is pent-up demand, and comparisons between strong months in 2009 and very weak months in 2008. China will be back in its usual 20 to 30 percent growth range soon. And that will last for quite a while.

China has anywhere between 30 to 40 cars per thousand pop, whereas the USA has 800 cars per thousand. This country has a frightening amount of room to grow. This is no bubble. It’s just the beginning of a market that has five times the population of the USA. (The official 1.3b number is widely believed as lowballed.)

Is this a bubble fed by the cheap credit the government is giving (like most of thier economy)or are the people actually using thier savings, China has one of the highest rates in the world

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It’s both. A lot of buyers do pay cash. Where did they get that cash? No, they didn’t spend the last 10 years saving for a car. When the government flooded the market with cheap credit, stocks recovered and real estates went higher. Home owners, business owners and government agencies thus have more equity/cash to buy cars.

Yikes.

Getting the feeling it’s a (big) bubble and it’s popping will possibly be just as bad as our’s (and we’ll feel it).