11% Rise in Chinese Car Sales Triggers Government Bailout

Bertel Schmitt
by Bertel Schmitt
11 rise in chinese car sales triggers government bailout

According to the officious, English-language China Daily, “Chinese automakers are facing their toughest challenge in three years as demand is falling and profitability is plunging amid rising costs.” And that’s because “China’s car sales rose 11 percent in the first nine months, compared with a 22 percent increase for the whole of last year.” So, even before the U.S. of A. can open the federal bra on behalf of Detroit’s automakers, the Chinese government has swung into action. “China’s government is discussing policies to help automakers boost sales and fend off the global financial crisis.” Policies being considered in Beijing include… “Consumption-tax breaks” – The PRC plans to give the little guy a break and money in his hand, instead of giving billions to three (or maybe just two) big guys. “Subsidies to automakers that develop vehicles powered by alternative energies” – that has a familiar ring to it. Because alternative energies are still mostly a gleam in the eye of a few believers, the real plan consists a hefty tax break with a green top coat finish. Chinese consumption tax (nothing to do with TB) can be as low as one percent for a (non-)car with a displacement of less than a liter, and as high as 40 percent for a bigger-bore vehicle of more than four liters. China Daily’s source is Chen Jianguo, himself “deputy head of the industrial coordination department of the National Development and Reform Commission.” If China Daily quotes a guy with a title that long, you can consider the plan as good as done.

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  • Br549 Br549 on Nov 10, 2008
    @br549; Some old obsessions never die. I guess I would hesitate to label the realization of China's utter centralized control of it's economy an obsession. China's leaders allow measured capitalism because they are smart enough to know that it's working to their advantage. Can't deny that it really is working either. But one can neither deny the ruthless and unquestioned land seizures (read Three Gorges Dam project) and complete control these guys wield over the citizenry whenever they deem it to be in their best interest, hence the rapid changes to taxation, stimulous packages, and infrastructure expenditures they can enact on whim without any pesky old representatives standing in their way as they speak for their constituencies. That, my friend, is totalitarianism, even if it does have capitalistic face.

  • Edward Niedermeyer Edward Niedermeyer on Nov 10, 2008

    I wonder if China is taking a page out of Ronald Reagan's playbook: instead of outspending the "evil empire" in a global arms race (I know their outlook on America isn't so black-and-white, but go with me here) they seem to be trying to spend us into oblivion economically. Mind the bailout gap!

  • Charly Charly on Nov 10, 2008

    The USA has the same ruthlessness with land seizures for big projects as China. It may even be more ruthless (not considering the theft of America from the Indians because then it won't be a maybe) The 40% tax is for engines bigger than 4 liter. Modern car who have engines that large are not exactly cheap and chearfull.

  • Bertel Schmitt Bertel Schmitt on Nov 11, 2008

    @br549: China doesn't have to seize land. All land is owned by the state. If they need it, they just take back what's theirs. Not an alien concept: A good chunk of London is owned by the Crown, and 99 year leases are as common in Old Blimey as 75year leases are in China ..... Closer to home, Battery Park City, where I lived and where the World Trade Center was, is sitting on leased land. Owned by the City of New York City. The Southern part of it patrolled by the National Park Police. Walking my dog there was a federal offense, I was told, several times. Some countries' views differ from the Fifth and Fourteenth Amendment. It's their countries and their beliefs.