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  • China - Well On the Road to Recovery. 0 comments
    Jun 5, 2009 1:22 AM

    China's population have been prodigious savers and they're breaking open piggy banks in ever increasing numbers. The baby-boom generation of the 1960s is now entering middle age, the period of strongest, peak, consumer spending and purchasing power.  

    U.S. new vehicle purchases plunged 37% in the first four months of this year, while in China auto sales rose 24.97% in April alone, making a fresh record! Retail sales (inflation adjusted) grew 15.6% year on year. Home appliance sales reached 72% higher from the previous quarter. Housing sales grew more than 100% year on year in the first quarter in Beijing, Shanghai and Shenzhen.

    The Chinese stimulus package totals 4 trillion Yuan. Mr. Mu Hong, vice-minister of the National Development and Reform Commission said, "Some officials spent the money on unapproved projects or failed to keep accurate records, and those who broke the rules have been punished." He also said, "But the overall implementation of the stimulus package is in accordance with the central governments requirements and there has been no serious illegal behavior so far."

    Domestic consumer demand is helping to offset the impact of shrinking foreign demand and weaker investment. China really doesn't need the US anymore. If China drops the dollar peg and stops exporting under-priced goods, the results would be catastrophic for the US service based economy.

    Disclosure: No positions.

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