chinese buy more cars than americans as their economy and real estate booms
News Posted On: 11 December 2009
China has overtaken the US for the first time as the nation buying the largest number of cars. The Chinese now also consume the highest national number of many other consumer items such as PCs and white goods.
John Bonnell, director of Asia vehicle forecasting at J.D. Power & Associates described the Chinese market as being “on full tilt — booming is an understatement these days.”
These numbers are tangible evidence that the much-vaunted economic power shift from the mature markets of the debt-laden West to the enterprise culture of the eager East is underway. The Chinese – traditionally a nation of savers – are actually spending now, while in the cash-strapped West many consumers are having to scrimp and save.
Chinese consumers have a penchant for massive flat screen TVs – bigger on average than US counterparts. Prices are cheaper than in the West – cars in China cost just over half US prices on average while white goods come in at around two thirds of Western market prices.
It is true the government has offered cash incentives to encourage rural families to buy smaller cars. However this measure cannot account for the boom in SUVs, sales of which are up by an annual 72 per cent.
Although incomes still lag the West it is expected that China will be playing catch up with a 12 percent growth rate forecast. Furthermore the renmimbi is expected to revalue upwards against Western currencies which will increase consumer buying power and push up property prices for overseas buyers.
Indeed the booming economy is also helping to drive the real estate market.
The National Bureau of Statistics (NBS) reporting on Thursday said that Chinese property investment was up by 17.8 percent for the first 11 months of 2009 compared to the same period in 2008.
The NBS also said that property prices in its index of 70 cities rose by an annualised 5.7 percent in November, up from 3.9 percent in October.
When currency moves and demand led growth are considered, it is clear that Western investors in the Chinese real estate market are likely to see excellent capital gains denominated in their own currency.
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