China Car Sales Tumble For Second Month In A Row, As Goldman Sees Spike In China Inflation To Multi-Year Highs

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Sun, 06/05/2011 - 11:00 | 1341131 Imminent Collapse
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Only 1.31 million cars sold in China in May.  How will they survive?

 

Sun, 06/05/2011 - 11:10 | 1341139 achmachat
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I used to rollerblade on beijing bicycle lanes. The danger came from CARS using those lanes...

Sun, 06/05/2011 - 12:07 | 1341222 Ahmeexnal
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They might be buying less cars, but they keep piling up gold.

They just added 4 more tons of gold:

http://www.marketwatch.com/story/4-tons-of-old-coins-found-in-china-2011...

Archaeologists in China are about to uncover an odd treasure: ten thousand tons of 2000 year old Engelhard gold bars.

Sun, 06/05/2011 - 11:09 | 1341140 achmachat
achmachat's picture

.

Sun, 06/05/2011 - 11:04 | 1341132 Long-John-Silver
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If you don't fix the leaks in the boat that lead to bailing it out, more bailing will not solve the problem.

Sun, 06/05/2011 - 11:14 | 1341143 Sudden Debt
Sudden Debt's picture

Unless you steer your ship to the cliffs, and if you are lucky the ship will stay above water for a while.

AND NO MORE WATER BAILING IS NEEDED!

 

Sun, 06/05/2011 - 11:16 | 1341144 Caviar Emptor
Caviar Emptor's picture

The 5 year auto plan has likely ended. When government programs end in China, they really end. GM rode the wave. Live by the sword, die by the sword. Keep in mind that our government auto plan ended too (cash for clunkers) . Gradually the two economic models are converging. 

Sun, 06/05/2011 - 11:26 | 1341155 Caviar Emptor
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German-grown beansprouts likely cause of deadly E. coli outbreak, officials say - AP

Spanish are angry because the Germans blamed their cucumbers for killing Germans!

Food fight!

Sun, 06/05/2011 - 12:06 | 1341224 Ahmeexnal
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History repeats again and again:

Zapatero, caudillo de España por la gracia de Dios (german puppet)

civil war

Spanish Royal family restored (english puppets)

Sun, 06/05/2011 - 11:33 | 1341166 Seasmoke
Seasmoke's picture

this is great news for SCHWINN

Sun, 06/05/2011 - 11:36 | 1341176 SilverShortage
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Jim Rogers still ultra bullish on China although he admits that there is a bubble in urban coastal real estate in China

 

More jim rogers interviews at http://jimrogers1.blogspot.com

Sun, 06/05/2011 - 12:12 | 1341236 Bam_Man
Bam_Man's picture

You mean that not everyone on Earth will eventually be a car owner?

Sun, 06/05/2011 - 12:16 | 1341237 Village Idiot
Village Idiot's picture

"Does have a little Wang in it - can I have some more?"

 

http://www.youtube.com/watch?v=EMiPjnNF7Dc  (comedy gold)

 

Sun, 06/05/2011 - 12:14 | 1341238 Bam_Man
Bam_Man's picture

Someone needs to develop a "Fred Flintstone" model and soon.

Sun, 06/05/2011 - 12:20 | 1341244 laomei
laomei's picture

I actually live here, in Beijing China.  This article was obviously written by someone who really has no clue.

 

Time to tear some shit apart...

 

CPI: Basic foods are highly regulated in terms of pricing, attempting to manipulate the market will get you locked up for a long long time.  Staples are price-controlled and while other increases are taking more money away from city dwellers, farmers are making a killing.

 

Gas prices: We used to pay approximately $Jack.shit for gas, that has obviously changed.  Now 97# is 8.4 a liter and 93# is 7.8 in Beijing, cheaper in the countryside obviously though.  Thing is that we have endless other public transit options, so the only real concern is "where the hell can I park?"  Rates have been raised to 15 RMB an hour in much of the downtown city.

 

Other car stuff: There has NEVER been an incentive here to purchase a car.  The only "tax break" is the fact that taxes were raised in January.  In order to purchase a car now, you have to enter the lottery to get a plate AND you have to be able to provide documentation that you have a place to park it AND you have to have lived here with a steady job for 5 years if you are not a local resident. 

 

Housing prices: Are being deflated in a rather controlled way and it's nice to see (despite my 47w apartment climbing to 300w and now falling back to 250w).  Beijing residents are highly restricted on how many properties that can purchase, loan requirements for everything past the first apartment are through the roof and non-residents get to do that whole 5 years with a steady job thing before they are allowedto purchase.  Sale prices will be further regulated in order to kill all major speculation before the end of the year.

 

I would hardly call this a stagflation situation.  Wages are going through the roof and quickly.  The minimum wage has been raised significantly and income taxes have been revised to remove tax liability entirely from those who earn under 3000 a month.  For those earning over 19,000 RMB a month they are seeing an increase in their taxes every month.

 

Produce prices have gone up some, sure, but it's all still cheap outside the cities (and albeit some prices have doubled in the last year, paying 30 cents a kilo versus 15 cents a kilo is hardly a ball buster).  The situation is not even close to as dire as the idiots in the west would love you to believe (hint, it's orchestrated propaganda.. easier to ignore domestic issues when you claim it's worse overseas... and it's easy to do that because it's not like anyone fact checks)

Sun, 06/05/2011 - 12:56 | 1341317 Slash
Slash's picture

" AND you have to have lived here with a steady job for 5 years if you are not a local resident."

 

 Beijing residents are highly restricted on how many properties that can purchase, loan requirements for everything past the first apartment are through the roof and non-residents get to do that whole 5 years with a steady job thing before they are allowedto purchase. 

 

And what's the ratio of resident to non resident again?

Mon, 06/06/2011 - 00:40 | 1342529 laomei
laomei's picture

it's around 1:9 beijinger:outsider.  However do keep in mind that this has absolutely zero effect on those who already purchased an apartment.  It's more or a restriction to cease the damned shanxi coal boss speculation and other speculation.

 

Another nice perk here is that homeowners pay exactly $0 in property taxes.  Businesses however get to pay 5-7% based either on rent or on value.  It's almost like it makes sense... 

Sun, 06/05/2011 - 13:53 | 1341425 robertocarlos
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That's not fair. Vancouver allows Chinese to buy cars without having worked here for 5 years. I was hoping to move to Beijing as a retired person.

Mon, 06/06/2011 - 00:43 | 1342536 laomei
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Foreigners, thankfully, they realized are not the problem.  You still have to wait 1 year after your first residency permit before you can buy anything however, and you are highly restricted in terms of mortgages and number of properties you can purchase (it's essentially 1, in all of China that you are entitled to.  And you down payment must be at least 50%).  Also, unless you have actual family here, yea, you are not going to really be allowed to "retire" in China as a foreigner.

Sun, 06/05/2011 - 16:25 | 1341776 huggy_in_london
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mate, if i were you i'd assume the "brace" position....this birds going down.

Sun, 06/05/2011 - 16:50 | 1341813 thefedisscam
thefedisscam's picture

Glad to see some truth posted here.

+100

Sun, 06/05/2011 - 17:00 | 1341828 bbtrader
bbtrader's picture

130,000 riots a year - is this true?  New unrest in Inner Mongolia.

And what's wrong with your stock market?

Sun, 06/05/2011 - 22:47 | 1342334 TGR
TGR's picture

You guys in Beijing have it easy when it comes to vehicles compared to Shanghai in respect to licensing. Anyone can buy a car in Shanghai, but the catch is getting a license: Beijing has the lottery, Shanghai auctions approx 5,000 (Shanghai-registered) plates a month.

That means license plates are now about RMB50,000 each (USD7,800), but these are resellable and considered an appreciating asset (like gold) so it does not put people off. I know some people who now have a plate worth more than their old car (Santanas). If you don't get a Shanghai plate, you are restricted from driving at key times and on key roads.

There is absolutely no let-up in the number of people seeking licences, thus the consistently rising plate costs since 1987.

People don't consider themselves to have 'made it' in China until they have 1) an apartment and 2) a car, and that still holds true today despite inflated prices.

 

T

Mon, 06/06/2011 - 00:40 | 1342530 laomei
laomei's picture

It's all honestly still rather tame.  Check out what Singapore does with CoEs, it now costs around $50,000 just to have the right to have a car for 10 years.  In Beijing, the plates cannot be transferred outside of a very few whacky circumstances which enabled some dealers the ability to make a nice pile of money... but alas that loophole is closed for good now.

 

In Beijing, if you get caught driving a non-jing plated car during the restricted times inside the city you get slapped with a 200 RMB fine... that's not a "per day" thing like getting caught driving on your off day used to be.  It's now per time captured, either by cop or by camera (there are cameras everywhere)

Sun, 06/05/2011 - 13:22 | 1341374 smlbizman
smlbizman's picture

it seems to me that it is now acceptable to use the al dunlap way to count if you are a car manufacture.....

Sun, 06/05/2011 - 13:44 | 1341410 falak pema
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I am sure that the export of good wine to China is going to explode in coming years! Just shows that the chinese are getting culture conscious...and their gourmet tradition will be a bonus for those who like to export quality food...that china doesn't make... Go long on Champagne!

Sun, 06/05/2011 - 13:54 | 1341433 bankonzhongguo
bankonzhongguo's picture

Champagne tastes like Chinese medicine.

 

Sun, 06/05/2011 - 16:26 | 1341771 huggy_in_london
huggy_in_london's picture

You've missed that trade buddy, thats the reason why the 2009 bordeaux went for sky high prices (with the 2010 vintage set to do the same).  

Beats me why they pay £13k for a case of 95 Lafite when all they do is mix it with coca-cola.  But i guess thats what happens in bubble economies!

Mon, 06/06/2011 - 00:43 | 1342538 laomei
laomei's picture

Not really, Chinese simply don't know their wines.  China is essentially a dumping grounds for wine product that will never sell elsewhere.  Domestic Chinese wine has also made a LOT of progress and the major wineries here have recruited top talent from abroad to bring the wine to world class standards.  There are excellent grape growing regions in China.

Sun, 06/05/2011 - 13:44 | 1341411 robertocarlos
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In one thousand months everybody in China will own a car. Then what will they do?

Sun, 06/05/2011 - 13:49 | 1341413 falak pema
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drive down the silk route to Venice on holiday!

Sun, 06/05/2011 - 18:05 | 1341923 DosZap
DosZap's picture

They are very industrious.

If I were them, I would make the Great Wall a four lane Tollway.

Sun, 06/05/2011 - 14:19 | 1341486 PulauHantu29
PulauHantu29's picture

Wait until a few hundred million there all try to sell their RE at the same time.

The panic rush to exit RE there will be worse then the USA subprime imho.

Mon, 06/06/2011 - 00:48 | 1342542 laomei
laomei's picture

Yea, here's the fun thing about RE here in China... it's regulated and Chinese are generally not in it for the fast buck, they purchase it in the same way they purchase gold.  As an inflation hedge.  After the second apartment, you don't get any loans, it's all up front in cash.  Furthermore, no one in their right mind here would go off and sell like that, and if it was attempted, the government would step in to stabilize the market... you know, like what a government is suppossed to do.

Sun, 06/05/2011 - 16:10 | 1341748 chistletoe
chistletoe's picture

no mention of government motors.

Weren't they counting on sales in China to save the day?

Channel-stuffing can't go on forever.

Well, thanks for the recommendation to short.  So far its working pretty good ....

Sun, 06/05/2011 - 21:31 | 1342223 Fox-Scully
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There goes GMs biggest growth market!

Sun, 06/05/2011 - 21:50 | 1342260 Dolemite
Dolemite's picture

PMs stocks and oil heading lower?

http://deadcatbouncing.blogspot.com

Mon, 06/06/2011 - 00:58 | 1342549 nathan1234
nathan1234's picture

Unlikely with war around the corner in the middle east this summer.. With the financial system broken the last chance would be to ensure the takeover of oil interests .

Mon, 06/06/2011 - 00:52 | 1342546 nathan1234
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Goldman & GM  

Both taxpayer handouts need to be closed down once and for all.

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