Business > Chinese Economic Development

As people’s living standard hes been continuously improving as a result of the ongoing economic reform, the Chinese economy has lifted millions of people out of poverty and created a middle and an upper class that are buying cars.

China became the world’s fastest growing auto market. According Chinese government statistics, over two million cars were sold in the country in 2003, a nearly 80 percent increase over 2002. China could someday become the world’s largest auto market. “It is expected to grow by 10 to 12 percent in 2005.” reports an automobile expert. The automobile market experienced three years of growth and surprised the world. The sharp decline of the market in 2004 caused panic among manufacturers and consumers. “China is not ready for the coming of an automobile society yet,” said Jia. “Supporting facilities, including parking spaces, traffic control systems and car maintenance and repair systems are still gravely inadequate.”

Rising car ownership and industrial production in China also raises questions about future effects on the world’s oil markets. China is currently the world’s second largest consumer, but still only consumes about one-third as much oil as the U.S. The growth is increasing very rapidly, and the demand for oil grew compare to last year and is expected to grow even more this year. China and India are bidding up energy prices and racing against each other and global energy companies.

China maintains a fixed value for its currency by standing ready to buy or sell U.S. dollars. Tradesports.com currently has a contract on the revaluation of the Yuan. According to the Tradesports marketplace, a 40% chance exists that the yuan will be revalued by July and a 70% chance it will be revalued by the end of 2005. Currently China fixes the yuan at around 8.3 to the dollar. The revaluation would probably cause many changes. For example Chinese products or anything else denominated in yuan will become more expensive on a dollar basis. Investors usually do not want to risk owning Chinese companies. However the revaluation of the yuan is inevitable and will present opportunities for investors. There will be countries who will benefit (like Malaysia, Singapore and Australia) and who will suffer.

Some people think that if the 20th was the American century, then the 21st belongs to China. I think China is a great opportunity to invest for someone who likes to take risk, because there are many uncertainty about its market, economy and its future.


Bibliography

1.http://www.newkerala.com/news-daily/news/features.php?action=fullnews&id=73996
2.New York Times/Business Day 2 Big Appetites Take Seats at the Oil Table
3.http://www.EFTZone.com

 

 

 

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