It’s one of those “nothing to see here” moments for Economists trying not to appreciate what’s really going on in China, therefore, the global economy.
The slump in China’s automotive sector dragged on through October, with year-over-year sales down for the fourth straight month.
Auto sales last month were off 12% from a year earlier to 2.38 million, the government-backed China Association of Automobile Manufacturers said Friday. With that, 2018 turned negative: Sales for the first 10 months were down 0.1% from 2017.
Chinese auto sales haven’t declined on a full-year basis since its mild embrace of market forces (in the form of Special Economic Zones). Around the same time as the introduction of those, the Chinese monetary system had to accept the eurodollar at its monetary base.
One year ago, not long after the Communist Party’s 19th National Congress, authorities spelled out a plan to open up their domestic brokerage and insurance industry to foreign firms. They had long resisted any such ideas, viewing the securities industry in particular as an unshakeable piece of the Chinese identity.
It is, on the one hand, an odd pairing; Communist infatuation with what many people today (wrongly) consider the epitome of capitalism. But, in November 2017, amidst all the recovery hysteria, they were running out of options. I wrote then:
The obvious question is, “what changed?” Why are the Chinese suddenly rolling out the figurative red carpet for foreign presence in businesses that are held as state security?
China could also use some more “dollars”, the external root problem Zhou also discussed in his missive. The Chinese have tried quite a few different things to stabilize their currency situation, to no avail. As noted earlier this week, their Hong Kong “dollar” adventure has gone off the rails, having become another great external risk to add to the PBOC’s concerns.
