While all stand and cheer China’s explosion of auto ownership:
China Car Sales Jump 48% on Economic Stimulus, Most Since 2006
By Bloomberg News
July 9 (Bloomberg) — China’s passenger-vehicle sales rose 48 percent in June, the biggest jump since February 2006, as government stimulus spending spurred a revival in the world’s third-largest economy.
Chinese motorists bought 872,900 cars, sport-utility vehicles and other passenger vehicles last month, the China Association of Automobile Manufacturers said in a statement today. Overall auto sales, including buses and trucks, rose 36 percent from a year earlier to 1.14 million.
That’s about 12 million units a year. Financed by government- backed loans.
It would be nice if Bloomberg or someone else can tell me how this is going to be a real benefit for anyone other than a handful of executives and managers? It is certainly not going to help moderate fuel prices.
The new owners get to sit for hours in traffic jams. There will be more pollution and more climate changing gasses emitted into the already dirty, Chinese air. (Which all comes over to the US btw.)
The increase in Chinese demand replaces demand in the US, Japan and Europe. This cannot help but intensify price pressures on petroleum.
Diesel and distillate prices seem to be the restraint on an overall crude price increase. The Wall Street Journal notes an increasing surplus of diesel fuel as industrial consumption remains low. As noted here previously, the resistance level is around $75 a barrel, which price has not been adequately tested. Increased consumption of diesel – used in Chinese vehicles – would lift the constraint on crude and allow that test to take place.
This may not happen on account of economic stumbling in areas outside of Chinese car buying. As this stumbling is energy- related, the increase in Chinese auto use is directly self- destructive. The short term crude price trend has been bearish from the $73 high to current $61, consumption in China will likely end that trend and the upward track will resume.
Just more stupidity …