ADVANTAGE POINT FOR CHINA.

 ADVANTAGE POINT FOR CHINA.

Finally Chinese goods are replaced from the shelves of US primarily followed with other economies. Chinese Exports fell 20.5% to US$957.36 billion. One of the prime reasons for such a decline is the falling dollar. More the dollar will fall the more costly the export will become. Trade value between China and the country's three major trade partners, the EU, the U.S. and Japan, was US$292.42 billion, US$239.36 billion, and US$182.34 billion in the first ten months, down 18.7%, 14.9% and 19.3%, respectively. In one way US have gained a lot due to this prime factor.

• US have been able to increase its consumer consumption. The consumer index showed much improvement in the first 10 months of 2009.
• This have given boost to the manufacturing sector of  US giving them space to produce and sell their own good to their own people, replacing exported goods. 

So in the coming days as more dollar will remain under the deep bottom levels the more one will see decline in export of China and other Asian economies. At the same time we will find US GDP growth is pegging up as more domestic products will be consumed and less exported. Now a question might come in the minds of my readers that are the dollar fall is being created deliberately. It’s hard to answere but as more US fiscal deficit will increase the more downside u will get in dollar.

Even if we take that for the next 6 months dollar will behave in this similar fashion then the Asian economies will have to cut back on many things from manufacturing to industry growths. Moreover new economies needs to be developed so that we can replace the US market by certain comfortable percentage to survive our (Asian) economies.

In the comings days china will face one of the hard times to push its products in other economies.

• China is running beyond 100% productivity which will results to cheap prices and lower profitability of Chinese corporate.
• When it will not find any space to dispose off their goods they will push hard to other economies resulting “Knockings at the WTO door”.
• The over capacity bubble will put brakes on the revival path of Recession.

 China has increased its industrial investments to record levels.

China's urban fixed-asset investment rose 33.1% in the first 10 months to 15.07 trillion yuan (US$2.21 trillion), compared with the same period a year earlier. The growth rate was 5.9% points higher than that in the same period of last year.

• This investment have resulted to increased productivity beyond 100% and antidumping their goods to other economies.

• China also went strong in investment in agriculture sector. In the first 10 months, investment in the primary sector, covering farming, fishing and forestry, jumped 54.1%year on year.

• The industrial sector, or the secondary sector, posted a 26.8% growth in investment and the tertiary industry, including commerce, finance and services, saw investment up 37.8%.So it is not the stimulus that played the game till now but also the money from sidelines have also been poured which resulted to such a high growth.

The Chinese Industrial production have been

The GDP growth of china has been a roller coaster ride.

China Gross Domestic Product (GDP) expanded 8.90% over the last 4 quarters. The China Gross Domestic Product is worth 4326 billion dollars or 6.98% of the world economy, according to the World Bank.

But the bitter fact remains that all these growth needs to be converted into revenue which depends primarily on other economies. The Chinese government is also cautious on this danger point of line. In few of the sectors the Chinese government is planning some radically changes. Like wise the government is increasing mergers and restructuring in the country's steel sector to help create three to five globally competitive steel-making giants. This consolidation is required since the government plans to :

·        Enforcing standards on product quality,

·        Environmental protection,

·        Energy consumption,

·        Resources use and

·        Production scale.

The government has also planned to go for M&A in automobile space of China.

·        Its being designed in this way that building up two to three large Chinese automakers with annual production capacity of 2 million vehicles.

·        It will be the consolidation of small domestic car manufactures with the big ones to bring and strengthen global competitiveness.

·        When US car makers are struggling with their financial figures China made a remarkable foot mark by getting its sales in October soared by 72% from a year earlier to 1.2 million vehicles.

Till now the value of quarterly M&A deals of China grew from US$1.3 billion in the first quarter of this year to US$8.9 billion in the third quarter. This is also   giving the Chinese industry expand and grow their business size. This will give the companies the power to go for overseas expansion.

So China is well planning ahead of US and following well the mistakes made by US auto majors. It going for consolidation to increase the quality and reducing the number of scattered operations and coming to some finest quality products in the coming days. US might find some hard times in many industries among which auto and steel remains a threat to US.