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Recovery signs - Car sales in China reflect positive mood

It seems that the bail out package of CNY 4000 billion from the Chinese Government is starting to have some positive effect.  For the first time since 4 months, car sales have increased in February by 25%. This may be the result of tax reduction on some models. Therefore, China is consolidating the first place in the world car markets, having reached during February a total sale of 827,600 vehicles, including buses and trucks. January and February has given a cumulative increase of 2.7% with a total sale of 1.56 million vehicles, while USA has experienced a decrease of 39% down to 1.35 million.

However there also is a negative data, as the retail price index has decreased for the first time since 6 years by 1.6% as compared with February 2008. At that time the same index was showing an increase of 8,7% with a risk of deflation. For 2009 the Chinese Government has budgeted an inflation of 4% but the final data will possibly be much lower also in light of the production prices that, during February, have shown a decrease of 4.5%. Production prices are decreasing for the third month in a row, leading to a possible deflation, although general economic situation is definitely not looking as a deflating one.

Although every body in the world is wishing China taking clear measures for widening domestic market and thus imports, the Chinese Government seems still looking for strengthening export by that possibly leading to disputes with traditional commercial partners such as USA and EU. Global Chinese export was decreasing during Jan by 17.5% and by 25.7% in February.


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