China’s Growing Economy
General Motors recently announced the pending closure of three U.S. assembly plants and the discontinuation of six cars made at those plants. While large sedans are no longer big sellers in the United States, they remain popular in China, and GM will continue to manufacture them there.1
China is GM’s largest market; the automaker sells more cars there than in North America. While the trade war continues between the United States and China, GM’s decision to close U.S. plants and eliminate certain vehicle models is largely based on sales and geographic production concerns.2
Such shifts show why it’s important for investors to keep a broad point of view and consider diversifying not just across industries but among countries. If you’re interested in examining ways to diversify your investment portfolio, please give us a call.
China is poised for substantial growth. The country boasts an immense middle class: estimated at 400 million people3 out of a population of almost 1.4 billion.4 This is more than the entire U.S. population, which is just more than 329 million.5 Furthermore, China is enjoying growing economic power and global influence, with domestic equity markets that collectively represent the largest IPO market in the world.6
China comprises 15 percent of the global economy, up from a mere 3 percent 20 years ago. It contributes to nearly a third of global growth and is the biggest trading partner for many emerging market countries.7
For consumer perspective, consider the most recent Black Friday and Cyber Monday combined sales in the United States – $13.9 billion. This pales next to China’s annual “Singles’ Day” shopping spree on Nov. 11, a day when retailers encourage consumers to buy gifts for themselves. In 2018, those one-day sales totaled $30.8 billion.8
Content prepared by Kara Stefan Communications.
1 Benjamin Zhang. Business Insider. Nov. 27, 2018. “GM is going to kill off its big Buick and Cadillac sedans in the US, but they are still alive and well in China.” https://www.businessinsider.com/gm-buick-cadillac-sedans-continue-in-china-2018-11. Accessed Nov. 27, 2018.
3 Knowledge@Wharton. Sept. 27, 2018. “Why So Many Underestimate China’s True Economic Power.” http://knowledge.wharton.upenn.edu/article/almost-everyone-underestimates-true-economic-power-china/. Accessed Nov. 27, 2018.
4 US Census Bureau. Nov. 27, 2018. “U.S. and World Population Clock.” https://www.census.gov/popclock/. Accessed Nov. 27, 2018.
6 Knowledge@Wharton. Sept. 27, 2018. “Why So Many Underestimate China’s True Economic Power.” http://knowledge.wharton.upenn.edu/article/almost-everyone-underestimates-true-economic-power-china/. Accessed Nov. 27, 2018.
7 Enda Curran. Bloomberg. Sept. 6, 2018. “China Stands Between Emerging Market Turmoil and Global Pain.” https://www.bloomberg.com/news/articles/2018-09-06/china-stands-between-emerging-market-turmoil-and-global-pain. Accessed Nov. 27, 2018.
8 Andria Cheng. Forbes. Nov. 26, 2018. “Black Friday, Cyber Monday Sales Hit Another High, But It’s Not Time To Celebrate Yet.” https://www.forbes.com/sites/andriacheng/2018/11/26/black-friday-cyber-monday-sales-are-hitting-another-high-but-its-not-time-to-cheer-yet/. Accessed Nov. 27, 2018.
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