China is leveraging the US Financial Crisis to the fullest as it has leapfrogged in two of the Key Industrial Segments. The Newsweek, last week, explored in a cover story, whether Shangai is the New Detroit. This week, Rana Foroohar wonders whether Shangai is also the Next Wall Street. China has become the biggest Auto Market and they are also pressing ahead with important financial reforms including launching their own version of NASDAQ and making its currency more convertible.
A user commenting on the article, had summed it up : China is G-2.
Excerpts from the articles :
1. Shanghai is the new Detroit
American tastes dominated the world's automotive market for a century, but all that's changing now. Today it's the increasingly well-to-do Chinese car-buyer that industry wants to woo and win, thanks to this incredible fact—China has, over the last three months running, surpassed the U.S. in terms of volume sales of automobiles.
The future of auto design was on display last week at the Shanghai Auto Show, where, in 30 football fields worth of space, international and domestic carmakers vied for the attention of Chinese consumers. The timing of the biennial event, China's oldest international auto show, was fortuitous. No one expected the Middle Kingdom to nab first place in the global auto market from America for at least another decade, but the financial crisis has had a sharp dampening effect on U.S. sales. The Chinese, meanwhile, spurred on by their government's enormous stimulus package, have kept spending. Beijing's 2009 auto sales target is 10 million units, an increase of 10 percent from 2008, and a figure that would cement its position, with an estimated 1 million more unit sales than the U.S. "No one expected China to emerge as the leading volume market this fast," says William Russo, a Beijing-based business consultant who specializes in the automotive sector. "This will give China a huge say in setting the standards and architecture for the entire industry.
If Beijing gets its way, the future will be small, green and—of course—made in China. The shock of the global financial crisis, and the resulting need to stimulate the auto sector has persuaded Beijing to dig deep into government coffers with more than $733 million to promote the rural sales of small cars and trucks (which domestic makers specialize in) and $220 million to fund and upgrade new green automotive technologies that many consider to be the wave of the future for the industry. Ultimately, Chinese planners want to create a new Detroit—a leaner, meaner, cleaner global automotive hub.
2. Shangai is the new Wall Street.
Shanghai is the new Detroit. Now, I'm beginning to wonder if it may soon be the new Wall Street. As I've written and blogged in the past, the fact that the world's top three banks by market capitalization are now Chinese isn't as big a deal as it might seem -- they are still local, commercial players, not global investment banks a la Morgan Stanley or Goldman Sachs.
Despite the market downturn, the Chinese are launching their own version of NASDAQ later this month, in order to help fund small and mid sized businesses that aren't benefiting as much from the massive stimulus package (yet still create the majority of jobs). They are also moving ahead with developing more complex securities (though not those crazy credit default swaps that tanked markets over here), and making their currency more convertible.
The Chinese could have used the financial crisis as a reason to turn their back on capital market reform -- instead, they are pushing ahead with it, and will likely gain global financial market share as a result. Wen Jiabao recently said as much when he told the Chinese that this is a moment for "more, not less" reform. It's such a cliché, but I'm reminded yet again of the fact that the Chinese use the same character to write "danger" and "opportunity."
