Author: Thomas Clouse

Roundup

By Thomas Clouse


Regulars_EM-Roundup-03
Going east: GM’s Hummer brand heads to China

China celebrated the 60th anniversary of the founding of the People’s Republic on October 1 with a morning parade through the main avenues of Beijing, an evening performance in Beijing’s Tiananmen Square and a citywide fireworks display. While tens of thousands of people participated in the celebrations, the government severely limited attendance to the events, encouraging citizens to instead watch the festivities on television. The military stationed personnel throughout the city to guard against political protests and terrorist attacks.

The celebrations continued throughout the month, with premier Wen Jiabao receiving Russian prime minister Vladimir Putin at the Great Hall of the People on October 13 to commemorate 60 years of diplomatic relations between the two countries. Meetings between the two leaders produced new business deals and trade agreements worth $3.5 billion, according to domestic media. Energy topped the list of priorities, with Russia offering to supply oil and natural gas as well as build two nuclear reactors. The two countries also agreed to work on a Chinese renminbi–Russian ruble currency settlement plan and committed to notify each other in advance of ballistic missile launches.

China will take measures to limit overcapacity in certain industries, including steel, aluminum and wind power, the country’s State Council announced in late September. Many companies in these industries had planned production increases following the introduction of the government’s infrastructure-oriented stimulus program. Media reports indicate that the government will lower taxes and encourage consolidation in such industries, while strictly limiting expansion-plan approvals. The central government’s plans may face resistance from local officials concerned about job losses and reduced tax revenue.

China’s Sichuan Tengzhong Heavy Industrial Machinery will buy the Hummer brand name from General Motors (GM), the companies jointly announced in October. Tengzhong will pay $150 million for Hummer, far below GM’s earlier valuation of $500 million. Tengzhong’s limited automotive industry experience and Hummer’s reputation for fuel inefficiency have fanned criticism of the deal, which still must receive approval from Chinese regulators. The deal must also receive US government approval.