Where is Chinas next export push?
I think China will start to export cars very soon, because the market now is in overcapacity. Twenty-seven provinces produce cars, and almost all of the foreign manufacturers are here. Demand will begin to slow, but supply is growing fast. Where will those cars go? To the international market. Right now prices are high, because prices are set by the state, and there are high taxes. I spoke with the head of Volkswagen a while back. He said if you reduce taxes, our cars already are competitive with international prices. If the government gives a tax rebate, it will be very easy to export. Exporting is not an explicitly stated goal, but this is the reality. Just like what happened when color TVs were in oversupply. When China becomes very competitive, it will be in economy cars. So the U.S. and Japan will have to upgrade to more luxury cars. What were mid-priced cars 10 or 15 years ago are now becoming economy cars. A car will be more like a bicycle in 15 years. Q: What is China’s long-te
