china to rule?

Old Chinese saying say a journey begins with a single step (or something like that). Indeed, China has taken yet another big step towards the direction of being a global economic bigwig.

China group Geely recently announced buying over the Swedish-icon Volvo. Dad and I were pondering how it would feel as a Swede, that for one of your national icons to now be owned by a 'Chinaman'; especially with the Western wariness of China, it makes for a pill even harder to swallow. Perhaps I won't really be able to empathise with the Swede until Singapore Airlines becomes foreign-owned.

Source: Google Images

China is currently the world's largest auto market (see Newsweek). Naturally, the impact for Volvo and the Chinese automobile market will be impacted by this buyout; Volvo will aim to turn its loss-making business around and to have a foothold in the Chinese market, and the Chinese market will now have a branded car for cheaper (how much depends on their strategy ahead). But there will also be impact on global markets, in particular the market I'll like to highlight would be the American one.

As it is, there has been huge pressures of late by the US for China to allow the allegedly undervalued Yuan to float more freely. I am certain there are domestic pressures for the Obama administration to address this as well; if not from the public (which might be too busy talking about the new Health Bill to worry about this) but surely from the disgruntled Republicans who want all the knives they can get to throw at the administration especially since the bitter-sweet passing of the Health Bill. Can you imagine what kind of pressures the Administration will then be under when the American auto market be inundated with cheaper Volvo cars? The trade deficit will just widen to epic proportions. And this Chinese thirst for global brand names, at least in the auto market (see The Independent), is definitely not quenched; this Geely-Volvo deal I suspect is the tip of the iceberg.

Source: Google Images

I know its abit of a far-off protraction, but definitely not improbable: will China rule the global economic system? If yes, what kind of hegemon will they be like? From the current looks of it, surely not a benevolent one, and that is a scary thought for a wild dragon-panda running amock in the world.


Uncle T