FDI into China declines for the 6th month straight

Not good news on the heels of already mixed messages emerging from the stimulus passed a few months back.

Even if China's stimulus can get the domestic economy going, it alone will not be enough to bring it out of recession... no less help the global economy economy get back on its feet as many hope.


According to this Bloomberg article:

FDI has dropped 9.5% to $8.4 billion from a year earlier.

Month wise, February FDI dropped 15.8% in February.

Consumer spending fell 20.6% percent to $21.8 billion.


“Foreign direct investment will continue to drop in the coming months as multinationals face a continued credit crunch and a deeper world recession,” said Lu Zhengwei, a Shanghai- based economists at Industrial Bank Co. “Investors will remain cautious until the world economy and consumer demand recover.”

China’s government said last month it will simplify approvals for overseas capital entering the nation by giving local governments more authority to approve such spending.


In response the Chinese government is planning:

To continue providing liquidity to ensure loan growth in order to keep demand flowing (click here to read more about China's surging loans)

Rural-sales programs through the provision of billion yuan ($2.9 billion) in subsidies for rural consumers buying electronics, home appliances, cell phones and other commodities. The government hopes this will allow the economy to tap into a very unexploited consumer market, numbering hundreds of millions of people.

If China could get the rural economy going it would be a great move for macro economy in the long term. When I was studying rural economics a continuous theme presented by the government was their hope the rural areas of China would develop in response to migrants sending money home and bringing a sophisticated mentality back when they visit or move home.

China is also counting on its rural population of 350-600 million to enter the mainstream economy.

Buy goods and services. Pay taxes to build their own new roads and schools. Rent empty apartments. Save their money in Chinese banks. Buy Chinese stocks. Basically to help in increasing China's GDP and overall level of development..

Tata Nano hits the streets of India

The long awaited Tata Nano hit the streets of India on Thursday with the company and dealers around India confident of strong demand in light of the global economic crisis which has hit the auto industry especially hard.


With a sticker price of 100,000 rupee's ($2000) the Nano is by far the cheapest car in the world. Despite this tempting price, a major concern in many investors minds must have been how India's consumers would be able to secure loans or if they would even be willing to take out a loans for a car in such volatile economic times.

Thankfully the Tata Motors Finance (TMF), the financing arm of Tata Motors, today announced the launch of an attractive loan program which include no upper limit on the number of cars to be booked through TMF, once the customers have submitted the forms a booking amount would be made to Tata Motors on behalf of the customers, applicants who have been allotted the car do not loose any amount except cost of the booking form and initial payments.

To facilitate the booking process, multiple touch-points have been created all over the country. As part of the arrangement, TMF will be assisted by Tata Capital Limited, E-nxt Limited, Tata Motor dealers, Tata Securities outlets and all channel partners – DSAs & Vendors to ensure wider distribution. The booking scheme offered by TMF will enable a customer to book the Nano by paying an amount starting Rs 3,199/- only for the base model.

All in all, there's high hopes for the Nanao which Tata Motors chairman Ratan Tata has said will "create a safe, affordable, all-weather form of transport for Indian families. Families of four -- and more -- are regularly seen balancing precariously on motorcycles weaving through the country's notoriously lethal congested traffic."


Here are some articles about the Nano launch

World's cheapest car goes on sale in India - AFP
Tata Nano Goes on Sale - Wall Street Journal
Tata Motors' special scheme for Nano - The Business Standard
Q+A: Bookings open for Tata's Nano, world's cheapest car - Reuters UK