The Chinese Auto Bailout

Bailouts seem to be all over the place. Now we know that the Chinese government plans to support the car industry, the second-largest in the world, with the aim of ensuring sales growth of about 10 per cent in 2009. The move is part of the continuing effort to stimulate the economy and shield the country from the effects of the global economic crisis.

After years of double-digit growth, Chinese passenger car sales fell 12 per cent year on year in November as consumer worries about economic growth sapped demand. Figures for December are expected next week. The proposed sales tax cut on smaller vehicles could help carmakers such as Geely, one of the largest Chinese car companies. Geely said Monday it expects to boost sales 25 per cent this year as it introduces new models.