In 2009, China surpassed Germany as the world’s biggest exporter, adding to the list of economic areas where it ranks number one. According to China’s customs agency, the country’s 2009 exports totaled more than $1.2 trillion. Germany’s foreign trade organization estimated that that country’s exports were $1.17 trillion for 2009. This is yet another sign of China’s rapid rise and of the movement of world economic power from West to East.[i] China is also the world’s largest automobile market, having surpassed the U.S. in 2009. Plus, it is the biggest steel maker, and has the largest hydroelectric facility, the fastest train, and six of the world’s ten longest bridges.[ii]

China’s Economy and Economic Strategy

China became the world’s third largest economy in 2007, overtaking Germany, and it is expected to become the world’s second largest economy, unseating Japan, as early as this year.[iii] Forecasts by the Energy Information Administration, the U.S. Department of Energy’s statistical arm, predict that China will replace the U.S. as the world’s largest economy within the next 15 years.[iv]

As a result, Chinese economic growth rose to 8.9 percent in the third quarter of 2009, and the government is forecasting a full-year expansion of 8.3 percent. China’s trade boom has helped Beijing pile up the world’s biggest accummulation of foreign currency reserves— more than $2 trillion.[vi] Meanwhile, the U.S. and other countries are still struggling with a recession, continued high unemployment, and an energy policy that retards its growth.

The People’s Daily, a Chinese newspaper, indicated that the large level of economic growth achieved in 2009 was due to its leaders’ ability to make quick decisions and to ensure that underlings carry them out, something that leaders of the free-market countries cannot do.[vii]

The Auto Race

In the area of automobile sales, the China Passenger Car Association reported that China’s total vehicle sales soared 45 percent in 2009, to an estimated 13.6 million, partly as a result of the Chinese government’s stimulus programs. By contrast, U.S. sales of cars and light trucks dropped 21 percent last year to 10.4 million,[viii] because of the recession, credit crisis, uncertainty regarding government stimulus programs, and worries concerning the financially troubled U.S. automobile industry. That made last year the worst U.S. auto sales year since 1982.

Except for August, when U.S. auto sales were boosted by the cash-for-clunkers incentive program, China sold more vehicles than the U.S. in every month since January of last year. Increasingly, global auto makers are also looking to China for sales.[ix]

Kevin Wale, president of General Motors’ China Group, expects Chinese auto sales to grow to 14.5 million to 15.5 million in 2010, far above the level predicted for the United States (11.5 million to 12 million), creating a gap that may be too large to close. [x] There is uncertainty, however, among analysts regarding how much China’s auto sales will grow this year. Some think growth may be as low as 5 percent, whereas others think it may be as much as 15 percent, increasing Wale’s range slightly.[xi]

One reason why analysts do not believe the strong sales growth experienced in 2009 can be repeated is the scaling back of the Chinese government stimulus for autos. China’s central government last January halved the sales tax from 10 percent to 5 percent on smaller-engine vehicles, which resulted in the sales boom. But for 2010, the sales tax is set at 7.5 percent on small cars.  And while that is still lower than the normal 10 percent rate, the effect that the economic stimulus policies had in 2009 could subside in 2010.[xii]

The Auto Industry in China

General Motors has been making headway into China’s auto sales, with 14 factories there and more than 1.8 million cars sold in 2009, just shy of its U.S. sales of slightly more than 2 million vehicles. While Buicks in the U.S. are deemed cars for the 60-and-over crowd, many young and middle-aged Chinese like what GM delivers in its Buick series. However, China has its own automobile manufacturers, who are ready to make headway into the booming Chinese auto market as well as into overseas markets.[xiii]

The Great Wall Motor Company Limited, for example, is a large multinational automaker, with product sales in more than 120 countries and regions. The company, which has more than 30 subsidiaries and over 22,000 staff members, manufactures sedans, sport utility vehicles, and pickups. It has an annual capacity of 400,000 vehicles and the capability to independently produce key parts such as engines and front and rear axles.[xiv]

Another Chinese auto company, BYD or Build Your Dreams Auto, has grown to be one of the largest automakers in China in just seven years. In 2009, BYD sold 450,000 vehicles, and the company expects sales to increase to 800,000 this year. The company’s goal is to be China’s top automaker by 2015 and number one in the world by 2025. Bolstered in part by Warren Buffett’s 10 percent investment in the company, BYD has plans to begin selling vehicles in the U.S. by the end of 2010. It also plans to market a fully electric crossover called the e6 that uses a proprietary ferrous battery technology. BYD claims that the five-passenger e6 can go 205 miles between charges, double the expected mileage of electric vehicles in the works by Nissan and Ford. The company also purports that the e6 can be fully recharged in less than one hour when plugged into a high-voltage outlet and that a 10-minute charge will replenish the battery to 50 percent.[xv]

China’s Oil Imports Reach Record Share

To fuel both its growing economy and its transportation vehicles, China in 2009 imported 52 percent of its total oil consumption (204 million tons versus 190 million tons produced domestically). According to the China Daily, importing more than 50 percent constitutes a “globally recognized energy security alert level.”[xvi]

According to the chief geologist with the Chinese Ministry of Land and Resources, Zhang Hongtao, “This year we will control the amount of imported oil and accelerate the exploration of domestic oil and natural gas.”  He added that, owing to the country’s fast economic development, increased oil imports would continue for a long time and that China urgently needed to step up the exploration and development of natural gas as a substitute energy source.[xvii]

However, China has already agreed to purchase 1.04 million barrels per day from Saudi Arabia, up 12 percent from its 2009 import levels. This is a larger percentage increase than in 2009, when its imports from Saudi Arabia increased almost 10 percent over 2008 levels. China is now the world’s second largest oil consumer, behind the U.S.[xviii]

Believing in diversity of supply, China has made a bid for Canadian oil sands, reaping benefits from threatened U.S. energy policies that would limit such imports. The Canadian government recently approved PetroChina’s $1.8 billion bid for Alberta oil sands, making this PetroChina’s largest North American investment and providing a foray into the Canadian natural resource sector. Under the agreement, PetroChina will assume a non-operating majority interest in two oil sands projects in northeastern Alberta, which is believed to hold 5 billion barrels of recoverable reserves. In addition, PetroChina has agreed to invest $250 million to fund its equity share of the project’s development through 2013.[xix]

The prediction for China’s total crude oil imports in 2010 is a 15 percent increase over 2009 levels. While crude oil prices are still low, China is expected to launch the second phase of its state petroleum reserve, according to China Oil, Gas & Petrochemicals, a report published by the state-run Xinhua news agency.[xx] Phase one consisted of a 101.9 million barrel reserve, which was mostly completed by the end of 2008. The second phase of an additional 170 million barrels is expected to be completed by 2011. Recently, Zhang Guoboa, the head of the National Energy Administration in China, indicated that there will be a third phase that will expand reserves by 204 million barrels, with the goal of increasing China’s petroleum reserves to 90 days of supply by 2020.[xxi]


China is savoring in its world domination of export markets and auto sales, while quietly ensuring that it has the energy to sustain its economic development. Its economic stimulus policies have actually put the country on a path of huge economic growth, while the U.S. is still seeing high unemployment and slow economic growth. Our energy policy of going “green” (empasizing wind and solar power) while stalling the development of fossil energy, has resulted in more expensive and highly-subsidized energy and an increase in jobs that are temporary at best. Our government may need to learn by example from other countries, a policy that it hasn’t had to adopt in a very long time.

[i] China becomes biggest exporter, edging out Germany,” Associated Press, January 10, 2009,


[ii] The Economist, China’s Economy: Not Just Another Fake, January 14, 2010, , and China Daily, The fastest in the world, December 28, 2009,

[iii] China becomes biggest exporter, edging out Germany,” Associated Press, January 10, 2009,

[iv] Energy Information Administration, International Energy Outlook 2009,

[vi] China becomes biggest exporter, edging out Germany,” Associated Press, January 10, 2009,

[vii] As China Rises, Fears Grow on Whether Boom Can Endure,New York Times, January 11, 2010,

[viii] GM Exec: China Likely to Keep Auto Sales Lead,New York Times, January 13, 2010,

[ix] China Overtakes U.S. to Become Largest Auto Market,The Wall Street Journal, January 12, 2010,

[x] GM Exec: China Likely to Keep Auto Sales Lead,New York Times, January 13, 2010,

[xi] China Overtakes U.S. to Become Largest Auto Market,The Wall Street Journal, January 12, 2010,

[xii] Ibid.

[xiii] GM Exec: China Likely to Keep Auto Sales Lead,New York Times, January 13, 2010,


[xv] Chinese Company Wants to Build Your Dream Car,”, January 15, 2010,,2933,583042,00.html

[xvi] Oil Imports Hit an Alarming Level in China: Study,China Daily, January 14, 2010,

[xvii] Ibid.

[xviii] China oil imports from Saudi to rise by 12% in 2010, November 22, 2009,

[xix] China Buys Into Canadian Oil Sands,Oil Voice, January 3, 1020,

[xx] Reuters, January 19, 2010,


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