China, Cars, and Commodities

by Laura Ehrenberg-Chesler on January 14, 2010

in Economic Indicators,Energy,Foreign Markets,Investment Strategies

China recently surpassed the U.S. as the world’s largest auto market.  They also surpassed Germany as the world’s largest exporter.  The economist Ed Yardeni recently wrote that “China’s auto industry will likely be one of the main drivers of economic growth over the next few decades, much as it was during the first half of the 1900’s in the United States.”

Auto makers around the globe are hurrying to expand capacity in China by building new factories and enlarging existing ones.  Ford, Volkswagen, and BMW are among the companies already on the ground in China.

To build a new car or a new factory requires materials like steel, and the iron ore needed to manufacture the steel.  Coal and oil will be required to operate the factories and gasoline will be necessary for the cars to run. 

Commodity prices are probably headed higher this year, as long as China and their car production remain on track.

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