China’s dizzying growth rate continues to make jaws drop in the west at an ever-increasing rate, but there has been a small sign this week the country will be no pushover when it comes to its own backyard.
This is China’s moment and the Oriental powerhouse shows no sign its express train is slowing down – in fact its exponentially rising sets of figures are giving those in such a planned economy pause for thought as the spectre of over-heating and resulting inflation looms.
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The other item giving the Chinese government a headache is the increasingly vitriolic spat between the US and China concerning the status of the weak yuan which shows no sign of abating – in fact much the opposite – with some pretty fierce rhetoric emanating from both sides.
But despite the tough war of words, China is not letting its own industry run amok, despite some received wisdom that might be the case.
Take the judgement handed down by China’s Land and Resources Ministry this week, delivering a RMB2m or around US$300,000 fine to BYD for apparent irregularities surrounding its acquisition of land to build a new factory.
The Chinese central authorities have made it plain to BYD they will not tolerate expansion for its own sake and have imposed the slap on the wrist as a clear message to other automakers – and producers of other goods for that matter – that expansion will not be allowed to proceed at any cost.
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By GlobalDataDetails of exactly why the Land Ministry was so irked by BYD remain clouded in mystery – BYD was understandably reluctanct today (15 October) to disclose the exact judgement to just-auto – but it represents the culmination of a difficult time for the Chinese manufacturer which has seen its forecasts drastically curtailed from the previous heady numbers.
Meanwhile, just what the ‘Sage of Omaha’ – or Warren Buffett to his friends – will make of the latest BYD twist is anyone’s guess.
The renowned US investor has ploughed a not inconsequential US$200m of his hard earned money into BYD, so how will he react to the Land Ministry’s punitive fine?
There’s a “will he won’t he” aspect to Buffett at the moment concerning BYD. Take your pick of myriad crystal ball gazers – some are predicting he will extract his money and go – others that quite the contrary – he will actually increase his stake in the car and battery maker.
Some analysts are sceptical Buffett is in it for the long term with BYD, but nonetheless maintain he won’t walk away empty-handed either.
And lurking in the background is the Chinese government, which has shown this week it has teeth to bare just as much with one of its own as well as the US Treasury.
