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China: 5-year plan

Is China ready to help save the world?

Marketplace Staff Jun 2, 2011
China: 5-year plan

Is China ready to help save the world?

Marketplace Staff Jun 2, 2011

Tess Vigeland: Kai — as we’ve been noting this week — is on assignment in China. You may remember he and a crew broadcast from Shanghai and Chongqing five years ago. A lot’s happened since then both in China and globally. First and foremost, the financial crisis and Great Recession. So they are back visiting those two cities for an update.
‘Cause after all, we’re all kind of counting on the Chinese economy to step up and help save the world.

So Kai joins us from Shanghai. Hey Kai!

Kai Ryssdal: Hey Tess.

Vigeland: Or I suppose I should say ni hao?

Ryssdal: Ni hao, there you go. That’s pretty good.

Vigeland: Thank you very much. So anything interesting happen so far?

Ryssdal: Lots interesting. You can’t come to this country and you can’t come to Shanghai without interesting things happening. But here’s just one: We were out doing some stories on American companies here and Chinese consumers and we talked to some folks at GM. And we went out to a Chevy dealership, the biggest one in China. And I was talking to the sales woman there about how she sells to Chinese customers. So I said all right, well listen, give me the sales pitch.

Vigeland: How’d she do?

Ryssdal: Well she did pretty well actually. First of all, she’s saying it’s got good gas mileage and it’s a good value for your money. So I decided to throw her a curve ball and I said, “Listen, I’m sorry but I have four children and they are just not going to fit in this car.” And two things happened. One was you could see a look come across her face ’cause nobody’s ever going to walk into a Chinese car dealership and say I’ve got four children because of the one-child policy. But the other thing she said was, “Well sir, then I think you’ ought to buy two.” So you give her points for thinking on her feet, right? But it’s also a little insight as to why GM is doing as well as it’s doing here. Which is by the way, really really well.

Vigeland: Well let’s about GM for a minute since they might be one of the biggest American success stories there, aren’t they?

Ryssdal: Yeah, they are absolutely one of the biggest American success stories. And I’ll give you an example: the Buick. You see ’em all over the place over here. They are a status symbol for a certain section of the market. There’s a part of the Chinese car-buying public that buys cars not to drive them, but to be driven around in. So what GM said was listen, we need to make a car with a longer wheel base that gives more room in the back end for the person who’s being chauffeured around. So they kind of figured out that little thing. But I was having a conversation with the head of GM China the other day and I asked him about the company’s growth because it has been unbelievable. They went from 500,000 cars a year five years ago when Marketplace was here to 2.3 million cars every single year. That’s like the definition of explosive growth. And I said how do you plan for that? And he said, “Oh, I just plan to stay a full factory ahead.” So this guy is selling more cars in China than GM North America. He’s making billions of dollars. And what he’s doing is he’s planning, by the factory-full, his expansion. Which is kind of amazing.

Kai at a Chevy dealership in Shanghai.

Vigeland: Boy, that just says it right there. So good for GM, also seems like it’s good for the U.S., the world even. You’ve got the global downturn. Industrialized nations growing at 3-4 percent at best. China still going great guns at 7-8 percent. So are you getting the sense that Chinese people are ready to step up and help drive the rest of the global economy? Are they ready to spend?

Ryssdal: So here’s the thing. So when we came here the last time, the basic question we were asking was: Should Americans be afraid of China and its growing economic power? And our reporting at that time basically led us to the conclusion of no because there are so many other things going on here. That’s exactly the same now. I think in a roundabout way of answering your question, they just have their hands full over here. Yes, there are some problems in the American-Chinese relationship, right? They control our debt. We’ve got a trade gap. All of that stuff. But I think if you go out on the street outside my hotel and you ask the average person, they are way more worried about inflation at 5 percent, what food is going to cost next month, than they are about what their purchasing power means for American GDP. I’ll give you one more example on the possibility of a downside risk here. We did some interviews yesterday about real estate in Shanghai, which is unbelievably high. We talked to this 24-year-old guy who owns his own apartment. He just bought another one last month at the top of the market. So I said to him, aren’t you worried that this is all going to come crashing down? And he looked at me and he said, “No, Shanghai real estate will never lose money.” So I tried to explain to him the whole American real estate crash thing, and he looked at me and said, “Shanghai real estate is different.” So we agreed to disagree, I guess.

Vigeland: All right. Kai Ryssdal joining us from his hotel room in Shanghai. Hey, do me a favor would you? Teach me how to say goodbye.

Ryssdal: Zai jian.

Vigeland: Zai jian.

Ryssdal: Zai jian. Literally I will see you again. Zai, again. See you, jian.

Vigeland: Auf wiedersehen.

Ryssdal: See you later.

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