Beijing Economy Roars, Despite Rumors to the Contrary

BEIJING, The People’s Republic of China – If there’s a recession here in China, I don’t see it.

Granted, I just stepped off the plane here in Beijing a few hours ago, but already the city feels much more vibrant than I expected, given the dire reports that keep appearing in the mainstream Western financial-news media. The Beijing economy appears strong.

Consider the airport. While more subdued than it was just prior to the 2008 Summer Olympic Games, it’s still humming. And the airplane on the flight over here was packed, with nary a vacant seat in sight. Of course, having my luggage actually beat me to the carousel was a big plus – just like it always is. There’s a policy that all bags are unloaded in 12 minutes.

From my hotel room in the Beijing Central Business District, I can see no end of sleek black cars, including the latest VWs, BMWs, Audis and Toyotas. Even Mini Coopers are becoming a common sight. But to many a guy’s dismay. According to my friend Chris Choi, a longtime Beijinger, the girls actually prefer big SUVs, including Range Rovers, Toyota FJs and, of course, the ubiquitous Jeep.

Speaking of cars, the Shanghai auto show kicked off here in China with the world’s automakers vying to get a foothold in this market, which is one of the fastest-growing in the world. Volkswagen AG (ADR: VLKAY), Porsche SE (soon to have closer ties to VW), Bentley Motors Ltd. are all here – and are enjoying record sales in China.

Some carmakers – such as China’s Geely Automobile Holdings Ltd. – are making noises about their global ambitions, too. To those who think that’s unlikely, take a moment to remember how dismissive American consumers were about the prospects of Japan’s automakers back in the late 1960s or early 1970s. And now Japan dominates the American market.
Are you listening, Detroit? I hope so.

I took a quick stroll around the block to shake off some jet lag. In that short time, I noted two new malls filled with Prada, Gucci, Versace and other upscale brands. Gone are the Citigroup Inc. (C) advertisements, but in their place are Deutsche Bank AG (DB) branches, as well as those of domestic China banks, which remain spectacularly liquid – meaning they’ve escaped the vast majority of the credit-crisis contagion.

Then there’s the media. Recent liberalization of media ownership and usage requirements have created a form of Wild West capitalism that our industries once dreamed about, but now only visit in the museums of their boardroom minutes. With ownership restrictions being substantially relaxed, companies that possess global brands are stepping up their efforts to reach consumers through increasingly direct advertising channels that are already making them known.

I’m excited about what I expect that I’ll be able to bring you over the next several weeks.

Stay tuned.

By Keith Fitz-Gerald
Money Morning

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