Cash-strapped local governments in China have begun auctioning off fleets of officials’ luxury cars as part of efforts to bolster revenues hit by the country’s slowdown.Government officials in any country don't like to give up perks. With the Chinese central bank slowing (but not stopping) money printing, things are getting tight.
Wenzhou, a south-eastern coastal city hit hard by the cooling economy, sold 215 cars at the weekend, fetching Rmb10.6m ($1.7m). It plans to sell 1,300 vehicles – 80 per cent of the municipal fleet – by the end of the year...
Wenzhou is not alone. Across the country, from Kunming in the south to Datong in the north, officials have been tightening their belts, paring back on banquets, curtailing travel and trimming the fleets of tinted-window luxury cars that have long been standard issue – even in the middle ranks of government...
Yulin, a city in Shaanxi province that until recently boomed from its coal mines, raised Rmb5.6m on one day in June by selling 19 cars – an average of Rmb292,600 per vehicle, according to the Communist party newspaper People’s Daily. Up for grabs were black Audis, the car of choice for Chinese officialdom, though the hottest item was a Toyota Land Cruiser, much coveted on mining roads.
Other cities, including Changzhou and Nanchang, said they started auctioning cars last year. The trend is also spreading to poorer villages, with Yuan’an, a farming county in central China, boasting on its official website about a June 18 auction that netted Rmb220,000.
Also of note are the indications of major government presence in the economy. The same FT article points out:
Cities have been told to keep police cars and ambulances, but to sell the chauffeured sedans that do not comply with government policy.Although there are significant pockets of free market activity in China, there is much central planning that goes on beyond central bank money printing that will make the money printing induced boom-bust business cycle crash a crash that will be heard around the world.
About one in every five Audis in China – the German car’s biggest market – is owned by the government, according to industry estimates.
Of course, it will be blamed on free markets, but it is the money printing and central planning that has led to ghost cities and the developing economic slowdown.