Two Hurting Auto Industries And ETFs, Two Approaches

The Big Three in the United States aren’t the only car makers feeling the economic slowdown: the same crisis is taking place in China, not great news for related exchange traded funds (ETFs). But the two countries are coming at the problem very differently, and it will be interesting to watch which tactic works better.

A dramatically noticeable slowdown in sales in China have Chinese car executives cutting production, putting off plans to export to the United States and looking to Beijing for some help, reports Don Lee for the LA Times. The Chinese automakers however, are not in such “dire straits” as the U.S. automakers who are pleading for $25 billion in aid.

Chinese auto workers are actually asking for policy changes such as lower consumption taxes and lower pump prices, in hopes of triggering sales. The Chinese automakers such as Shenzen BYD Auto are not short on money, they just have no place for exports to go.

• iShares FTSE/Xinhua China 25 Index (FXI), down 62.3% year-to-date

• PowerShares Golden Dragon Halter USX China (PGJ), down 67.8% year-to-date

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