Billionaire entrepreneur and Tesla Inc. (NASDAQ:TSLA) CEO, Elon Musk’s one-word response to a post on X is shedding light on the sheer size and scale of China’s economy, while also busting assumptions regarding the East Asian giant’s reliance on the United States.
China’s Massive Domestic Market
On Sunday, Musk responded to a post by energy executive Jesse Peltan on X, regarding the size of China’s domestic market, with a one-word response, “Yup.”
Peltan said, “Exports are only 20% of China’s GDP,” which currently stands at $19.4 trillion, and in this, exports to the U.S. account for just “15% of that,” or 3% of the nation’s total GDP, highlighting that the nation is far less dependent on the United States than it is often assumed.
See Also: Nvidia Eyes Bigger AI Chip Output After China Orders Flood In
The post concluded by saying that the “Chinese domestic market is way bigger than people realize,” which was endorsed by Musk, prompting active discussions on X.
China’s Trade Surpluses Understated
Despite the tariffs, trade tensions and other geopolitical uncertainties, China’s trade surplus touched an unprecedented $1.2 trillion for the trailing twelve months in August this year.
According to the U.S. Census Bureau, China’s trade surplus with the United States stands at $160.47 billion through September this year, which marks a sharp decline from nearly $220 billion during the same period last year, before President Donald Trump’s tariff regime.
Several prominent experts, however, believe that the nation’s actual trade surpluses run a lot deeper than official data reveals.
Investor Peter Thiel has pointed to American imports from other nations that come with significant Chinese-made components or value-added contributions.
Similarly, Economist Brad Setser has accused China of masking billions of dollars in unreported trade surpluses, which he said could be worth north of $500 billion.
Tesla’s China Sales Under Pressure
While Musk has long known the potential of the world’s second most populous nation, which is also Tesla’s biggest market outside of the U.S., the company’s sales have come under pressure this year, with the automaker on track for its first annual sales decline in the market since entering it more than a decade ago.
This comes amid growing consumer demand issues, alongside intensifying competition from homegrown companies such as BYD Company ADR (OTC:BYDDY) (OTC:BYDDF) and Geely Automobile Holdings LTD (OTC:GELYF).
The Company’s year-to-date sales in China stood at 531,855 towards the end of November, which means it has to sell 125,520 units during the current month to reach its last year’s total of 657,105 vehicles.
Shares of Tesla were up 2.71% on Friday, closing at $458.96, and are up 0.86% overnight. The stock scores high on Momentum in Benzinga’s Edge Stock Rankings, with a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock, its peers and competitors.
Read More:
Photo Courtesy: Photo Agency on Shutterstock.com
Recent Comments