Trade

Why A Chinese Buyer Is Key To GM's Global Growth

A woman walks past a General Motor's veh
Frederic J. Brown/AFP

"Chinese Plan to Buy Stake in GM" — the headline splashed across the top of this weekend's WSJ — pushes a lot of buttons.

Given the popular economic narrative of the moment, it's easy to read that headline as: "Rising economic rival to buy fallen American industrial giant."

In fact, though, this is the result of a long-term relationship that's been hugely helpful for GM.

The buyer is a Chinese automaker called SAIC, which is expected to invest about $500 million in GM's IPO this week. That would give SAIC a 1 percent stake in GM, according to the WSJ, Bloomberg and Reuters.

GM and SAIC have been partners in China for more than a decade, and things seem to be going very well: GM is on track to sell more cars in China than in the U.S. this year. And the car market there is growing fast, as China's middle class explodes.

What's more, GM and SAIC are partnering to expand into India, another fast-growing car market.

In that context, SAIC's planned investment in GM looks more like the latest step in a global partnership that's central to GM's comeback, not some kind of parable about the rise of China and the fall of the U.S.

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