China Going Crazy for SUVs

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The SUV craze has hopped the Pacific Ocean and headed to China:

Gone are the days when buyers in China, the world’s largest car market since 2009, mostly purchased fuel-sipping compacts and subcompacts. Their shift toward larger and ever-more-numerous vehicles is not only driving up China’s oil import bill and contributing to pollution but is also fattening automakers’ profits — and manufacturers made clear over the weekend that they plan to infuse the market with large vehicles.

General Motors announced that it would introduce nine new or restyled S.U.V. models in China in the next five years, and disclosed that it would build four more factories and add 6,000 jobs to accommodate its ever-rising sales here.

This is why global consumption of oil doesn’t respond very strongly to higher prices. As incomes go up in developing countries, demand for oil also goes up, and this offsets the reduction in demand due to higher oil prices. You can see this vividly in China, where incomes are increasing steadily and, sure enough, the newly emerging middle class wants SUVs even though world oil prices remain pretty high.

So what does reduce oil demand? Lower incomes, of course. Recessions reduce oil demand quite nicely. That’s not the answer anyone wants, but it seems to be the correct one.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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