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Quick Hits: China Imports American Vice


Brief scrutiny of today's headlines.

We're continuously bombarded with data showing America's lopsided trade balance with the Far East. In 2007 alone, the United States imported $256 billion more than it exported to China.

Beneath the headlines, however, are some interesting facts about what China is importing from the U.S.

Despite record high oil prices, the Chinese are buying gas-guzzling cars at an astonishing rate. Government subsidies have kept gas prices abnormally low, enabling auto makers like General Motors (GM) and Ford (F) to supplement slackening U.S. demand with sales overseas. GM highlighted the Escalade at a recent auto show in Beijing, and sales of luxury cars and SUVs in China are expected to jump by as much as 45% this year.

Americans aren't just exporting outsized cars. China's ditching its chopsticks and rice for fried chicken and pizza. Yum Brands (YUM), parent company of Taco Bell, KFC and Pizza Hut, reported better than expected first quarter earnings yesterday on the back of strong growth in Asia. Chinese same-store sales rose 12% and profits came in 33% above last year's numbers.

Economists may be fretting about a slowdown in global economic growth, but plenty of multinationals are still expanding at full speed. Yum plans to open 1,000 new stores outside the U.S. for the eighth straight year. In its earnings release yesterday, competitor McDonalds (MCD) cited China as one of the countries exhibiting the strongest growth.

Chinese consumer habits are shifting, and American companies are poised to capitalize.

For more on the the fast food industry, check out Hoofy and Boo's always astute analysis:

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