gm.jpgWhich is the largest state-owned car manufacturer in China? Its a trick question for the answer is General Motors.

After its near-death experience, GM emerged from bankruptcy protection last week and is now majority-owned by the US and Canadian governments.

Those humbled by the fall from grace of this once invincible American giant were in for a second shock last week.

During the press conference announcing General Motor's Lazarus-like resurrection — made possible by billions of dollars of government aid — the company's CEO Fritz Henderson disclosed that GM had sold more cars in China than it had in the US so far this year.

The fact that the company's Buicks and Cadillacs are apparently more popular in China than they are back home serves as a wake-up call for those still see China as an “emerging” car market.

Granted, the uncertainty surrounding the US giant's future and the recession have conspired to depress GM's domestic car sales to artificially low levels in recent months. Deliveries of GM vehicles from US dealers in June 2009 were a third lower than in June 2008 while production at GM's North American plants collapsed 74% over the same period.

But there is no hiding the fact that sooner or later, China is going to permanently overtake the US as GM's largest market — officially it is currently GM's second most important market.

Reflecting the strategic importance of China, GM has created a new company, GM International Operations (GMIO) to oversee all GM's operations outside of North America and its boss, Nick Reilly, will be based in Shanghai.

That means that GM's operations around the world will answer to Shanghai rather than the clutch of regional presidents that GM had previously.

General Motors expects its sales volume growth in China to exceed 20% this year, after reporting a surge in H1 sales of 38% year on year. In 2008, the auto giant sold 1.1m vehicles in China.

Last month, China's car manufacturers produced more than 1m automobiles, which is twice the monthly production of Japan's domestic industry. Car sales in the Chinese market rose 48% year-on-year in June, rocketing China into the top position in vehicle sales so far this year.

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