The Chinese government's strong countermove followed a weekend of nationalistic vitriol against the United States on Chinese Web sites in response to the tire tariff. "The U.S. is shameless!" said one posting, while another called on the Chinese government to sell all of its huge holdings of Treasury bonds.

The impact of the dispute extends well beyond tires, chickens and cars. Both governments are facing domestic pressure to take a tougher stand against the other on economic issues. But the trade battle increases political tensions between the two nations even as they try to work together to revive the global economy and combat mutual security threats, like the nuclear ambitions of Iran and North Korea.

Mr. Obama's decision to impose a tariff of up to 35 percent on Chinese tires is a signal that he plans to deliver on his promise to labor unions that he would more strictly enforce trade laws, especially against China, which has become the world's factory while the United States has lost millions of manufacturing jobs. The trade deficit with China was a record $268 billion in 2008.

China had initially issued a fairly formulaic criticism of the tire dispute Saturday. But rising nationalism in China is making it harder for Chinese officials to gloss over American criticism.

"All kinds of policymaking, not just trade policy, is increasingly reactive to Internet opinion," said Victor Shih, a Northwestern University specialist in economic policy formulation.

Eswar Prasad, a former China division chief at the International Monetary Fund, said that rising trade tensions between the United States and China could become hard to control. They could cloud the Group of 20 meeting of leaders of industrialized and fast-growing emerging nations in Pittsburgh on Sept. 24 and 25, and perhaps affect Mr. Obama's visit to Beijing in November.

"This spat about tires and chickens could turn ugly very quickly," Mr. Prasad said.

China exported $1.3 billion in tires to the United States in the first seven months of 2009, while the United States shipped about $800 million in automotive products and $376 million in chicken meat to China, according to data from Global Trade Information Services in Columbia, S.C.

For many years, American politicians have been able to take credit domestically for standing up to China by taking largely symbolic measures against Chinese exports in narrowly defined categories. In the last five years, the Commerce Department has restricted Chinese imports of goods as diverse as bras and oil well equipment.

For the most part, Chinese officials have grumbled but done little, preferring to preserve a trade relationship in which the United States buys $4.46 worth of Chinese goods for every $1 worth of American goods sold to China.

Now, the delicate equilibrium is being disturbed.

China's commerce ministry announced Sunday that it would investigate "certain imported automotive products and certain imported chicken meat products originating from the United States" to determine if they were being subsidized or "dumped" below cost in the Chinese market. A finding of subsidies or dumping would allow China to impose tariffs on these imports.

The ministry did not mention the tire dispute in its announcement, portraying the investigations as "based on the laws of our country and on World Trade Organization rules."

But the timing of the announcement — on a weekend and just after the tire decision in Washington — sent an unmistakable message of retaliation. The official Xinhua news agency Web site prominently linked its reports on the tire dispute and the Chinese investigations.

The commerce ministry statement, posted on its Web site, also hinted obliquely at the harm that a trade war could do while Western nations and Japan struggle to emerge from a severe economic downturn. "China is willing to continue efforts with various countries to make sure that the world economy recovers as quickly as possible," the statement said.

The Chinese government sometimes organizes blog postings to defend its own policies. But some postings on the tire decision have been implicitly critical of the Chinese government, making it unlikely that they are part of an orchestrated effort.

"Why did our government purchase so much U.S. government debt?" said one posting signed by a "Group of Angry Youths." It continued, "We should get rid of all such U.S. investments."

China has accumulated $2 trillion in foreign reserves, mostly in Treasury bonds and other dollar-denominated assets, and held down the value of its currency, which has kept Chinese goods quite inexpensive in foreign markets. China's exports have soared — China surpassed Germany in the first half of this year as the world's largest exporter — while China's imports have lagged, except for commodities like iron ore and oil that China lacks.

Worries that China might sell Treasury bonds — or even slow down its purchases of them — have been a concern for the Bush and Obama administrations as they have tried to figure out how to address China's trade and currency policies.

At the same time, the Chinese economy relies heavily on exports to the United States, while the American economy is much less dependent on exports in the other direction. Exports to the United States, at 6 percent of China's entire economic output, account for 13 times as large a share of the Chinese economy as exports to China represent for the United States economy.

Carol J. Guthrie, a spokeswoman for the Office of the United States trade representative, said that the United States wanted to avoid disputes with China and continue talks, but would look at any Chinese trade decisions for whether they comply with W.T.O. rules.

Products involved in trade disputes between the United States and China together make up only a minuscule sliver of the two countries' trade relationship.

The bigger risk for China, economists and corporate executives have periodically warned, is that trade frictions could cause multinationals to rethink their heavy reliance on Chinese factories in their supply chains. The Chinese targeting of autos and chickens affects two industries that may have the political muscle in the United States to dissuade the Obama administration from aggressively challenging China's policies.

General Motors sees much of its growth coming from its China subsidiary, the second-largest auto company in China after Volkswagen. And the farm lobby in the United States has long pressed for maximum access to a market of 1.3 billion mouths.

But spotlighting automotive trade may be risky for China. G.M. and Ford both rely mostly on local production to supply the Chinese market, while China is rapidly increasing auto parts shipments to the United States.

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VW plans new electric car at Frankfurt Auto Show; will continue to ... - Fort Lauderdale Sun-Sentinel

Posted: 14 Sep 2009 11:23 PM PDT

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GEORGE FREY AP Business Writer

1:14 a.m. EDT, September 15, 2009

FRANKFURT (AP) — German carmaker Volkswagen AG said it would unveil several new models at this week's Frankfurt Auto Show, including an electric car called the E-Up.

At a reception before the start of the show Monday evening, the company said the E-Up compact would likely only go into production in 2013 and approach production levels of that of its other popular compact cars only by 2020.

The company said the front wheel drive car's lithium ion battery will have 18 kilowatt hours energy capacity enabling a driving distance of around 130 kilometers, or about 80 miles, depending on driving style.

"One of the basic milestones on this timeline is the mass produced electric car," Chief Executive Martin Winterkorn said in a statement.

He said only in high volumes and on all continents could one truly speak of the beginning of the electric age in automobiles and a perceptible reduction of their environmental impact.

"The concept car now being presented in Frankfurt very realistically shows how we envision such a Volkswagen with pure electric drive — technically, visually and with regard to a practical size," Winterkorn said.

The company will also unveil other models that include more of its Blue Motion technology as well as new hybrid technology.

In his speech later in the evening, Winterkorn said the company overall would remain focused on efficiency across the company, and that VW would take the electric car out of the niche market that it's currently in, and bring it to the world at much larger production levels.

"The future will belong to lower emissions and more efficient transportation," he said. "We're releasing one environmentally friendly car after another.

"The VW group is in top form. Today, VW is the most successful multi-brand car group in the world; we have convincing solutions for the entire market."

He said that the company was also confident about the future as it was seeing more positive signals for the economy.

"There are increasing signals that we've seen the bottom; we're looking at this optimistically."

___

On the Net: http://www.volkswagen.com

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Myers Industries closing two plants to cut costs - Cleveland Plain Dealer

Posted: 14 Sep 2009 12:31 PM PDT

by Frank Bentayou / Plain Dealer Reporter

AKRON, Ohio — Akron plastics company Myers Industries Inc. said today it will close parts plants in Shelbyville, Ky., and Reidsville, N.C., by the end of the year, ending 158 jobs at the facilities.

The company, which makes containers for nurseries, parts for the automobile industry and some consumer products, said it needs to cut costs at a time when a lingering economic downturn has brought months of lower sales.

"The decision to close any facility is extremely difficult because of the people and communities it impacts. However, given the changed economic landscape and to better position our business, it is absolutely critical that we further reduce costs, consolidate facilities and fully utilize our high-efficiency molding capacity to enhance productivity," John Orr, president and chief executive officer, said in a written statement.

The company said it will make severance and outplacement support available to employees who lose their jobs. They include 88 people who make injection-molded reusable containers at the Kentucky plastics factory and 70 employees at a blow-molding factory in North Carolina that makes automotive parts.

Work the two plants now do will transfer to other Myers operations in North America, the company said.

Myers intends to incur one-time pre-tax expenses of about $10.6 million with the closings, and it estimates its cash expenses at about $3.4 million. It also expects an annualized pre-tax savings of about $4.5 million.

In a statement, the company said, "Additional options remain under consideration for certain businesses in the automotive and custom segment, including further restructuring or potential divestitures."

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Sonic Automotive Announces Concurrent Offerings of Class A Common ... - PR Newswire

Posted: 14 Sep 2009 07:02 AM PDT

CHARLOTTE, N.C., Sept. 14 /PRNewswire-FirstCall/ -- Sonic Automotive, Inc. (NYSE: SAH) today announced a public offering of Class A common stock and convertible senior notes.

Sonic Automotive intends to offer approximately 9,000,000 shares of its Class A common stock in an underwritten registered public offering. In connection with this offering, Sonic Automotive intends to grant the underwriters a 30-day option to purchase an additional 1,350,000 shares of common stock to cover over allotments.

In conjunction with the common stock offering, Sonic Automotive intends to offer approximately $125,000,000 aggregate principal amount of convertible senior notes due 2029 in an underwritten registered public offering. In connection with this offering, Sonic Automotive intends to grant the underwriters a 30-day option to purchase up to an additional $18,750,000 aggregate principal amount of the convertible senior notes to cover over allotments. The convertible senior notes will be convertible, under certain circumstances, into cash, shares of Sonic Automotive Class A common stock, or a combination of cash and shares, at the option of Sonic Automotive. The offering price, interest rate, conversion price and other terms of the convertible senior notes will be determined by Sonic Automotive and the underwriters.

The closing of the underwritten convertible notes offering and underwritten offering of common stock will not be contingent on each other.

Sonic Automotive intends to use the net proceeds from these offerings to repay all or a portion of the principal amount outstanding on its 4.25% Convertible Senior Subordinated Notes due 2015 (which the holders can put to Sonic Automotive in November 2010) and its 6.00% Convertible Senior Subordinated Notes due 2012. If Sonic Automotive is unable to repay these notes, it will use proceeds from the offerings to repay outstanding amounts under its credit facility.

J.P. Morgan Securities Inc. and BofA Merrill Lynch are acting as joint book-running managers for the offerings. Wells Fargo Securities, Moelis & Company and Stephens Inc. are acting as co-managers for the offerings.

Sonic Automotive has filed a registration statement (including a prospectus and related preliminary prospectus supplements for each of the common stock and convertible senior notes offerings) with the U.S. Securities and Exchange Commission (SEC) for the offerings to which this communication relates. Before you invest, you should read the applicable preliminary prospectus supplement and the accompanying prospectus for more complete information about Sonic Automotive and these offerings. You may get these documents for free by visiting IDEA on the SEC website at www.sec.gov. Alternatively, copies may be obtained from J.P. Morgan Securities Inc., 4 Chase Metrotech Center, CS Level, Brooklyn, NY 11245, Attention: Prospectus Library or BofA Merrill Lynch, 4 World Financial Center, New York, New York 10080.

This release is not an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

About Sonic Automotive

Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is the nation's third-largest automotive retailer, operating 153 franchises.

Included herein are forward-looking statements pertaining to completion of the proposed transactions on the terms described above. There are many factors that affect management's views about future events and trends of Sonic's business. These factors involve risks and uncertainties that could cause actual results or trends to differ materially from management's view, including without limitation, economic conditions, risks associated with acquisitions and risk factors described in Exhibit 99.1 to Sonic's Current Report on Form 8-K furnished on August 21, 2009 and in its other filings with the Securities and Exchange Commission. Sonic does not undertake any obligation to update forward-looking information.

SOURCE Sonic Automotive, Inc.

Website: http://www.sonicautomotive.com