The bill clearly falls short of the $34 billion the Big Three were asking for, but should be enough to keep the automakers running through January, when the new Congress and Obama administration take the wheel.

As previously reported in Money Morning, there will be limits on executive pay, prohibitions for golden parachutes and requirements that the automakers get rid of their corporate aircraft and not pay dividends while loans are outstanding. The bill also provides a “car czar,” or presidential appointee, to oversee keep tabs on the companies’ restructuring efforts.

Of course, the bill is still awaiting congressional approval and there is cause to believe it may stall in the Senate.

Sen. Richard Shelby, R-AL, was a member of the panel that twice grilled Big Three CEOs and one of the bailout’s most vocal critics. Yesterday (Wednesday), Shelby threatened to filibuster the deal if it reaches the Senate.

It’s interesting to note that Shelby’s home state of Alabama, has built three foreign car assembly plants – Honda Motor Corp. (ADR:HMC), Mercedes-Benz and Hyundai – as well as a Toyota Motor Corp. (ADR:TM) engine plant, in the past 20 years.

Shelby’s efforts induced the formation of Boycott Alabama Now, a group that says it wants America to give Shelby a taste of what he’s doing to America. Such a boycott “will include any travel into the state well as boycotting the purchase of anything produced in any way within the state,” according to the group’s Web site.

Senate Minority Leader Mitch McConnell expressed reservations about the bill’s legislation and doubts it’ll garner enough Senate votes to pass. The state he represents, Kentucky, has a 7,000 employee Toyota plant, The Boston Globe reported.

Then there’s Tennessee, the only state with U.S., Asian, and European auto assembly plants. And in an interview with BusinessWeek, Tennessee’s Sen. Bob Corker seems to understand his colleague Shelby’s positions on the bailout more so than his own.

“It has not been an issue of local politics. For me there is no issue of local politics. I try and dig into these issues and present thoughtful responses to the situation. In defense of Senator Shelby, I knew where he was going to be on this issue before this ever arose,” Corker said. “He was against the Chrysler loans back in 1979. He was always going to be against this, as he was against the Wall Street bailout legislation. In his case, it’s not the politics of the auto industry. That’s just who he is.”

But Corker nailed the source of problem.

“Regardless of what happens this week, the legislation, if passed, is not going to move people to buy cars,” Corker said.

Auto Woes Extend Beyond the Big Three

Falling demand is something all carmakers can agree on, especially in Germany, Europe’s largest economy and the home of Europe’s largest carmaker, Volkswagen.

While all focus has been on Detroit’s Big Three, few have noticed that Volkswagen – like Detroit’s Big Three – is trying to bite off its own piece of a broad government bailout. In October, Germany’s parliament passed a $642 billion (500 billion euro) bank-rescue plan to stabilize the country’s banks. And Volkswagen has quietly sought government help for its financial services and banking units.

Premium carmaker BMW said it wasn’t sure if it would ask for similar help, Reuters reported.

That’s why it’s not accurate to assume bailout opponents share the same opinions on the bailout as foreign automakers. As Money Morning previously reported, it’s more than just Big Three employees on the line.

While the Big Three employ more than 200,000 people directly, they support millions more indirectly through suppliers and dealerships. The collapse of the Big Three could ultimately cost the economy more than 2 million jobs total. And that doesn’t count the estimated 1 million Americans – including many retired autoworkers – who rely on the U.S. auto companies for pension and healthcare benefits.

According to Germany’s VDA industry group, parts purchased by manufacturers account for 75% of the value of an average car, Bloomberg reported.

Here in the United States, as many as 60% of Honda’s U.S. parts suppliers are also major parts sources for the Big Three.

If a manufacturer’s major customer goes under, it too may scale back operations and therefore be unable to meet the manufacturing and shipping demands of another customer.

“You can’t underestimate what would happen when a large player collapses,” BMW Chief Executive Officer Norbert Reithofer e-mailed to Bloomberg. “That would impact the supplier structure and therefore the entire industry.”

The United States is also the largest market for most foreign automakers. Allowing one or all of the Big Three to go under would add millions to the running unemployment numbers and deepen the recession, making the U.S. market less likely to buy their cars.

Source: Auto Bailout Awaits Congressional Approval with Millions of Jobs at Stake

Why U.S. automakers can’t import smartly designed, well-made little cars that get 50 miles per gallon into the United States is absolutely beyond my comprehension.

Particularly because they already make those cars, and because oil prices (as well as gasoline prices) are destined to move even higher from here.

If you don’t believe me, let me tell you about the little beauties I saw in downtown Shanghai early one recent morning.

They’re made by Buick – a General Motors Corp. (GM) nameplate that’s on its way to extinction in its home U.S. market.

Here in China, on the other hand, Buick is a luxury car of choice. Buick’s also known for making sporty “econo-boxes” that offer a little bit of zip.

Ford Motor Co. (F), too, seems to have gotten back to its once-successful roots by “bringing a better idea” to the Chinese market. It’s not a luxury car, but it does demonstrate some global thinking. The car I’m referring to is the Ford Focus, a “world car” designed so that a common chassis can be adapted for virtually every key market around the world. The car started out as the “Euro Focus,” so it was imbued with a sporty, sophisticated design and image right from the starting line. And it shows – it gets very high marks from Chinese buyers.

But it, too, remains “unavailable” in the U.S. market – at least the sporty designs that I’m seeing here [although our crack Money Morning research team back in the States did some digging and were able to tell me that the Focus could debut in the U.S. market by 2010 or 2011]. European competitors such as Germany’s Volkswagen AG (OTC: VLKAY), and France’s PSA Peugeot Citroen SA, with its Citroen and Peugeot nameplates, both, also are clamoring for share on Chinese streets.

There’s a good reason for all this interest: Here in China, auto sales are growing by 15% to 20% a year, with no signs of slowing down. Where as this used to be bicycle heaven, it’s now bicycle hell.

Much of that torrid growth is being “driven” by locals who are buying their first cars. But, believe it or not, rental-fleet operators are becoming more-frequent customers, especially in such major cities as Shanghai and Beijing, and in Hong Kong, one of the two “special administrative regions” in the People’s Republic of China.

And “rental fever” is reflected in the emergence and fast growth of such companies as the Anji Rental and Leasing Co Ltd., which expects profits to soar beyond its usual 50% growth rate in 2008 and revenue to exceed the normal 25% to 30% rate the company consistently has been booking in recent years.

Much of that recent acceleration in sales and profits, according to company representatives, is being fueled by the looming Summer Olympic Games in Beijing. But Anji – a joint venture between Shanghai Automotive Industry Sales Co. Ltd., and Avis Europe PLC, expects this higher-than-normal business volume to continue after the Olympic games, because of the World Expo to be held in Shanghai in 2010.

To prepare for this, Anji is opening offices all over China, including locations at Beijing’s International Airport and at both of Shanghai’s airports. The rental firm is also taking steps to align itself with Avis’ globally available services, including – for the first time ever – enabling foreigners to reserve cars before arriving in China.

And in China’s red-hot competitive markets, companies like Hertz Global Holdings Inc. (HTZ), Bole International Car Rental, RuiJie Auto Rental and ShangCar are right behind them – pun absolutely intended.

Unfortunately, both the auto-manufacturing and car-rental businesses remain small and highly fragmented, meaning there is no clear pathway to profit – not yet, anyway.

But there is an alternative.

Many cars here lack critical safety features that are standard in both Europe and North and South America. Take air bags. Here in China, less than 60% of the cars come equipped with them. But as demand for cars and trucks continues to grow, consumers will become more informed about safety features.

The upshot: Beijing is expected to mandate higher automobile-safety requirements that fall in line with international standards within five years. That means that companies that have already started incorporating global safety requirements into their daily business operations have given themselves a real competitive advantage – both here in China, and in the growing global markets that even include the United States.

Our tour group just met with the top two executives – the chief executive officer and the chief financial officer – of one such company: Jinheng Automotive Safety Technology Holding Ltd. (HK: 8293).

If you’ve never heard of the company, don’t worry. You probably will in the near future.

Jinheng is the leading automotive safety airbag supplier in China, and will likely become a global force in the very near future.

The company already makes products used in more than 60 different vehicle models produced by 30 different manufacturers in China, the Middle East and Europe. And the company is growing rapidly, with the expectation that it will be adding new international customers this year.

Jinheng’s shares are trading at a compelling eight times earnings, right now, and is arguably undervalued. Furthermore, the company has fulfilled the requirements needed to advance from Hong Kong’s secondary board (exchange), to the larger and more prestigious main board.

When that happens, expect the company’s visibility to increase, making it much easier to attract large blocks of capital it can then use to finance its global aspirations.

And stay tuned … as this Money Morning series continues, we’ll have many more such “on-the-ground” observations to bring your way. And we continue to believe that China will be a key to any investor’s ultimate success.

["The View From China" is an investing travelogue chronicling Investment Director Keith Fitz-Gerald’s current journey through Mainland China. Next up: A look at how China has played a key role in causing worldwide energy prices to increase.]