Chinese auto-industry steadfast on its feet by the end of the transition period

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Last updated at: (Beijing Time) Monday, March 29, 2004

Chinese auto-industry steadfast on its feet by the end of the transition period

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Beginning next year China will lift the control over the import quota of auto products.

After reviewing the past two years since China made its entry into the WTO we've found that the auto industry, which was thought likely to bear the brunt, has reacted appropriately and the expected scenario of being seriously pinched by imported automobiles hasn't come to occur.

According to the promise that China undertook when joining the WTO, the protection measures for auto products during the three-year transition period will expire by the end of the coming year. Beginning from next year China will lift the control over auto product import quota. After reviewing the past two years since China made its entry into the WTO we've found that the auto industry, which was thought likely to bear the brunt, has reacted appropriately and the expected scenario of being seriously pinched by imported automobiles hasn't come to occur.

During the two years while customs duty on imported automobiles was reduced drastically and the import was on the constant and big increase, restructuring of domestic auto industry and introduction of foreign investment was conducted at an accelerated pace. We saw a good trend of rapid growth and brisk production and sales in China's auto industry. In 2003 China's auto production for the first time exceeded 4 million, of which more than 2 million were sedan cars. China has become the fourth large auto production country and passed the annual transition review by the WTO two years in a row.

In the face of huge reduction of customs duties and growing import quota the relevant departments brought forward the principle of orderly competition, optimization of structure and guaranteeing domestic production need. It effectively cushioned the impact that the entry into WTO might have on the Chinese auto industry. Meanwhile it expanded the investment of multinational auto giants in China and induced a "big boom" in domestic automobile demand. And it shifted the demand for imported automobiles to homemade ones.

When allocating auto import quota the concerned departments arranged the import of some whole-set components and key parts that could be used in production support so as to satisfy the need of domestic manufacturers to put forward new auto products. According to incomplete statistics new models put forward during the last two years have topped 80. The new models replaced some of the imported automobiles and raised the production technological level and management level of domestic auto enterprises and the grade of home made automobiles; laid down a sound foundation for the development of domestic auto companies and expand employment.

During the two years since the entry of China into the WTO the Chinese auto industry has always been under the wing of extensive trade barrier. Due to the effective efforts of relevant departments and industrial circles it has established a gradually and orderly opening up market environment and created favorable conditions for the development of domestic auto industry. Profound changes have taken place in the Chinese auto industry. Firstly automobile production and sales grow at high speed. Secondly auto product structure tended to be reasonable with the proportion of sedan cars increased dramatically. Thirdly, industrial concentration has grown to certain extent. Fourthly economic performance improved considerably. Fifthly new products come to show continuously, especially new sedan cars. Sixthly auto product export keeps a rapid growth trend. Seventhly industrial restructuring has made a big headway.

While honoring the promises the relevant Chinese departments adopted active guidance measures with regard to whole-car import to avoid the onrush of whole-car import. According to the statistics released by the customs China's whole-car import (including whole-set of accessories) reached 172,683 in 2003 - 100,000 more than the number in 2001. Among them sedan car import for the first time exceeded 100,000. However, the proportion of imported sedans in domestic sedan sales decreased somewhat - from 6 percent to less than 5 percent.

Of the imported whole-cars, sedans that make up the largest proportion have three characteristics. First, their grade is moving upward. The average unit price exceeded US$30,000. Second, air displacement is tending to be bigger. Third, imported sedans are usually those that cannot be domestically manufactured. These usually are up-market, luxurious, personified and can't be domestically made in the foreseeable future.

As the three-year transition period is nearing to an end officials in charge of the Chinese auto enterprises said since China entered into the WTO two years ago the international competitiveness of the Chinese auto industry has been improved considerably. As the proportion of domestically purchased auto parts and fittings keeps on increasing, the prices of some domestic automobiles have been matched with international practices. Some models even have prices lower than the international level. They believe the imported automobiles will be able to exert limited impact on domestic industry even when the three-year transition period is over.

By People's Daily Online

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