China's auto production capacity is expected to be more than two times the country's demand by the end of 2010, China Securities Journal said on Monday, citing an official with the National Development and Reform Commission.

"The industry is facing a grave overproduction situation," warned Chen Bin, deputy director of the commission's Industrial Department.

Chen said China currently has an annual production capacity of 8 million complete units and the figure could soar to 10.2 million units a year when projects with an annual output of 2.2 million units, which are now under construction, are completed soon.

The sector will witness a 10 percent growth annually according to projection of concerned departments.

China's auto sales are expected to hit 5.5 million units this year, and 9 million units by the end of the country's 11th Five-Year (2006-2010) plan period.

However, Chen warned the number could hike to around 20 million units a year by that time if no measures were taken to control the investment scale in the auto industry.

He suggested that criteria should be further upgraded for enterprises to engage in the production of autos to avoid large scale investment in the auto industry.

Source: Xinhua