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Auto business roars ahead
( 2003-12-11 00:18) (China Daily)

While auto imports surged into China as the nation fulfilled its commitments to the WTO accord, the auto industry has nonetheless experienced rapid growth over the past two years, figures show.

Total vehicle output in China will exceed 4.3 million units this year, up from 3.25 million units last year and 2.35 million cars in 2001.

China, which joined the WTO at the end of 2001, cut its tariffs on vehicle imports to 43.8 to 50.7 per cent last year and to 38.2 to 43 per cent this year from 70 to 80 per cent in 2001.

The nation's quota for components and completed vehicle imports increased by 15 per cent annually to US$9.1 billion this year since its WTO entry.

The robust growth in China's auto output can mainly be attributed to the booming domestic demand and the nation's policies of driving foreign automakers to speed up investment and production in China, instead of aggressively exporting vehicles to the nation.

China grants more of its quotas to auto parts imports than to completed vehicle imports to satisfy mounting production needs of foreign automakers, which does not violate any WTO rules.

The nation's vehicle imports will total more than 180,000 units this year, up from 120,000 units last year and 70,000 in 2001.

However, the import growth is not as high as analysts' forecasts before the WTO entry.

Analysts predicted that China's vehicle imports would skyrocket after the WTO entry and would have a great impact on the domestic auto industry.

Driven by China's policies, foreign automakers formed new joint ventures and strategic alliances with Chinese partners and introduced dozens of new models into the nation over the past two years.

Japan's Toyota created an alliance with First Automotive Works Corp -- China's largest automaker -- to produce 400,000 vehicles in China.

Nissan set up a US$2-billion joint venture with another Chinese big name -- Dongfeng Motor Corp -- to produce 900,000 vehicles in China by 2010.

German luxury carmaker BMW formed a joint venture with Brilliance China Auto.

The new models produced in China over the past two years included Toyota's Vios and Land Cruiser, BMW 3 and 5 series, Volkswagen's Polo and Golf, Audi A4, Nissan Sunny, Ford Mondeo, General Motors' Excelle, Citroen's Xsara, Honda's Accord and Fit and Hyundai's Sonata.

Foreign automakers have already had a common understanding that they can only account on production in rather than export to China to have a strong foothold in the market in the long run.

More foreign models will be made in China next year although the nation will continue to cut its tariffs and grant more quotas to components and completed vehicle imports.

The tariffs will decline to 34.2 to 37.6 per cent according to China's WTO obligations and the quota will increase by 15 per cent next year.

The new models to be produced in China next year include General motors' Cadillac, Peugeot 307, Ford Maverick, Toyota's Corolla, Honda's CRV, Volkswagen's Touran and Touareg, Hyundai's Elantra, Mitsubishi Pajero Outlander and Nissan Teana.

China's total vehicle output is expected to reach 5.7 million units next year, including 2.7 million passenger cars.

Domestic automakers will not face some real pressures until 2005, when China will remove its quota on vehicle imports. The nation will also cut its tariffs to 25 per cent by the middle of 2006.

However, locally-made vehicles will continue to dominate the domestic auto market and imported vehicle will only account for a small proportion in a decade.

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