Chen Bin:China auto industry overcapacity

Secondly, how to promote the auto industry steadily?

First of all, the introduction of restructuring and revitalization plan of Chinese automotive industry is timely. And the direction of policy is correct.

In the last fourth quarter, due to the international financial crisis, Chinese auto market was indeed gloomy. CPC Central Committee and the State Council paid great attention to the domestic auto market and suggested that the restructuring and revitalization project of key industries should be formulated. The central authorities also pointed out clearly that we should take quick actions to deal with all the problems and earnestly implement all the useful policies scientifically.

On November 26th, 2008, The State Council held an executive meeting and announced that the restructuring and revitalization project of key industries was necessary. On January 14th 2009, the State Council examined and approved the project. Why is the automotive industry the priority task? The leaders of the State Council have attached great importance to domestic auto market. The senior leaders had made several calls to the National Development and Reform Commission to ask for information before the project was released. In addition to the implementation of specific plans, the intensity and potential benefits were also the critical stuff which the leaders were concerned about.

The introduction of the revitalization plan plays a positive role to promote the development of auto market and adjustment of the structure. As a result, from January to August this year, the production and sales volume of Chinese auto market was more than 8 million. Why was Chinese automotive industry able to get rid of the difficult situation and keep on growing with a relatively high speed? I believe there are three factors contributing to this phenomenon.

First of all, in order to cope with the international financial crisis and ensure that Chinese economy would still grow with a steady and decent rate, the CPC Central Committee proposed an economic stimulus package, which has resulted in the boom of Chinese economy and the rise of consumers’ confidence.

Secondly, rapid economic development for many years has already cultivated a strong consumption demand for vehicles. And that’s the fundamental power to propel the development of auto market.

Additionally, according to the restructuring and revitalization plan, China has implemented a series of scientific measures to expand domestic needs, adjust the production structure and improve the sales market. Because of those useful actions, the automotive industry has finished the objective of revitalization sooner than other departments. From several detailed aspects we can get some clear notions about why the Chinese auto market could defeat the global economic downturn. First of all, the adjustment of purchase tax promotes the development of smaller cars. We have witnessed the refinement of auto production structure. In the market of passenger cars, the proportion of vehicles whose engine volume is less than 1.6 liter has increased by about 10%.

What’s more, Chinese government has encouraged all the automakers to care more about the needs of peasants. With the development of villages and smaller cities, we can continue expanding the domestic market and the automotive industry will gain a large number of benefits in the long term.

Chinese native automakers hold a privileged position to develop several types of cars which have been encouraged by government. Self-brand automakers have progressed a lot in the year of 2009.

In addition, Chinese government has carried out the development strategy of new energy vehicles, which is indeed important to support and promote such a new industry.

We have come up with some ideas to promote the restructuring work of industry structure. This step will help some large-scale enterprises to foster the ability of independent innovation and develop their own brands.

Although we are faced with a positive trend of auto market, I want to remind all the entrepreneurs to keep a cool head. The rapid development of auto market this year reflects the effectiveness of proper policies. However, when the market volume reached 12 million some day in the future, we have to deal with several upcoming challenges, such as shortage of energy, air pollution, traffic jam and so on. Saving energy and emission reduction have already been tasks of great importance. Social pressure has posed a threat to the booming auto market.