New Policies to Promote Exports Business

In 2009, the status of automotive industry keeps rising in the national economic system. The State Council issued top ten revitalization plans in the beginning of 2009 and the first one was aimed at promoting the development of automotive industry. The incentives for the real estate industry have already resulted in a growing risk of an economic bubble, while the development of auto market is quiet satisfactory. Therefore the effects of Chinese economic stimulus policies reflect the contrast between home and abroad. Now China's auto industry has become a spotlight in the world and the world's auto giants are counting on China to reverse downturn and maintain growth, according to Auto.sohu.com.

　　1. The differences within the growth of Chinese automotive industry in 2009.

No.1 The general contrast in the automotive industry-domestic business booms but export-import business suffers.

According to the detailed statistics released by the China Customs recently, the trade volume of the export and import business of complete vehicles and auto parts totaled 46 billion U.S. dollars from January to September. The volume of the first nine months in 2009 was down 20% compared to the same period in 2008.

According to the National Bureau of Statistics, in the first three quarters this year the sales of complete vehicles produced by domestic automakers was 1083.2 billion yuan, which increased by 21% compared with last year. The sales of new products were 567.3 billion yuan, which accounted for 55% of the total sales. Now the improvement of production structure was quiet fast.

No.2 The contrast between exports and imports-The performance of exports business was better than imports.

In the first nine months the imports sales totaled 22.1 billion dollars, down 11% from a year earlier and down 30% compared with the first quarter and 22% compared with the first half of 2009.

In the first nine months the exports sales was 22.1 billion dollars, down 27% from a year earlier. The imports business fell 35% compared with the first quarter and dropped 30% compared with the first half of 2009. Now the exports business burdened much pressure.

No.3 The contrast between exports and imports-The vehicle business suffered a tougher condition than the auto parts industry.

For January to September, the exports and imports of auto parts industry reached 32.97 billion dollars, down 14% from a year earlier. The exports business fell 20% to 20.2 billion dollars and imports dropped 3% to 12.77 billion dollars.

In the first nine months the exports and imports of complete vehicles reached 22.1 billion dollars, down 33% from a year earlier. Generally speaking the performance was poor. The exports of complete vehicles fell 52% to 3.64 billion dollars and the imports of complete vehicles dropped 20% to 9.34 billion dollars.

Now the center of the pressure lies in the exports industry of complete vehicles.

No.4 The contrast within the exports of complete vehicles-sedans suffered most.

Since 2008 the growth of Chinese auto exports business has been declining. Currently the downturn has gradually become mild. The total amount of exports in 2008 was 681,000, up 11% year-on-year. However, in the fourth quarter of 2009, the sales dropped by 38% and the sales fell 61% in the first quarter of 2009. In the second quarter, the slump narrowed to 56%. However, in the third quarter the negative growth rate was 49%.

According to the customs data of vehicle exports, the share of sedan fell from 35% in 2008 to 24% in 2009. During the same period, the share of truck rose to 53% from 42%. In the first nine months in 2009, the exports of sedans dropped by 71%, much higher than that of passenger cars, which was down 29%. The exports of truck were down 44%. So the exports of sedans suffered most.

　　2. The analysis of the imbalanced conditions of auto industry.

No.1 The state's policy is geared to stimulate domestic consumption.

In 2009, the government issued some active policies to stimulate the auto market. The policies' starting point is to stimulate consumption and economic growth by promoting automotive industry. The charge of road maintenance was cancelled. The purchase tax of 1.6-liter or smaller car was reduced by half. And some polices were aimed at stimulating the vehicle sales in countryside. These policies got good effects in terms of stimulating consumption.

No.2 The state’s stimulus policies have failed to stimulate overseas demand.

In 2009 the world is faced with an economic crisis and trade protectionism becomes rampant, which brings severe pressures to China's exports industry. And the auto industry is the protection of national priority in many countries and it has become an important protection measure to control China's auto imports. Therefore China's stimulus policies just take effect at home and fail to protect the China's vehicle exports market.

No.3 Chinese automobile market has become the target of foreign trade protection and trade power.

In 2009, as to the issue of Chinese automotive industry and domestic market, the trade turmoil and international political races are very intense. China's revitalization plan that independent brands should account for 50% in the market was forcibly suppressed by multinational groups.

The news that certain luxury foreign brands entered into government procurement contracts caused controversy. At this time German Chancellor personally stood up to exert influence. Chinese domestic market has become the focus of international attention.

　　3. The state has adopted measures to encourage exports.

No.1 The determined goal is to ensure sustained growth.

This week some state-level ministries and commissions jointly issued the Opinions of Promoting China's Auto Exports to Sustain Healthy Development. This is an important guidance for automotive exports and the release of the Opinions has become a major event in the automotive industry.

A. China has set a new long-term development goal. From 2009 to 2011 Chinese auto industry should strive to achieve an average annual increase of 10% in vehicles and auto parts exports. By 2015, vehicles and parts exports should reach 85 billion U.S. dollars with an average annual growth of about 20%. By 2020, China's automobile and parts exports will account for 10% of world automotive products trade.

B. China has established the global orientation of automobile exports. China should consolidate the traditional low-end market in the developing countries and expand foreign supporting market of auto parts and develop high-end markets in developing countries. China's auto industry will steadily enter the low-end market in developed countries. China will cultivate multinational automobile and parts enterprises which are equipped with strong scientific and technological innovation capability and independent technology. The state has offered strong support for independent-brand car exports.

No.2 The automakers will receive encouragement from the government.

A. The state will promote automobile export enterprises to change from purely export-oriented enterprises to marketing-oriented enterprises. Only automobile manufacturers are able to swift from sales trade to expanding market.

B. China will promote auto exports to change from products exports to combined exports of product, technology and capital. Only automobile manufacturers are able to output technology and capital effectively.

C. China will promote auto exports to change from relying on dealerships network to developing their own marketing systems. Only automobile manufacturers have enough power to establish a long-term network.

No.3 China will strengthen support for the exports of cars.

A. The importance of sedans exports is clear.

Policies clearly state that we should promote exports of complete vehicles to change from commercial vehicles like truck and chassis to passenger cars and commercial vehicles including economic models and big and small passenger cars. Economic car is an overall title of small cars and mini car and it is the pre-proven tool for exploring the international market.

B. The active guidance offered to energy-saving and new energy vehicles also helps sedans exports.

The policy clearly states that China will offer positive guidance to energy-saving and new energy vehicles exports. The government will support enterprises to accelerate research and development of new auto power battery and new hybrid vehicles. The state will support the promotion of pure electric vehicles and guide the promotion of hybrid vehicles.

Now the new energy vehicles mainly include two fields, urban buses and sedans. While large bus has become a private business of different provinces and cities, the manufacturers of medium and small hybrid passenger bus blossom everywhere and self-production and marketing results in tough exports performance.

The industrialization of pure electric and hybrid cars develops faster and there is a large market opportunity in the next few years. Therefore pure electric and hybrid cars have great potentials in the transformation of exports. (Translator: Qinghua/Hanxin)

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