NDRC to Curb Overcapacity of Automotive

　　Currently China is faced with the emergence of the new round of "automotive manufacturing fever". Chen Bin, the Director of Department of Industry of the National Development and Reform Commission, pointed out on September 4 in Tianjin that driven by the local government, China's auto market had embraced a rapid expansion. The risks of overcapacity have been enhanced. Therefore China should inhibit such a trend, according to the Beijing News.

　　In the 2010 International Summit of the Development of China' Auto Industry, Chen Bin said that in the year of 2009, the sales of new cars in China totaled up to 13.64 million units. A large number of automobile manufacturers have devised ambitious plans regarding the expansion of capacity. Now the new round of expansion of capacity has begun.

　　According to a certain survey, the overall annual capacity of China's 30 major automobile enterprises (groups) reached 13.59 million units. By the end of the year of 2015, the annual capacity will reach up to 31.24 million units. In 27 provinces, autonomous regions and municipalities, there will be programs of manufacturing vehicles. According to the planning projects which Xinhua News Agency learned from local authorities, the planning capacity will be far greater than market demands by the end of the 12th Five-year plan.

　　Chen Bin pointed out that the overcapacity was caused by the malfunction of market's signal, resulting in a certain degree of blindness of investment. But serious overcapacity will lead to vicious competition in the market. Enterprises will get fewer profits and plants may suffer from the problem of underemployment.

　　Chen Bin said the automotive industry has several characteristics such as a long industry chain and a strong driving force. Local authorities may depend on the massive development of automotive industry to boost the growth of economy. With the stimulus of profits, the planning capacity may be raised blindly.

　　Measures

　　The reform of fiscal and tax investment and financing system

　　Chen Bin believed that in order to deal with the problem of overcapacity, government has to focus on the reform of fiscal and tax system as well as investment and financing mechanism.

　　First of all, local governments have to respect market and should not set targets or tasks for automakers blindly.

　　Second, local governments have to avoid implementing preferential policies in the field of expanding capacity of automobile manufacturers.

　　Third, relevant authorities should release information and policies as to the production and sales of auto industry timely.

　　Fourth, automobile manufacturers have to consider the utilization of production capacity and other conditions during the process of registration.

　　Fifth, governments should prevent automakers from carrying out projects about traditional vehicles in the name of new energy cars.

　　Related information

　　The safety standard of domestic vehicles should be enhanced.

　　According to the Xinhua News Agency, China Automotive Technology and Research Center released the third part of evaluation results for the 2010 China's New Vehicles Safety Assessment. Six domestic models participated in the crash test. All of the models reached the three-star standard, which shows that the safety technologies of domestic auto brands have to be enhanced. The gap is obvious.

　　The six models included Hainan Mazda Cupid, Zhengzhou Nissan Dongfeng Shuaike, Tianjin FAW Xiali N5, Chongqing Chang'an Yuexiang, Zhengjiang UFO A380 and Lifan 620. (Translator: Qinghua/Hanxin)

　　See Original Chinese Report Please Clicks:

　　http://auto.sohu.com/20100905/n274714292.shtml