Dr. Feng Fei, an economist at the Development Research Centre of China’s State Council, has forecast at a recent forum on the outlook for the Chinese economy that the country will become the world's largest vehicle manufacturer by 2020. "China's per capita GDP has topped US$1,000, which means a growing number of Chinese citizens will be able to afford private cars and the auto industry will outgrow the country's GDP," said Dr. Feng Fei.

China is ranked fourth after the US, Japan and Germany in 2004, with output of 5.07m vehicles. Feng said China's production is set to hit 6 million units this year, 9.6 to 10 million in 2010 and 14-15 million in 2020.

"By then, China will become the world's No. 1 auto consumer and producer, too. Added value yielded by the vehicle manufacturing sector will make up two to 2.3 per cent of the country's GDP, up from 1.6 percent in 2004," Feng said, noting that China still lags behind the developed countries in the automotive industry in this respect: "In Germany and the United States, for example, the auto industry contributes 8 per cent and 3 per cent respectively to their GDP."

China's auto sector currently faces three major problems: lack of competition and coordination in the domestic market that weakens the competitiveness of the entire industry; lack of innovation; and excess reliance on oil imports, said Feng.

As a result, Feng said China should develop more economical cars to mitigate the effect of rising imports of increasingly expensive oil. In 2010, China's oil output has been forecast to reach 180 million tons while oil imports will hit 140 million tons, accounting for 44 per cent of the country's total oil supply. By 2020, oil import will climb to 250-270 million tons, i.e. 56 to 60 per cent of China's oil supply, while the country's own oil production will be between 180 and 200 million tons.

(Source: Xinhua agency/China Daily)

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