China was a low carbon dioxide emission country a decade ago.
Now it comes second after the United States in the production of
carbon dioxide. The explosive growth of the auto industry is
driving the county into an "auto society." As a result, traffic
jams, environment pollution and energy crisis seem inevitable.
"Instead of overheated investment and redundant construction,
the real challenge is the social crisis presented by the imminent
auto society transformation," said Chen Qingtai, vice director of
the State Council Development and Research Center, an auto industry
patriarch who has worked in the industry for 22 years.
The State Development and Reform Commission (SDRC) is about
to promulgate China's first compulsory regulation on controlling
auto fuel consumption to steer China's auto society, according to
the Financial Times.
Auto society predicament
As the auto industry contributes a lot to China's GDP, it has
begun to accept the cost of social development on the
environment.
Latest research from the Harvard Institute indicates that within
the decade-long Sino-foreign auto joint venture mode, almost all
emission control technologies offered by foreign carmakers are
out-dated. Thus, China lags about ten years behind most developed
countries in regulating auto emission discharge standards. While
developed countries begin to adopt Europe IV standards, most
commercial cars and sedans running on Chinese urban and rural roads
still follow Europe I standard. Only few can live up to Europe II
standards.
"Besides backward standards, the enforcement is far from
satisfactory," said Fang Maodong, a researcher with the
Tianjin-based China Auto Technology Research Center. Even those
meeting China's state emission standards still discharge about 200
percent carbon monoxide and 300 percent hydrocarbon and nitrogen
oxides of cars running in Europe.
Besides environmental cost, the country also sees mounting
social economic costs. According to Shanghai and Beijing municipal
environmental protection agencies, air pollution caused by vehicle
emissions accounts for more than 90 percent of urban pollution and
has doubled the lung disease incidence over the past 30 years. The
World Bank estimates that medical expense and costs of laborer
productivity caused by air pollution may offset around 5 percent of
China's total GDP.
Since the number of motor vehicles grows at explosive speed,
traffic jam becomes the biggest headache for city operators. The
average speed in rush hour for Beijing's 2 million vehicles is only
a meager 11 KM/hour. Shanghai has to adopt plate-licensing fees of
around 30,000 yuan to 40,000 yuan (US$3624 to US$4832) per vehicle
as a tool to ease the traffic pressure.
Another severe challenge synchronized with the auto society is
energy. Authoritative statistics shows that motor vehicles devour
85 percent of China's oil output and 42 percent of its diesel
output. Zhang Xiaoyu, president of China Mechanical Industry
Association estimates if China could maintain a 7 percent GDP
growth over the next two decades, vehicle sales would hopefully
grow 10 percent annually.
"That means oil consumption will also grow fast and worsen the
severe oil supply-demand gap," said Zhang.
Compulsory measures to boost fuel efficiency
According to the Financial Times, carmakers must submit
an authorization application on fuel consumption for each vehicle
model and reach the lowest standard before releasing it to the
market as required by the SDRC's fuel efficiency compulsory
regulation.
Fang Maodong, one drafter of the regulation, said that the
regulation is mainly for two purposes: to control carbon dioxide
emission and to ensure national energy security. The regulation
sets a goal to lift fuel efficiency up to 15-20 percent higher than
the United States by 2005/08.
In the US, manufacturers have been required to meet average fuel
consumption standards since 1975. Otherwise, manufacturers will be
fined US$5 every 0.1 mile/gallon per vehicle. Customers may also be
punished if a newly bought vehicle exceeds the standard by a big
margin. Thanks to the compulsory fuel efficiency policy, the US has
saved 190 million gallons of raw oil and US$92 billion in 2000
alone.
Auto industry insiders say that once the above-mentioned
regulation is enacted, domestic high fuel consumption cars like SUV
and luxury sedans with big cubic capacity will be the first to feel
the impact. "Under such standards, SUV manufacturers like the Great
Wall, Zhongxing, Beijing Jeep and big cubic capacity sedan
manufacturers like Honda, Volkswagen and General Motor will be
affected to some extent," said the regulation drafter.
Experts predict that most sedan manufacturers will increase
investments on fuel-saving diesel sedans. Some manufacturers
started pilot projects in this area as early as 2000.
It is said that the SDRC will release a new Auto Industry
Development Policy to overhaul the entire industry. From the start
of the auto project review and approval process, the development
policy will hopefully eradicate industrial irregularities like
shabby vehicle assembly, illegal transfer and sales of vehicle
product quality certificates, and illegally setting up affiliated
companies.
Capital without technology will be strictly blocked to enter the
auto segment. Local governments will not be allowed to use the
state's financial appropriation to establish or expand auto
projects. All commercial banks are forbidden to provide loans to
auto projects that haven't passed the review and approval process
and land resource authorities are not allowed to grant land for
such purposes.
Meanwhile, to those whole vehicle manufacturers without
correspondent design and development capabilities, the state
authorities will set a time for them to reform and improve. Those
failing to meet demands within the time limit will be ordered to
retreat from the whole vehicle-manufacturing segment.
(China.org.cn by Alex Xu and Daragh Moller, January 14,
2004)