The auto industry in China has great potential to increase in
the next two decades alongside the nation's steady economic growth,
but huge challenges exist.
China's vehicle output is expected to grow on average by 10 to
15 per cent during the next 20 years, said Zhang Xiaoyu, chairman
of the China Association of Automobile Manufacturers.
Annual vehicle output in China is forecast to reach 10 million
units by 2010 and 17 million by 2020.
Vehicle numbers in China will increase by six times to 140
million units by 2020 from last year, according to the Ministry of
Communications.
The number will ultimately reach 240 to 250 million vehicles
with the proportion of ownership about 150 units to every 1,000
people, the ministry predicted.
At present, the vehicle number per 1,000 people in China stands
at 20 units, compared with an average world level of 120 units.
From 2000 to 2020 China's gross domestic product (GDP) will
quadruple to US$4,000 billion.
Per capita GDP will reach US$3,000 by 2020, up from US$1,000
currently.
With greater numbers of people owning cars, China is progressing
from a kingdom of bicycles towards an automobile society.
The trend will not be altered because an increasingly rich
population will buy cars as a means of improving its living
standards, said Chen Qingtai, deputy director of the Development
Research Center of the State Council.
"The industry will have a positive and profound impact on all
aspects of the Chinese society," Chen said.
For example, the use of cars will improve peoples' ways of life,
and enable them to learn about different subject areas, such as
machine building, electronics, energy, the environment, geography
and law, he said.
Differences between China's coastal and inner regions, cities
and the countryside will be reduced step by step with more people
owning cars.
However, the auto industry will also face many big challenges
mainly concerned with energy, environment and traffic, he said.
"The growing car population will engulf the bulk of China's
total oil supply and will also put pressure on it," Chen said.
He said that automobiles in China would consume 138 million tons
of oil annually by 2010, accounting for 43 per cent of the nation's
total oil demand.
The annual oil consumption from automobiles will grow to 256
million tons by 2020, 57 per cent of the total demand.
In 2000, vehicles in China consumed 65.6 million tons of oil,
one-third of the total demand.
"As a result, China will depend on oil imports more heavily
because domestic oil reserves are limited and the nation's energy
security will be greatly affected," Chen said.
China's total oil demand is forecast to reach 450 million tons
annually by 2020, relying on imports for more than half.
The nation's oil imports will increase to 110 million tons this
year from 97 million tons last year.
Exhaust emissions of automobiles will also pose big challenges
to environmental protection in China, Chen said.
"Pollution in cities will mainly be generated by automobiles,
instead of coal, if we cannot effectively control auto exhaust
emission," he said.
Vehicle exhaust emissions will account for 79 per cent of total
air pollution in China by 2005, according to forecasts from China's
State Environment Protection Administration.
Vehicles have become the biggest carbon monoxide and nitrogen
oxide emitters in big cities such as Shanghai, Beijing and
Guangzhou.
In 2000, vehicle carbon monoxide and nitrogen oxide emissions in
China reached 30 million tons and 3.8 million tons.
Foreign and domestic automakers have started to introduce clean,
energy-saving technology in China, encouraged by the Chinese
Government.
The State will encourage vehicle manufacturers to develop and
produce vehicles powered by diesel, gas, ethanol, electricity,
hydrogen and hybrid fuels, according to China's new auto policy
released in June.
The average oil consumption of new vehicles will decline by more
than 15 per cent before 2010 from 2003 with the introduction of new
technology.
Germany's Volkswagen was the first foreign automaker to produce
cars equipped with modern diesel engines in China.
The company started to make the Jetta with suction direct
injection (SDI) engine in 2002 at its joint venture with First
Automotive Works Corp (FAW) in Northeast China's Jilin
Province.
The venture also launched the 1.9-litre turbo direct injection
(TDI) Bora in March this year and the 2.5-litre TDI Audi A6 in
August.
The venture plans to produce more than 10,000 diesel-powered
cars this year, including 8,000 SDI Jettas.
Modern diesel engines save much more energy and are far more
environmentally friendly than petrol engines.
For example, the 1.9-litre TDI diesel engine's carbon dioxide
emission is 30 per cent lower than the same-sized petrol engine.
The introduction of modern diesel engines is a "practical way" to
save energy and alleviate emission pollution and they have
excellent prospects in China, says an executive of the Volkswagen
venture.
However, diesel engines still have a bad reputation in China as
many low-quality trucks spew black smoke and are very noisy.
Therefore, at present, diesel-powered cars account for a tiny
proportion of total car output in China.
Last year, China's car output totalled 2.01 million units but
only 4,600 Jettas were equipped with diesel engines.
By contrast, diesel-powered cars account for 40 per cent of the
total market in Europe and up to 50 per cent in Germany.
Japan's Toyota Motor Corp will start to produce its
hybrid-powered Prius car in China next year in collaboration with
FAW.
Toyota and FAW are also in negotiations to introduce their
hybrid engine technology into FAW brand cars.
The introduction of hybrid cars in China will be Toyota's
"active response" to the nation's new auto policy, said Akio
Toyoda, a Toyota board member.
Fuel consumption of the 1.5-litre hybrid Prius is lower by 40.5
per cent than the 1.6-litre petrol-powered Corolla being made at
Toyota's venture in China with FAW, says Toyota.
A Beijing-based official of GM said that the world's No 1
automaker expects to put its hydrogen-powered vehicles into initial
production in China in 2010.
As part of efforts to alleviate pollution in preparations for
the 2008 Olympic Games, Beijing will put into place the European
III emission standard and the IV standard in 2008.
The European II standard will be implemented nationally next
year.
Xu Feng, a white-collar worker living in northern Beijing's
Asian Games Village area, is cautious about buying a car.
"It will be very convenient to drive out of Beijing to breathe
fresh air and do other things during holidays if I have a car, but
the traffic jams between my apartment and downtown office are
terrible," Xu told China Daily.
Xu's hesitation is not rare for many city residents with money
in their pockets.
(China Daily October 6, 2004)