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UPDATED: November 7, 2009 NO. 45 NOVEMBER 12, 2009
A Weak Titan
While the Chinese auto industry has crossed a major production threshold, it is still too early to label China a major auto producer

INDEPENDENT BRAND: Automobiles are assembled on a production line of the Dongfeng Liuzhou Motor Co. Ltd. The development of independent brands will decide whether China can be considered a strong auto-producing nation 

The Chinese auto industry drove into unfamiliar territory this year after selling more cars than the United States in a single month. On October 20, China saw its 10-millionth car produced in 2009 roll off the production line in the Changchun-based China FAW Group, making it the third country with an annual output of more than 10 million units, following Japan and the United States.

But with all the prominent numbers and seemingly ever-buoyant market, people cannot help but ask if China has become strong enough to be classified as a major auto country.

From zero to 10 million

"It took China 53 years to increase its annual auto output from zero to 3 million, while it took only seven years to boost output from 3 million to 10 million," said Teng Bole, Deputy Secretary-General of the China Consulting Committee for the Automobile Industry.

In 1953, China began construction of its first car-manufacturing factory. By 2002, China's annual output had reached 3 million, ranking fifth among the world's major auto production countries. In 2009, China ranked as the world's third biggest auto producer, surpassing Germany and France.

The speed with which China's auto industry developed has shocked the world. According to Teng, it was after China's entry into the WTO in 2001 that the country began to accelerate the development pace of its auto industry.

In response to fierce international competition, China began deepening reforms in the auto industry in 2001. By vibrantly pushing forward strategic adjustment and optimizing its industrial structure, China was able to establish a new auto industry system comprised of three major large-scale auto manufacturers, including Changchun-based China FAW Group, Wuhan-based Dongfeng Motor Corp. and Shanghai-based Shanghai Automotive Industry Corp. (Group), and 16 other key auto enterprises, said Teng.

The auto industry development policy released by the State Council in 2004 injected vitality into China's auto industry, allowing continued progress to be made in the field of electric vehicles and clean- and new-energy automobiles, he added.

Meanwhile, foreign auto manufacturers initiated joint-venture auto projects by increasing investment and expanding their capacities. A rising number of foreign-invested auto companies, especially those engaged in key parts production, were launched in China, and a host of auto brands were produced by joint-venture auto manufacturers.

China's domestic research and development achieved its own progress in that same period, laying a foundation for the technological upgrading of local automotive engines. China has since reached the same level as advanced countries in terms of the production of auto-manual transmissions, automobile chassis parts, air bag restraint systems, brakes, continuous variable transmissions and other essential vehicular components.

The safety of Chinese-made automobiles has also made significant improvements. All car models have passed China New Car Assessment Program tests and some have even won five-star rating designations.

As far as enterprise size and product quality are concerned, China has reached the internationally advanced level in the production of large and medium-sized passenger cars, as well as trucks, said Zhang Xiaoyu, Deputy Director of the China Machinery Industry Federation, at the off-line ceremony for the 10-millionth automobile in 2009 held this October.

Since China has crossed the 10-million automobile production threshold later than Japan and the United States, its emission standard will be set much higher as Chinese automakers take an environmentally friendly approach to developing the auto industry differently than their overseas auto rivals, Zhang said.

China will attach greater importance to emission standards and technological innovations to alleviate pollution, he said.

Big but not strong

While the country celebrates its giant production volume, it may be too early to designate China as a strong auto-producing country.

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