China faces challenges as auto sales continue to expand in September

• Source: Xinhua
• [08:19 October 13 2010]
• Comments

Auto sales in China continued to expand last month, raising the forecast for annual sales to a record 17 million units this year, the China Association of Automobile Manufacturers (CAAM) said here Tuesday.

Sales of automobiles rose 16.89 percent in September from a year earlier and 24.69 percent from August to 1.56 million units, while auto production was up 16.94 percent year on year to 1.59 million units, said CAAM.

In the first nine months of this year, auto production reached 13.08 million units, up 36.1 percent from a year ago.

A total of 13.14 million units of domestically-made auto vehicles were sold in China in the same period, up 35.97 percent year on year.

Sales for the Jan.-Sept.period are quite close to the total number of vehicles sold last year, when China overtook the United States to become the world' s largest auto maker and auto market with production and sales hitting 13.79 million and 13.64 million units respectively.

China' s annual production and sales of new autos are likely to surpass 17 million units this year, CAAM predicted, matching the highest annual level ever reached in the United States.

Although the expansion in the sector has brought in an industrial boom and played an important role in China' s domestic demand, it has also triggered widespread concerns over the country' s energy capacity, pollution levels and rising traffic pressures.

For general citizens and city planners in China, the increasing number of traffic jams is the most obvious problem in enjoying a life behind the wheel.

In Beijing, the rising number of private cars, along with heavy rainfall and a spurt in holiday travel, caused a record 140 traffic jams in a single Friday evening last month. In some parts of the city that day, people spent nearly two hours on what would normally have been a 15-minute ride.

Earlier this month, figures from the Ministry of Public Security revealed that the number of automobiles on China' s roads had hit 85 million, while a total of 144 million Chinese had learnt to drive vehicles.

Statistics from the Beijing Transportation Research Center (BTRC) revealed that the number of registered cars in Beijing had topped 4.5 million in September, and would possibly exceed 7 million by 2015.

However, the city's road system will be over-burdened by then, as its full capacity is estimated to be 6.7 million vehicles, said Guo Jifu, director of the BTRC.

In addition, experts and officials have warned that the burgeoning number of vehicles could pose threats to the country' s energy reserves, as China is still highly dependent on oil imports.

China's oil dependency reached alarming levels last year with imports accounting for more than 50 percent of consumption. However, that figure rose to 55 percent by the end of August this year.

Xu Changming, an official with the State Information Center, said the auto market's growth should be maintained at around 1.5 times the growth in the country's gross domestic product (GDP).

This means China's auto sector growth should rise less than 13.5 percent, since GDP expanded by 9.1percent in the past year.

But according to Edward Prescott, the Nobel Economics prize winner in 2004, China' s vehicle production and sales may both range as high as 40 million units by 2020, and reach 75 million in 2030.

Chinese officials had also warned that an unchecked expansion of China's auto industry encouraged by local authorities could harm the wider economy, and that excess capacity must be "resolutely" stopped.

Chen Bin, head of industrial coordination at the National Development and Reform Commission, the nation' s economic planning body, said last month at a forum in Tianjin that local governments had been making "blind" efforts to open new factories and expand capacity, which could hamper sustainable development of the national economy.

In Beijing, auto emissions were responsible for 50 percent of the city' s gaseous pollutants in 2009, he added.

He said local authorities should avoid setting unrealistic output quotas for auto makers, and should end preferential land and tax policies for them.

He said the government should also strengthen supervision of industrial efficiency data to guide reasonable resource allocation.

China's auto industry is not only facing the tough task of boosting domestic consumption, but is also responsible for maintaining sustainable and coordinated economic and social development, Chen said.