China Wants More Car Imports. (Yes, Your Eyes Are Not Deceiving You)
With the economy pretty still mostly on the ropes all over the world, the favorite policy appears to try to export yourself out of the crisis, and to keep imports to the barest minimum. In pretty much all countries but one. Would you believe it: China.
“China will actively promote auto imports over the next five years to help the country restructure and upgrade its auto industry,” Qian Jingfen, an official in charge of imports at the Ministry of Commerce (MOC) told Xinhua today.
The new auto import-promotion strategy will be written into the new Five-Year (2011-2015). What’s in that plan is usually taken pretty seriously. China does not just want to import more cars, it will also encourage the imports of advanced auto equipment, key technologies and components.
This year, auto sales in China are expected to reach 18 million units, says the China Association of Automobile Manufacturers (CAAM). Imports of completely built units currently account for less than 5 percent of market share, and outpace car exports by a wide margin. Exports to China already are the main driver of growth in the European auto sector.
A policy to promote import of key technologies is understandable. But a 5 year plan policy to foster importation of new cars? Inscrutable orient.
Perhaps their plan is to get foreign automakers accustomed to revenue from exports to China, and then later enact import barriers and tell the foreign automakers that they can continue exporting to China by qualifying for an special status exemption - the admission fee being the handing over of advanced intellectual property, agreeing to sell rebadged Chinese cars at American dealerships, etc? It could also be that the Chinese don't intend to import a high volume of cars indefinitely, and want to get the surge capacity from overseas rather than building up their own capacity and later having to deal with thousands of laid-off blue collar workers who've had a taste of middle-class wealth.
The tarriffs on autos imported into China are huge, especially for large (normal in the US) displacement engines. Someone in power is enjoying that bit of cash flow. The tarriffs on the 5% imported could total major money compared to total tax revenue on the other 95%. Maybe Bertel has some handy numbers?
This is bigger than any of you guys have imagined. Remember, this is all happening after Korea and Cancun.Chinese auto business owners are really unhappy *PG* (understatement) at the new laws Beijing is introducing. Essentially, China is 1) reducing new car permits (cutting it to one third of this year's) 2) removing tax cuts for the car industry in China, and 3) China will be accelerating car imports from overseas. All of it doesn't make sense for China unless you put it into context.This is massively good news for American business. If the US starts electrifying transport and builds electric/hybrid cars for export to China, 1) the US doesn't need to invest in new manufacturing plants, it just needs to convert them for electric/hybrid vehicle production 2) it creates jobs 3) it pays off US debt and 4) electrifying transport reduces demand for oil. China was going to do it itself anyway, but instead of benefiting the Chinese economy, it will now benefit the US economy. It's a massive giveaway from China. But Why? Oo Climate talks were never about the climate - governments could care less - they're about oil. Demand is going up sharply and production can't increase, so oil prices are going up. We're not running out, but demand is going up and we can't increase the supply fast enough. It's like 5 people fighting over 3 cookies, then 2 people join the fray. Except everyone has nuclear weapons. The scientists are also finding it hard to drill deepwater oil - which is why we had the Gulf of Mexico spill - a deepwater project - as opposed to sticking to nice landbased/offshore drilling. The scientists can't develop the technologies for tar sands, and deepwater to make it economical. That's what korea was about - it was a proxy warning from China. The US had no choice but the militarise after the midterms - and the world shook and realised the US wasn't going to reduce oil consumption. France-UK signed a joint nuclear testing facility, India is now building a nuclear arms triad, Russia-China-India have accelerated trade, talks and defense cooperation. China is the biggest renewable investor, currently reducing oil consumption and accelerating energy independence. However, it feels the US is cheating and isn't doing enough to reduce its oil consumption. China has so much nuclear capability, that it's impossible to stop (over 1000 missiles) even with a missile defense shield. Even if you could, over 200 nuclear bombs going off is enough to mess up the world by dispersing radioactive particles on wind currents (cancer/deaths/etc). The good news is, after Korea, both China and US realised they couldn't risk nuclear war. So for the first time after 16 years of failed climate talks, China backflipped, changed its hardline approach, agreed to all the US's demands, which allowed both to sign the Cancun Agreements (their first ever climate commitment). After Cancun, China signed a Free Trade Agreement with the US allowing the US to sell high-tech renewable products to China. China also promised to spend $1.5 trillion on buying US made renewable products, allowing the US to increase jobs for families, pay off its debt and restore American power. China is also killing its own auto industry, by banning its citizens from buying cars, reducing oil consumption and stabilising oil prices. Nuclear war benefits no one, so out of self interest, China is helping the US, even though it means it'll be sacrificing economic growth. The only thing left is to accelerate the alternative energy industry in the US, pay off foreign debt, create jobs and restore the economy. In China, citizens have no choice, the government says it, the citizens wear the costs. In the US, voters realise it means higher prices, and are blocking cooperation, without realising they're provoking a nuclear war. But why Carbon taxes? Well, you can either remove oil subsidies, or you can introduce carbon taxes. It's either asking oil-intensive consumers (i.e. family's, transport, etc) to pay $100, or getting every single industry, consumer and business to pay $1. It needs to be done, but which is easier on families? It's a no brainer, Obama realises it, and he's been desperate to get this thing passed, but things are complicated because of the political and social situation in the US. This needs to change fast so that the US can pass these carbon taxes, accelerate the renewable industry, create jobs, help families, and pay off debt. The US voter is faced with a choice - nuclear arms race or a renewable energy race. China's already played ball, sacrificing it's economy and helping the US transition its energy. It even agreed to remove its own wind subsidies (with lots of compliants within China that it would disadvantage Chinese industry) straight after Obama complained it was stopping US investment in renewables. Will the US return the favor? The Cancun Agreement was not binding - this sucker needs to be legalised at the next climate summit in South Africa. To do that, the US has to legalise a carbon tax, control or emmisions trading scheme - anything that enables a free market consumer based mechanism (i.e. people won't transition out of good will - so you need to raise the price). Anything less will likely spark a massive Cold War x 5 (because more nations now have nuclear capability, some of them so big, they're unstoppable). http://www.washingtontimes.com/news/2010/dec/22/axis-of-evil-spins-closer/ see comments I'm no Democrat, but this ain't about Democrats or Republicans, this is about getting what needs to be done, done - ensuring our country's prosperity. A true patriot would let off the political baggage and do what's right for the country.
I know macroeconomic reasons make sense, but could it also simply be that the high level officials are embarrassed by the stuffs churned out by their domestic auto industry, and want to beat it into shape by raising the bar? After all, Chinese officials are obsessed with saving faces, and they don't hesitate to initiate mega-projects that carry major symbolic values (space program, bullet trains, massive hydraulic projects, ...), yet they won't ride their domestic cars (only Germans). Automobiles are highly symbolic objects in modern society, and they contribute greatly to the reputation of their origin. This could be part of the push to consolidate their private auto industry so they could start doing some proper R&D.