China Is Taking A Brake

Bertel Schmitt
by Bertel Schmitt
china is taking a brake

China’s car market will take it easy and grow only 3 to 5 percent this year after surging 32 percent to more than 18 million last year. This is the prediction of China’s State Information Center, as reported by Bloomberg. The Center is not just any center, it is a unit of the powerful National Development and Reform Commission, China’s top economic planning agency. The anemic looking growth –power of a big base – will nonetheless lift China’s automobile sales above 19 million, a level no country has seen on this planet.

“The third quarter may be better than the second as September and October are traditionally hot seasons for auto sales but I don’t expect a big improvement,” the center’s Research Director Xu Changming Xu said. Xu’s forecast jibes with the estimates of the China Association of Automobile Manufacturers CAAM which had revised its outlook to about 5 percent in July.

Worried about inflationary tendencies, the Chinese government is pushing the brake pedal after accelerating growth the last two years.

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  • Eldard Eldard on Sep 04, 2011

    Please no!!! I want Chinese to buy more cars and guzzle more oil so others won't have to.

  • Obbop Obbop on Sep 04, 2011

    At one point did not USA auto sales increase by at least 100 percent at one point? First auto sold I suppose is the base. The second would be a 100 percent increase; correct? Would the third sold be 200 percent? Ad infinitum until the "counting period" reach its end. The world wonders.

  • Type57SC Type57SC on Sep 05, 2011

    At 5% per year, we're still talking about 30MM in 2020. That's an incredible amount if the govt doesn't shut down growth entirely.

  • Andrewpmk Andrewpmk on Sep 06, 2011

    The thing is that China's largest cities (Beijing, Shanghai, etc) are huge and choked with traffic congestion so the government is restricting car sales. There has also been a massive program of subway construction in major cities, as well as the high speed rail program. The bulk of China's growth in car sales is going to come from second tier cities and rural areas. In contrast cities in Poland are much smaller - the largest city, Warsaw is only 1.7 million in a country of 38 million. Also Poland is still not all that urbanized (about 60% urban vs 50% in China) despite having a significantly higher GDP per capita. The severe traffic congestion problems that plague China simply are much less of a problem in Poland. In the long term I think that Chinese car ownership will level off at around the level of Taiwan (212 per 1000) or South Korea (346 per 1000), with much lower levels in the biggest cities.