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Free Car Pricing to Stir up Domestic Car Competition
Chinese government has recently relaxed its pricing controls on domestic cars and granted domestic car manufacturers with a full latitude in pricing.

Experts said this is an important step for Chinese cars to face competitive challenges in the global auto market in the future and the relaxation of prices will push manufacturers to come up with new products and develop new technology.

In the past, Chinese car producers have to strictly abide by the government price system. When China walked into a more open market economy, so did the car prices. Since 1995, domestic manufacturers were permitted to readjust prices by 10 percent based on benchmark levels set by the State Development Planning Commission.

"The government's withdrawal from pricing shows their active attitude in altering functions in the market-driven economy," according to an editor with an auto magazine.

He said both the production and consumption behavior in China's socialist market economy, when it comes to expensive products like cars, is maturing.

At present, China's domestic auto industry is thriving in big cities such as Beijing, Shanghai and Guangzhou, world-famous producers also chose China as a big potential market.

As supply outnumbered demand, more fierce competition arose in the Chinese auto market and more efficient methods of regulating prices are called for.

Meanwhile, the main stream of car consumers has witnessed a shift from the previous government institutions to individuals as long with improved living conditions of the Chinese people, as a result of the economic development over the past two decades.

A recent survey showed that 20 percent of Chinese households, totaling 26 million people, have a strong desire to buy cars. The number equals the overall car production in the world.

The improvement of transportation conditions also motivates the rapid development of the car industry. Many new cars were put on the market including Buick Sail, Citroen and Xiali.

"As China provides a more relaxed consumption circumstances for car users, more and more people can afford cars of good quality and suitable prices," according to an official with Citroen Company.

Still, China is facing other problems such as high added fees and lack of energy, which are yet to be solved.

(Xinhua 05/22/2001)

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