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Domestic Autos Streets Ahead
Automobiles made in China will dominate the domestic market for a long period of time - despite increased vehicle imports following the nation's entry into the World Trade Organization (WTO).

Gan Zhihe, deputy secretary general of the State Economic and Trade Commission, said local automakers would continue to satisfy domestic demand with high quality vehicles.

Vehicles from domestically based companies - including Sino-foreign joint ventures - would hold up well in competition with overseas imports.

"They will also be able to lower costs and prices based on rapid expansion of their production scale," Gan said.

"Vehicle imports will increase further because of China's tariff cuts and removal of non-tariff measures following the nation's WTO entry."

China imported 100,000 vehicles in the first 10 months of this year, an increase of 57 per cent from a year earlier, according to statistics from the Ministry of Foreign Trade and Economic Co-operation.

Car imports increased by 35 per cent year-on-year to 56,400 units during the period, statistics showed.

However, total sales of domestically made vehicles amounted to nearly 2.67 million units between January and October this year, up 35.55 per cent from the same period of last year, according to the China Association of Automobile Manufacturers.

Sales of domestically made cars rose by 51.73 per cent to 908,100 units.

Recognizing the strategic importance of local production in China, foreign automakers are bringing more new models to their Chinese joint ventures to cash in on the fast-growing market.

More than 10 newly developed models of foreign automakers have been produced in China this year.

"Domestically made automobiles enjoy advantages in sales networks in China and other government policies," Gan said.

China will gradually cut its tariffs on vehicle imports, cancel a wide range of barriers by 2006, such as import quotas, and allow the establishment of foreign automakers' wholly owned sales networks in the nation. This will give local manufacturers time to increase competitiveness.

Under WTO obligations, China will cut tariffs to 38.2-43 per cent next year from 43.8-70.7 per cent and will offer a total vehicle and spare parts quota of US$9.1 billion, up from US$7.9 billion this year.

Tariffs will decline to 25 per cent by the middle of 2006.

China will also remove quota barriers on all vehicle and spare parts imports by 2005.

(China Daily December 2, 2002)

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