Industry insiders: Auto overcapacity worries unnecessary

13:57, September 13, 2010      

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During the International Forum of the China Automotive Industry Development held last week, the issue of overcapacity was a hot topic once more. Although the National Development and Reform Commission (NDRC) has emphasized again that overcapacity must be firmly restricted, other organizations such as the China Machinery Industry Federation (CMIF) and the State Information Center (SIC) hold a different opinion.

Zhang Xiaoyu, president of the CMIF, believes that the current expansion of auto enterprises can be regarded as mild over-investment, and it is normal. The government should guide them correctly, and setting restrictions with simple administrative methods will not work.

Xu Changming, director of the Information Resources Development Department under the SIC, also believes it is unnecessary to worry about the over capacity. On the one hand, China is in its second high-speed development period, and it is expected that China's auto market will expand 15 percent annually over the next 10 years.

The internationally-accepted capacity utilization is 75 percent, but in 2009, the capacity utilization of China's auto industry was around 120 percent, which means China's auto industry was operating at an overload. In addition, 70 percent of China's auto enterprises are foreign-funded, and 30 percent are domestic, Xu said.

"They are all very sensitive to the market, especially local private auto enterprises such as BYD and Geely," he said. "Once the market starts to shrink, the enterprises can quickly adjust their production and development plans. Therefore, the market can flexibly adjust itself according to the production capacity."

Dong Yang, the secretary-general of the China Association of Automobile Manufacturers, said it has been proven in the past years that the NDRC's worries about the over capacity of the auto industry were all unnecessary. The overcapacity issue is not the most important issue of China's auto industry, he said.

"The most important issue is the industrial upgrade issue. We need to promote our technologies, reduce fuel consumption and pay more attention to environmental protection," Dong said.

By People's Daily Online

(Editor:祁澍文)

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