Entry of Sedans into Chinese Families

Entry of Sedans into Chinese Families—A Historical Trend

Should China develop family cars? This question didn't spark much debate in the past, because for quite a long time the State economy was relatively backward, a low-wage system was practiced for workers and cadres, and there were no private or individual economic sectors to create a comparatively rich group to enjoy luxuries as sedan cars. In recent years, however, with the quickening of the pace of reform and opening up, there have emerged a well-off stratum and middle-class groups in China, so the entry of sedan cars into Chinese families has become a historical trend and the development of family sedans has become a topic of discussion to the concern of the people.

Statistics show that China's per-capita GDP last year reached around US$800, crossing the threshold to a "comfortable life". According to economists' usual saying, when GDP reaches this level, or when the annual income of a family is equivalent to half the price of a car, it signifies the arrival of the era of sedan cars entering families. Presently, there are over 500,000 households in Beijing, each with a yearly income of around 45,000 yuan (equivalent to half the price of a common car), and the number of families with the same economic strength is growing in Shanghai, Guangzhou, Shenzhen, as well as in other economically developed areas in east and south China. All these indicate that China has possessed the condition for developing family cars.

In terms of China's internal and external situations, there should be no more hesitation in regard to this issue. Because once China enters the WTO free-competition door, foreign cars will come in at low tariffs and, if China itself fails to develop the car industry, it would, without doubt, mean ceding the excellent opportunity to others, in that case it will bring inestimable economic losses to the State.

What is of crucial significance is that Chinese leaders' attitude has become clear. The Proposal made last year by the CPC Central Committee concerning the 10th Five-Year Plan clearly states that "the entry of sedan cars into families should be encouraged". Government departments in charge have adopted some relevant specific measures, which include: canceling 238 items of administrative charges on traffic and cars, government funds and government collection of funds, and extending the service life of non-commercial passenger vehicles, including sedan cars, from 10 to 15 years.

With the conditions mentioned above, China's car industry should operate smoothly and grow rapidly under a favorable environment. Statistics show that in recent years, the proportion of cars purchased privately to the total sales of cars has increased at an average annual rate of 20 percent, and the figure had exceeded 50 percent by 1999.

The phrase "encouraging the entry of sedans into families" clearly sated in the Proposal concerning the 10th Five-year Plan demonstrates government determination and confidence in boosting auto vehicle consumption by relying on sedan cars. Experts say that judging from the current incomes of Chinese urban residents, at least some 300 million people have the ability to buy cars. A buying spree of private cars will appear in China between 2005 and 2010, while the total demand for automobiles this year will reach 2.37 million, over 10 percent more than in the previous year.

China has huge potential for family cars, furthermore, there will be a variety of new economic cars to be put on sales on the market this year, which will further stimulate vehicle consumption, the total demand will reach around 720,000, up 13 percent over the same period last year. Due to the large-scale development of the western region and other reasons, the demand for trucks will also rise, to reach around 800,000, up 4 percent. In addition, the demand for passenger cars stands at 850,000, or a 13 percent rise.

To meet the demand for market development, many Chinese auto enterprises have in recent years focused their attention on high-quality and low-price cars. For example, Shanghai has put out Sail and Tianjin, Xiali 2000. Particularly worthy of note is Chery, produced by Anhui Chery, which now has entirely joined with Shanghai Automotive Industry Corporation. With almost the same performance as Sail and Xiali but a price of only 88,000 yuan, no wonder it attracted many a potential buyer the moment it was unveiled.

However, experts point out that to accelerate the entry of sedans into families, attention should also be paid to supporting reforms in other fields in addition to producing low-price cars, such as bank loans, auto maintenance and simplified license application procedures. Meanwhile, it is necessary to solve knotty problems, such as traffic jams, the shortage of parking lots and gas supply, so as to attract more car purchasers.

By PD Online staff member Li Heng

People's Daily Online --- http://english.peopledaily.com.cn/