high-ranking leaders in China. By 1960 the annual output of motor vehicles exceeded 22,000, but the industry then went into a decline, producing less than 4,000 vehicles in 1961, and the original production scale was not resumed until 1963.
In the late 1960s China began to build the Second Auto Works, which later became the Dongfeng Motor Corporation (DMC). It was located in a valley in northwestern Hubei Province, a mountainous region. The Second Auto Works reached its designed production capability in 1986 and began to produce 5-ton trucks. Other heavy-duty truck manufacturers, such as the Sichuan Auto Plant and the Shannxi Auto Plant, also appeared during this period. They too were built in mountainous areas, which impeded production and further development.
In 1971, after a decade of development, the total output of China’s automotive industry exceeded 100,000 units. Growth remained slow, however, with the total annual output still under 150,000 seven years later. In the 1970s the total number of motor vehicle manufacturing facilities increased to over 50, but most of them were small and had low production.
Earlier, in the 1960s, the Chinese government had attempted to implement a highly centralized management system for the automotive industry, but for many years the industry developed in a scattered and disorderly fashion. With economic reform in the 1980s, the highly centralized control of motor vehicle production under the planned economy was gradually replaced by a market-oriented approach. The product mix was adjusted, and the production of heavy-duty and light-duty vehicles1 was expanded to eliminate the shortage of these vehicles. China also stepped up its cooperation with automotive industries in other countries, importing technology and establishing joint ventures. In May 1983 Beijing Jeep Corporation, the first joint venture for manufacturing complete vehicles, was established. Later, Shanghai-Volkswagen, FAW-Volkswagen, Dongfeng-Citroën Company, and other joint ventures came into being. Adjustments also were made in the structure of the industry, and a group production and management system was gradually created. During the 1980s annual motor vehicle output increased rapidly, from slightly more than 200,000 in 1980 to almost 600,000 in 1989.
During the 1990s China’s automotive industry further adjusted its strategy, placing much higher priority on the development of the passenger car industry. Before the 1980s China did not allow private citizens to purchase motor vehicles for personal use and therefore did not develop passenger car production. In the mid-1980s, when the control on private pur-