environmental and health concerns (Chapter 7), and government policies (Chapter 8)—impinge on the choices of technology. China has already decided to require Chinese cars to meet European Emission Standard I (Euro I) now and Euro II standards by 2004–2005, based on state environmental protection regulations. The European Union1 has been enacting increasingly stringent emissions standards and now requires Euro III standards for its member nations, with Euro IV standards planned for implementation in Europe in 2005. State plans call for Chinese cars to attain the current Euro emissions standards by 2010.

To meet the “wide availability” objective (that is, be affordable), the “China car” would have to cost about RMB60,000–80,000 ($7,200–9,600). Below this price range, the basic requirements for emissions control, performance, and safety cannot realistically be met.

To make the automotive industry into a pillar of the economy, China will have to build its domestic capabilities for supplying materials, manufacturing components, and providing the design, assembly, maintenance, sales, credit, and other services that in turn will contribute to an increase in China’s gross domestic product (GDP). As discussed in Chapter 3, consolidation of the Chinese automotive industry and improvements in efficiency and cost competitiveness will take on new importance. Imported cars and components create unfavorable trade balances for China, whereas exports will expand opportunities for its automotive industry. Where technology choices bear on the future competitiveness of the industry, these factors must be considered carefully.

Likewise, the China car should be highly fuel-efficient, because China’s domestic supply of petroleum fuel is limited at present and higher fuel demand can be met in the near future only through increased imports. This situation will affect China’s balance of trade over the next decade and perhaps longer. The China car also should be highly “clean” in emissions, because the air quality in many Chinese large cities ranks among the worst in the world. The situation is expected to worsen if vehicle tailpipe emissions are not controlled rigorously.

The buyer of the China car will have a heavy influence on automobile design and sales. Successful auto companies select product attributes that maximize markets. Consumers typically want the most performance and convenience they can afford. Initially, most Chinese drivers will be located in urban areas or on rural and intercity roads that are not designed for high speeds. The performance requirements and fuel efficiency of cars are heavily influenced by the “driving cycles” used in designing and op-

1  

Through rulemaking proposed by the European Union Council of Environmental Ministers and approved by the European Parliament.



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