hicles per capita were comparable to the world average, its fleet would have to number 160 million, with 10 million new and replacement vehicles acquired each year. But, as revealed in Chapter 2, vehicle ownership is strongly correlated with a country’s per capita gross domestic product (GDP) and average personal income. This suggests that a reasonable estimate for the number of vehicles in China in 2005 is about 25 million, a number in agreement with the general expectations of government planning.
In its eighth national five-year plan (1991–1995), the Chinese government designated the automotive industry as a “pillar industry” of the economy.2 In its most recent five-year plan for the automotive industry (2001–2005), the government proposes specific actions to restructure and strengthen the industry, which is now primarily engaged in truck manufacture and in joint ventures with foreign manufacturers for automobile assembly, and to produce a Chinese family car at a price that would encourage mass ownership (for specifics of the five-year plan for the automotive industry, see the appendix to this chapter and Chapter 3). The plan emphasizes advanced technology and the production of vehicles that will be competitive in the international market, and gives priority to investments in highways and oil and gas pipelines. More specifically, the plan suggests that only two or three of the 118 existing automotive manufacturing companies will still be active in 2005, and it indicates which technologies will be used in manufacture and which will be incorporated into Chinese cars. Government planners anticipate that the new automobiles can be produced by independent Chinese companies, but they acknowledge that Chinese accession to the World Trade Organization (WTO) will complicate that prospect.
From the perspective of the Chinese automotive industry, the five-year plan represents short- and long-term opportunities and challenges. In the short term, the industry will receive government support to assist in consolidation and aid in expanding the domestic market. At present, nearly all the cars manufactured in China are produced by joint ventures, but the central government has indicated a desire to promote a Chinese-designed car, and additional resources may be made available for that effort. In the medium to long term, the automotive industry must adjust to the effects of China’s membership in the WTO, which will open the