China wants to win the car production race but without leaving a trail of smoke.
Former Chinese premier and communist ideologue Deng Xiaoping once remarked of China’s grand industrial ambitions, “I don’t care if the cat is black or white, so long as it catches mice.”
That principle eventually catapulted the nation to its present status of global industrial royalty; nevermind if Deng’s advise shook a few long-honored Maoist tenets and spurred a decades-old debate.
But while hardliners remain doubtful about the benefits of bending a dogma or two, what’s clear is that the cat that China unleashed decades ago is more like a gigantic voracious mechanical saber-toothed tiger now—catching more than its share of mice, and leaving a trail of deadly smoke.
China, the former sick man of Asia and hesitant industrialist, is now the world’s third largest producer of automobiles. In 2007, the country’s vehicle sales peaked at US$9 million. That’s an increase of more than 25% from 2006’s US$7.22 million.
Last year’s overwhelming sales is not a fluke according to the China Association of Automobile Manufacturers (CAAM). The group says the growth will be sustained and China will have some 131 million cars on its streets by 2020.
“China’s vehicle output is expected to grow an average of 10–15% annually over the next 20 years,” CAAM chairman Zhang Xiaoyu said in a recent statement.
But China has a very short history of private car ownership, according to a report by the Department of Agricultural and Resource Economics at UC Berkeley.
Until five years ago, the majority of cars were owned by the state or companies. Over the past 10 years, however, private car ownership has increased eightfold to roughly 11 million cars. The report explains this development by the classical threshold model: People start purchasing high-price durable goods, such as cars, as a province’s per capita income increases.
Can’t Hack It? Buy It!
The only setback to China’s manufacturing advance is its lack of home-grown technology. For the most part, Chinese manufacturers have to partner with foreign auto giants to make a substantial impact on the market.
Dongfeng Motor Group, for instance, formed Dongfeng Honda Automobile Company in 2006 with Japan’s Honda Motors to build its state-of-the-art factory in Wuhan, Hubei province. The investment of 2.8 billion yuan (US$383.87 million) quadrupled the company’s production capacity from 30,000 units a year to 120,000 in 2007.
But the more cunning strategy some Chinese companies employ nowadays is purchasing second-hand technology from automobile biggies, instead of investing millions in their own research and development.
Lifan Group, in partnership with the Chinese government, will buy not just technology blueprints, but a whole plant owned by industry leaders DaimlerChrysler and BMW. The Chinese auto maker plans to disassemble the sophisticated plant located in Brazil, transport the parts to China, and reassemble it in a new location in Chongquing.
Lifan wants the plant to be operational this year to roll out its first batch of modern European-standard, fuel-efficient vehicles. The move may just transform China from an automotive mid-weight to a highly competitive global car manufacturer, taking on long-time industry players like Japan.
As expected, the race to boost production comes at a tremendous price. China’s State Environmental Protection Administration recently warned that China’s vehicles have become the country’s worst polluters, responsible for rising carbon monoxide and nitrous oxide emissions in large cities like Beijing, Shanghai, and Guangzhou.
Car exhaust, accounting for 79% of air pollutants, has contributed to the deaths of 50,000 newborn babies and has been blamed for causing 400,000 cases of respiratory illness every year in the country’s urban areas.
Beijing, which will host the 2008 Summer Olympics, is in a panic mode to clear its air of pollutants by the time it welcomes athletes and spectators this August.
“Beijing’s air quality is not within the requirements of the green Olympic Games,” Shi Hanmin, director of the Beijing Environmental Protection Bureau, said in a recent report. He said the city has 300,000 highly polluting vehicles; each one with emissions equal to the exhaust produced by 14 European road-worthy cars!
The United Nations Environment Program has sounded a similar alarm. It said the levels of hazardous particles in Beijing’s atmosphere “often greatly exceed World Health Organization Air Quality Guidelines.”
The irony is that the Chinese government has among the strictest policies regarding fuel exhaust and usage in the world. It has imposed the efficient use of fuel and energy not only on motorists but households as well.
Under China’s Five-year Program, the country aims to adopt fuel-efficient mass transit systems, better government logistics, and energy-saving alternatives for homes.
The government has poured over US$120 million into the manufacture of a futuristic “green vehicle” as a public transport alternative. The passenger car is being built to meet a stringent pro-environment checklist. Already, China has more than 200,000 vehicles using alternative forms of fuel plying its polluted roads.
The Chinese government also wants to give tax breaks to ecological and fuel-efficient cars, while heavily taxing cars that fail efficiency standards. Officials hope the measure will encourage new buyers to pick environment-friendly cars, forcing the old, smoke-belchers off the streets. (According to the Ministry of Science and Technology, China allocates 60% of its oil supply to transportation.)
The government’s partnership with car manufacturers aims to encourage eco-friendly reforms in the automobile industry. The plant it aims to operate under a joint venture with the Lifan Group will have a wastewater purification and recycling system, a water-based paint system to cut down on emissions, and better, more efficient production methods under the “Green Factory” principle.
Since they have been proven to cut down on fuel consumption and gas emissions, the Chinese government has been pushing the use of hybrid vehicles that are jointly or alternately powered by a standard petrol or gas engine and an electric motor.
The state tapped Chery Automobile Co. Ltd. to export the first line of Chinese-made cars. The roster included the successful A5ISG, a compact hybrid sedan powered by a 1.3-liter, four-cylinder engine and an electric motor.
The hybrid Chery, featured at the 9th Beijing International Automotive Exhibition in November 2006, is said to be ready for mass production this year and will be exported to Europe and North America. The hybrid car will burn less fuel and will cut emission by about 30%. The batteries packed in each car power the electric motor during travel and recharge during stops or plug-in.
Other car manufacturers have also joined China’s auto greening efforts. Geely Automobile Holding Corp. is expected to roll out its first hybrid car from its Hunan plant this year. The hybrid plant is seen to chug out about 100,000 electric-gas cars by 2010.
Meanwhile, Sichuan FAW Toyota Motor Co. has been producing its Prius hybrids in China since late 2005. The car has been selling well despite the obstacles of competition and a costly price tag of US$40,000.
Chang’an Motor Corp., the local partner of Ford Motor and Suzuki Corp., as well as Shanghai Automotive, in a venture with Volkswagen, are also aiming at large-scale hybrid car production this year.
For a country with over a billion car-less but mobile constituents, a cleaner mass transport system is the answer. To do this, China’s Ministry of Science and Technology said the government plans to utilize fuel cell vehicles (FCUs) that have zero pollutant emissions.
China’s Science and Technology Minister Wan Gang said FCUs are among the vital technologies eyed for the future development of China’s automobile industry and mass transit system.
Before the Beijing Olympics, thousands of old buses will be replaced by those running on clean-burning, compressed natural gas. Officials say some 5,000 green buses will be plying Beijing’s roads this year. Twenty electric-gas buses are already going through trial rounds in Wuha, Hubei to test the efficiency of hybrid buses for mass transport. Several companies are also looking into prospects of mass-producing natural gas and electric buses. The firms also plan to set up recharging stations for the green buses.
The Chinese government’s current dilemma is convincing its people, more than the rest of the world, that it is genuinely concerned about cleaning the air that is choking its urban residents, while still sustaining its economic successes.
China’s automobile industry, on the other hand, is experiencing a shift towards eco-friendly alternative vehicles; a trend driven more by market forces than by motoring chic. If the market is any indication, the choice of the people is clear. The cleaner, the greener, the better.
print ed: 02/08