China and the automobile’s future

Chinese electric subcompact cars on the assembly line
A worker checks out electric cars on an assembly line in eastern China. In 2015, the country became the world’s top seller of “new energy” vehicles (source: dpa)
  • China has an oversized auto industry that is oriented primarily toward the domestic market
  • China’s car output is higher than the United States,’ but its vehicles tend to suffer from inferior quality and some are copies of foreign models
  • Technological change that is revolutionizing the global auto industry offers secondary players, such as China, a unique chance to quickly raise through the ranks

Since it abandoned Maoist dogmas decades ago, China has entered the auto business with a bang. Today, as the world’s largest vehicle manufacturer, it faces the steep challenge of efficiently utilizing its installed production capacity of 40 million units a year. Annual car sales in China are some 25 million, and exports not much above 1 million.

Another complication is the convergence of technologies that is transforming not only the automobile but also the social context in which it is used. Will China’s economic planners succeed in taking advantage of the window of opportunity that technology provides and turning a local giant into a global player?

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