BEIJING — China has designated eight cities as national automobile and auto parts export bases, in order to standardize vehicle and parts exports and to facilitate independent innovation throughout the domestic auto industry.
The Ministry of Commerce (MOFCOM) and State Development and Reform Commission (SDRC) announced on August 17 that they had jointly selected Shanghai, Tianjin, Chongqing, Changchun, Wuhan, Xiamen, Wuhu, and Taizhou as China’s first export hubs.
Another 160 automakers and suppliers were also designated as export-oriented enterprises. This included 44 automakers — such as FAW, Dongfeng, Chery and Geely — as well as 116 suppliers and 61 foreign-invested companies.
These export bases and manufacturers are expected to play a leading role in optimizing China’s auto exports, protecting intellectual property rights, and increasing independent innovation in the auto industry, according to Vice Premier Wu Yi.
Seventeen major automakers at the ceremony, including FAW, Chang’an, Chery, Geely and Yutong, also signed a 15-year strategic cooperation agreement with China Export & Credit Insurance Corp. and China Ocean Shipping (Group) Co. (COSCO). The deal is expected to help the automakers facilitate shipments and fend off risks such as fluctuating exchange rates and political changes abroad.
China’s automobile and parts exports have increased about 40 percent per year since 2000. Export value hit $10.9 billion in 2005, up 34 percent from 2004, while vehicle export volume more than doubled to 173,000 units, outnumbering vehicle imports by 11,000 units.
Despite the huge potential for auto exports, however, China’s export value remains relatively small, accounting for roughly 7.3 percent of the auto industrial value throughout the country and merely 1.1 percent of the world’s auto trade. Chinese-made automobiles are mainly sold to developing countries in the Middle East and Latin America, and to Russia.
China’s auto exporters also face major risks stemming from a host of problems such as stricter foreign environmental and safety standards, and a lack of shipping capacity. Out of 1,025 exporters in China, over 600 exported less than 10 vehicles in 2005, and some shipped only one.
Policymakers should therefore encourage technical innovation in the auto industry and help increase automobile and auto parts exporting by regulating the market. The new export bases and export-oriented enterprises are likely to create a healthy environment that can support rapid and sustainable growth.
“One of the important symbols of an international auto power is having a large capacity to export auto products,” said Minister of Commerce Bo Xilai.
In Germany, Japan and South Korea, exports usually account for more than 40 percent of total output.
Bo expressed the hope that these export zones will become key bases for independent innovation. They should eventually be turned into important platforms for international exchange and cooperation in China’s auto industry, and be used as a significant means of welcoming shifting trends in global auto development.
The designation of these auto export bases and companies is also believed to have been a government measure to alleviate overcapacity in the industry; utilization of vehicle manufacturing capacity currently stands at 83 percent; and for parts production, a mere 68 percent.