Towards sustainable growth in the Chinese automotive industry: internal and external obstacles and comparative lessons

This paper concentrates on how China's industrial policy towards its automotive industry has developed since the onset of the 'Open Door Policy' in the 1970s. In particular, attention is paid to the legacy of the Communist era and how this has hindered the industry's long-term development. Additionally, discussion focuses on the role played by Foreign Direct Investment in trying to improve China's long term competitive position, and on policy comparisons with Japan and Korea. The paper notes that the Chinese automotive industry suffers from major structural, technical and organisational weaknesses. It explores what steps are being taken to remedy these with the help of government policy so that China might be able to achieve its goal of holding 10% share of the global car market beyond its own frontiers by the decade 2020-2030. In so doing, it highlights the differences in policy with those pursued in Japan and Korea and the 'uniqueness' of the Chinese approach thus far.