DEVELOPMENT OF CHINA AUTOMOTIVE INDUSTRY

Abstract

Starting from 1978, China, which had been living under the strict socialism practice for many years, adopted major economic reforms towards liberalization and outward orientation. These changes have been reflected in the automotive sector too. After the initiation of the reforms, Chinese economy has grown rapidly and the automotive sector has taken the first place in the world in production and market share. Success of the automobile industry largely attributable to policy practices that attracted foreign direct investments. A new era has started with China's membership to the World Trade Organization (WTO). More liberal policies have been implemented, and some restrictions in the sector have been removed. In this study, the developments in the automotive sector are presented in the context of different ownership structures. Study results indicate that there has been an evolution from a production structure with foreign partners to a market structure in which national brand automobiles produced by domestic manufacturers. However, it is understood that the domestic automotive industry could not performed at the desired level due to various problems arising from the developments in the sector.