China's Automobile Industry: Policies, Problems, and Prospects

China's Automobile Industry: Policies, Problems, and Prospects

China's Automobile Industry: Policies, Problems, and Prospects

China's Automobile Industry: Policies, Problems, and Prospects

Synopsis

The author presents an argument for a system of social insurance that replaces welfare with a Guaranteed Adequate Income. The book reviews public assistance programmes, and evaluates other plans that have been proposed.

Excerpt

From the early days of the People's Republic, the Chinese realized the enormous strategic and economic necessity of a well-developed vehicle industry. This chapter traces the development of what was defined as the "domestic economic forces" faced by foreign firms in the late 1970s and 1980s. It further examines, from a historical perspective, the early government guidance necessary for constructing an automotive industry in a centrally planned system, one that varied considerably with the oscillation of political and economic trends. The chapter outlines these sometimes dramatic policy swings over the decades after the 1949 Communist victory, and thereby provides the necessary historical base for later applications of the analytical framework introduced in chapter 1.

Pre-1949 Conditions

The first automobiles arrived in China in 1901, and ran mainly on the streets of industrialized Shanghai. By the mid-1920s, though, there were only about 7,000 cars and 600 trucks on the streets of major cities; virtually all of these were imported vehicles, and many were owned by foreign residents. American model cars dominated sales in China during these early decades.

Analysts cited several factors that retarded the growth of the automotive sector. First, China had relatively few miles of paved road. In 1923, the country had about 2,000 miles of "highway" (mostly rough trails). By 1937, there were about 25,000 miles of surfaced highway.

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