China to inundate Europe and USA with low-quality cars in 2008

Vehicle exports from China, the world's third-biggest producer, may increase at least 46 percent this year as carmakers manufacture more sedans and trucks.

Auto shipments will exceed 500,000 units in 2007, the Ministry of Commerce said in a statement on its Web site yesterday, citing the minister, Bo Xilai, at a meeting with the nation's car exporters. Last year, overseas sales doubled to 342,400 units, customs data showed.

China has more than tripled automobile output and sales since joining the World Trade Organization in 2001. Last year, it surpassed Germany as the world's third-largest vehicle maker. The nation has designated eight port cities, including Shanghai, Tianjin and Xiamen, to serve as the country's main automobile and component export centers.

“China has to expand its overseas markets as production capacities for vehicles are rising much faster than we had expected,'' said Zhang Xin, a Beijing-based analyst with Guotai Junan Securities Co. ``Many Chinese exports are currently sold to the low-end markets, including Africa and South America, with low margins.”

The government will increase the threshold for exporters to improve the quality of vehicle shipments, the statement said. It will also encourage Chinese auto companies to invest overseas and merge with rivals, the statement said, without elaborating, Bloomberg reports.

The world's third-largest auto producer has already exported 294,000 cars in the first seven months of the year, up 70.3 per cent year-on-year, Commerce Minister Bo Xilai was quoted as saying in the statement.

China's auto exports have grown rapidly. The 340,000 units shipped in 2006 were up from 173,000 the year before, according to government figures.

The country's production capacity is expected to reach 8.5 million units this year after growing at an average of 45.8 percent annually since 2002, the ministry said.

The auto industry accounted for 3.7 percent of China's economy at the end of last year, reports.

Source: agencies

Author`s name Alex Naumov