The evil car strategy – the WTO column

(Later also at Chinabiz)

Ann Arbor – My regular readers might recall that I have been worrying quite a lot about the possibilities of the foreign car industry to recoup the many billions of US dollars they are investing at this stage in China.
The car industry in China is inefficiently organized, export is a far away dream and the domestic market does not seem large enough to support all those investments that have been flooding the automotive market. The infrastructure is lacking: after one year of decent growth traffic has come to a standstill in larger cities and on major highways. At some moments the average speed of cars in cities is lower than eight km per hours, slower than a bicycle. Add the problems with pollution and the need to import more oil to keep those cars moving and you might see that the most recent predictions, an annual demand of 20 millions cars by 2020, seems a bit far fetched.

Obvious, now China has become already the 4th largest car producer in the world, the contribution to the national and local economies of those industries is something no government would like to discount. So, how can we solve that dilemma?
This week dr. Zhao Jimin, working at the universities of Harvard and Michigan came in a lecture of the Center of Chinese Studies in Ann Arbor with an ideal solution. I would have called it a Chinese solution, if it had not been used in the US already rather successfully, since it solves almost all problems. There is no way you can stop Chinese citizens from buying the car that offers, said Zhao, and probably she is right. So, how can you limit the problems without losing a booming automotive industry? All those car users should use the bus or other means of public transportation.

It took a few minutes before I really realized the brilliance of that solution. “Beijing now has two million cars,” explained Zhao. “The problem is all two million are also being used. In New York people own over twelve million cars, but they use only two million.” That would be a good way to manage this problem.
Do you really think the Chinese consumers are so stupid they will pay their hard-earned savings for a car they can hardly use, I asked her after the lecture. The American audience became slightly unruly, since it works in the US, why should it not work in China?

Perhaps she is right. Anyway, the restriction on the usage of cars will only come in a sneaky way, get tougher as the traffic gets more often into a gridlock. The car industry has dictated the way Americans use how public space is being used in their country, who should the car industry not impose their doctrine on the Chinese?

Fons Tuinstra