WTO Impacts On China's Car Industry

The thesis deals with WTO impacts on China's car industry. As an important sector of automobile industry, car industry had been protected by high tariff rates and limited quotas for almost half a century. With China's entry into WTO in December 2001, it is undergoing an unparalleled revolution. What WTO brings to Chinese car market is lower tariff rates, more import quotas, less restrictions on foreign investment and fairer market competitions. In other words, a completely open market will occur in due time.Facing this big challenge, China's car industry is adjusting itself to WTO commitments during the buffer period of 5-6 years which is granted to this infant industry. The first accommodation was made on the regulations and law documents that conflicted with WTO requirements. Then came the adjustment of the industry structure. Since the foreign car manufacturing groups have stronger competitiveness, domestic carmakers need several enterprises groups as their leaders to compete with their foreign counterparts. The Tenth Five-year Plan for Automotive Industry declares to establish "2-3 large automotive enterprises groups with certain international competitiveness". Although it takes time to form such large groups in China's car industry, it gives a clear direction in which domestic carmakers are developing. Another important adaptation occurs in the product mix. The car industry is focusing their effort on producing economy cars. Meanwhile, limitations on private cars have been reduced. Economy car consumption is considered as a significant factor to push the development of automobile industry and the whole national economy forward.Thanks to these positive measures taken by China's car industry, the first two years after China's accession to WTO witnessed dramatic changes in domestic car market:car price slash and reorganizations between automakers. They are both outcomes of market competition. Meanwhile, those guidelines in the Tenth Five-year Plan do play a positive role in domestic market changes.However, there are several problems haunting China's car industry: How to survive the globalization, how to develop our own intellectual property right on car making and how to protect the environment when we speed up car manufacturing. Although they are still under discussion, sensitivity to these problems will help Chinese car makers survive this turbulence brought by Chinese WTO entry.