Growth of a Giant: A Historical and Current Perspective on the Chinese Automobile Industry

Abstract

The automobile industry in China has marched into its 5th decade since 1956 and in 2009 surpassed the USA as the giant of global automobile production and consumption. Rapidly increasing motorization in China exerts unprecedented economic, social, and environmental effects at home and abroad. This paper aims to provide a synoptic overview of the Chinese automobile industry, classifying it into four distinct phases, which are characterized by the prevailing institutional environments. These are the Start-up Phase from 1956 to 1978, Growing Phase from 1979 to 2001, Prosperity Phase from 2002 to 2010, and finally the Stationary Phase from 2011 until the present day. It analyses China’s national political, economic, trade, international relations and other factors and how these affected the development of the overall Chinese automobile industry, with a specific emphasis on the formulated and applied automobile industry policies. The dramatic growth in the automobile industry currently faces a potential period of decline as China’s latest industrial policies focus on alleviating the ownership and use of private vehicles, especially in its major cities due to severe congestion and other impacts. Thus, China has entered an era similar to other developed nations and cities, though it has made such economic changes at a speed and scale unparalleled in history.