China's auto exports confronting adversity
Post date
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18/11/2009 16:55
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| China's auto export has declined for 12 consecutive months. |
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(Pony)
Compared with its fast-growing domestic auto market, China's export of autos, including auto parts and components, fell by the impact of global financial crisis.
China auto export in sharp decline
China's auto export has declined for 12 consecutive months since August last year because of the big contraction in the international auto market.
Starting from the second half of last year, China's auto export experienced a sharp decline. From the official statistics, China's auto export went through five consecutive years of sustained growth in the third quarter of 2008 began to decline markedly in the second quarter than in the past export volume by 13.6%, export value fell by 6.7%; the fourth quarter export data continues this trend, and the fall rate of more pronounced.
China's complete vehicle export volume amounted to 186,600 in the first eight months of 2009, slumping 50.80% year on year, according to the China Association of Automobile Manufacturers.
Export of auto parts and components, for the first seven months, it reached 8.44 billion U.S. dollars, down 30.1% from a year earlier.
"Concerning the outlook for China's auto export, complete vehicle export will see a month-by-month recovery growth, while auto parts and component manufacturers are facing better situation than those complete vehicle producers." said Fu Peizhao, Vice Sectary General of China Chamber of Commerce for Import & Export of Machinery & Electronic Products, Automobile Branch (CCCME AUTO).
Disadvantages of Chinese auto export
Shrinking demand amid the global financial crisis
The world economy downturn does indeed lead to a sharp decline in the US and the European auto demand. The US and the European consumers used to opt for excessive consumption. Since the financial crisis broke out, financial institutions have tightened monetary policy, which seriously affects auto sales considering that many people apply for auto loans to buy new as well as used cars.
Trade protectionism emerges
With the ongoing financial crisis, some countries have taken resort to trade protectionism as a self-protective mechanism, aiming the raising of import barriers is likely to add lustre to the domestic auto industry
After raising import duty by 15%, effective December 2008, the Russian government announced to raise as of Jan. 1, 2009 for nine months the import duty for cars again. Several countries, such as Iran, conduct importing quota on vehicles. These policies set up obstacles to China domestic auto brands to enter these markets.
Chinese auto parts and component manufactures also need to combat unfair trade practices. US president Barack Obama on September 17 slapped a new additional duty on tire imports from China, followed a petition filed by the United Steelworkers union earlier this year, which represents workers at many US tire production plants. The new duty of 35% takes effect on September 26 and completes an existing 4% duty. Next year, the extra duty will decrease to 30% and 25% in the third year.
The European Wheel Association, which represents six aluminum wheel manufacturers in the continent, filed a petition with European Member States in June claiming that Chinese aluminum wheel manufacturers were dumping their products in the European market, and that this was harming the local industry. The European Commission has started investigation. Once an anti-dumping judgment is made, the European Union may levy tariffs of up to 33% on Chinese aluminum alloy hubs for five years. As a matter of fact, Chinese aluminum wheels accounted for merely 8% of European imports between July 2008 and May this year.
The Change of exchange rate
Because of international financial turmoil, many countries' currencies have depreciated against the U.S. dollars. As a result, importers in these countries have to pay more for importing overseas vehicles. They have lost interest in importing cars as profit margin of imported vehicles became smaller while cost rises.
Car export promotion measures to be released
In the situation of severe export, China conducts a series of policies and measures like maintaining the export tax rebate rate to 17%, supporting financing of Chinese auto enterprises.
In addition, based on Adjustment and Vitalization Plan for Auto Industry, Chinaˇs ministry of commerce, joining hands with National Development and Reform Commission,
Ministry of Industry and Information Technology, have finished drafting a document to promote sustainable and sound development of car export, which involves product development and research, credit insurance, etc. It is expected to be released in the second half of the year.
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