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As China's Auto Market Booms, Leaders Clash Over Heavy Toll

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On one hand Chinese environmental officials are aware of the pollution problems in Beijing and Shanghai and other cities. Levels of nitrogen dioxide in Beijing exceed the WHO clean air guidelines by 78%. On the other hand the newly emerging middle class is seeking car ownership, and the local government officials need growth in the car industry to show good GNP and GDP growth numbers on which their performance is judged. Beijing and Shanghai and Anhui province local governments are part owners of some auto companies. About 416,000 people are employed in the Shanghai area auto industry alone and the auto industry in Shanghai pays about 900 millon dollars in taxes, according to government figures. At seven cars per 1000 population car sales are just beginning to take off. And with China's population its clearly not going to be possible to have the same level of ownership as in the US. The same is true for India. This would increase by many times the current demand for crude oil and increase emissions to the point of creating a disaster. And even today because of lax enforcement, and older models on the road, about 40% of vehicles in Beijing have no pollution controls and the other 60% have varying degrees of pollution controls. Experts say changes to the subsidized oil price policy, refineries that produce cleaner gasoline, policies to build more mass transit which has lagged behind in China as car sales took off (and probably more GNP impact from car plants than mass transit which act as inducement for local officials), and stricter fuel efficiency and auto emissions standards are needed.

China's rapidly growing automobile market 2005-2010

03/28/2006

Changes in China's rapidly growing automobile market.

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Stiglitz and Sen's report point to need for looking at multiple indicators of growth, including education, health care and environment.

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Be skeptical of touting GDP growth numbers. China which has done this has learnt from this experience as it shifts to trying to assess the costs of environmental degradation in headlong industrialization. The U.S. and the shift to bigger houses and bigger cars, which later fed a collapse of housing and the auto industry show a different angle of this obsession with GDP numbers that can work constructively or destructively if not understood and managed properly. Air quality and pollution is a major problem in China and affects the quality of life.

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