China’s Faustian Bargain With the Auto Industry
OK, the post title is a tad melodramatic. However, two related newsish items found their way into my Inbox at the same time. Both were disturbing.
First was a straightforward news item from the FT on June car sale numbers, up 48.5% from last year. Yeah! A nice boost to GDP, more indications that domestic consumption is firming up, and the government’s tax breaks and subsidies for autos seem to be working.
Everybody happy? Not exactly.
The second item was a post by Charlie at China Environmental Law on China’s car culture (“Car Wrecked” — now that’s a good post title). He was responding to an Op/Ed about cars as status symbols, noting that social pressure (even with kids) is also spurring on car sales these days.
This one’s easy for me. Despite my Southern California roots, I’m not really a car person. Haven’t owned one since 1998, haven’t needed one living in Beijing (or my two years in D.C.), haven’t really missed the whole car thing.
I understand that having a domestic auto industry sounds like a great idea to China’s government. Lots of jobs, lots of money to be made on exports, lots of new tech, even lots of international prestige.
But once you get a car industry, you’re stuck with it. Ask the Americans. When oil is cheap and the economy is good, all is well. Sure, the environment takes a hit, but who the *#$% cares about that anyway? Growth is king.
But when demand tanks and fuel gets expensive, what to do? You have a very important group of companies out there that employ thousands of citizens. So you turn to subsidies and incentives (or bailouts, if you’re dealing with Detroit).
Meanwhile, having a large numbers of cars out there necessitates changes to road design, city planning, etc. Roads are widened, new highways built, bike lanes done away with. Screw it, says the city planning official, all of my friends are in cars now, so no one is going to complain too much about the shift in priorities, yes?
Eventually you get to a point where you, as a country, need to start dealing with your air pollution. Put it off a long time, but domestic and international pressure have forced your hand. But now it’s a lot more difficult than it would have been 10 years ago. All these cars out there, proud car owners, powerful car companies.
This has turned into a diatribe. Sorry about that. The traffic and bad air in Beijing over the years does something to you I guess.
I’ll leave you with Charlie’s parting comment (and that of the Op/Ed author); can’t say it better myself:
When the United States embraced the car culture, its people had before them a virtually virgin continent. There was promise of unlimited space, resources, possibilities, and decades of cheap oil. But Detroit is dying.
We are not starting out with any of North America’s advantages.
I think the most we can hope for is that China makes (and people buy) cars that pollute less. That may help slow the destruction of the environment, but it won’t do much to slow the destruction of the social fabric that is wrought by the car culture. It will be very sad to see a China that is car wrecked.



It is difficult to imagine a China with the same level of car ownership as the US or Europe while still managing to operate. The density of housing in most Chinese cities would mean that there would not be enough parking spaces or enough space on the roads even if they did away with the bike lanes and the sidewalks.
It would be a big shame to have a China where the minority who could afford a parking space for their car clogged up all the roads for the majority who still relied on public transport.
While car ownership in China is increasing rapidly, it isn’t at that level yet (apart from perhaps the biggest cities) Let’s hope that oil becomes expensive enough soon enough to discourage the rest of China from following suit.
No reason to compare with US. We’re already up to our eyeballs in cars and nowhere near US per capita numbers. In other words, it’s already a big problem and in need of a solution.
As far as oil prices go, remember that China keeps the price down artificially, so consumers are not reacting to real market forces.