China’s WTO Auto Blow

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While China has been in the WTO since December 2001, it has only now had the first case (the background to which we reported here in September 2006) found against it, as PA reports:

    “The World Trade Organization made public its first official condemnation of Chinese commercial practices on Friday, releasing a February ruling that sided with the United States, the European Union and Canada in a dispute over car parts.

    …In the sweeping decision, the three-member WTO panel ruled against China on nearly every point of contention with the U.S., the 27-nation EU and Canada. The panel found that Chinese measures “accord imported auto parts less favorable treatment than like domestic auto parts” or “subject imported auto parts to an internal charge in excess of that applied to like domestic auto parts.”

And it is not expected to be the last case, not least because a host of international manufacturers will be looking to China for the growth that now looks unlikely at home – and they will fight to break down any barriers they find:

    “…The dispute has likely been closely watched by makers of everything from batteries and brakes to seats and spark plugs on both sides of the Atlantic, including U.S.-based Delphi Corp., General Motors’ former parts supplier, and Robert Bosch GmbH in Germany.”

In terms of the auto market, it is clear why there is interest, as is indicated in a new report from Research and Markets (China Automobile Sector to 2010) which notes in its key findings that:

    • “It is projected that China will add 33 Million automobiles during 2008-2010.
    • Passenger car production in China is expected to cross 7 Million Units in 2008.
    • Passenger car stock per 1000 population is likely to increase at a CAGR of 19.8% from 2008 to 2012 in China.
    • Sales of commercial vehicle in the country are forecasted to grow at a CAGR of around 5.5% during 2008-2010.
    • Based on the past performance, it is projected that passenger car sales will cross 11 Million Units in 2010.
    • Sedan will be the preferred segment among the Chinese consumers during the forecasted period”.

However the auto case develops, it seems that China will continue to open up its markets as its more sensitive local industries become stronger and more internationally competitive. But, whatever WTO rules, foreign domination is still not part of The Plan.

See new sources:

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