Action to burst the bubble in the construction of automobile plants
may be taken by the state if evidence emerges that it is hurting
the industry as a whole.
An
official with the State Economic and Trade Commission (SETC) warned
yesterday that a price war may erupt in the second quarter,
sharpening already fierce competition.
"Some local governments are currently very keen on building
automobile parks and factories, which may have a negative impact on
the industry," said Zhu Hongren, head of the division of operation
co-ordination with the Bureau of Economic Operation under SETC.
Zhu told the 2003 China Electronic and Information Industry Forum
yesterday that relevant departments will tighten regulations on
construction of automobile projects -- initiated mainly by local
governments.
The official also pointed out that the launch of new automobile
models and an expansion of production capacity may spark a price
war.
But he remained confident the industry will enjoy growth of over 20
percent this year.
Zhu believed an enhancement of competitiveness of the First
Automotive Works, Dongfeng and Shanghai Automobile Industrial
Corporation would help the industry maintain high growth.
He
said the release of government regulations to encourage automobile
consumption and more focused consumer demand would also play a key
role.
He
predicted sales of automobiles would reach 3.6 million units this
year, including 1.3 million cars. The figures for 2002 were 3.48
million and 1.06 million respectively.
Prospects for textiles and light industry were also bright this
year, Zhu said.
Industrial output of textiles will reach 1.1 trillion yuan (US$133
billion), rising 10 percent. Exports would be US$6.2 billion -- 3
percent higher than last year.
Industrial output of light industry will amount to 2.5 trillion
yuan (US$302 billion).
But he warned that some countries may erect technological barriers
and take anti-dumping measures against Chinese exports.
He
also pointed out that the growth of the coal industry might slow
down after a buoyant 2002.
"Last year's rapid development of the coal industry was mainly due
to increased demand and resumption of production after the closure
of some coal mines," said Zhu. "But it will slow down this
year."
(China Daily January 17, 2003)