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Jayantha Sri Nissanka reporting from China

When some one asks who uses the most number of push bicycles in the world, every one knows it is Chinese.

But in time to come it will undoubtedly change to automobiles. In the future it is certain that the China will dominate the world automobile market producing quality automobiles at a competitive price.

Many giant automobile manufactures in the world from US, Germany, Italy, and Japan have tie up joint ventures with Chinese counterparts. After the China entered the WTO many more automobile manufacturers have come forward to tap the opportunities in China.

A constantly expanding demand and increasing competition are what the Chinese automobile industry inevitably require today. China's WTO entry will spur its progress toward this direction. Earlier, China's automobile industry was highly protected. Chinese have realized that import quotas are playing a less important role in restricting automobile imports as domestically built vehicles have become increasingly cheap and their prices on the domestic market are now closer to international prices. It seems that the adverse effect on the domestic automobile industry will not be as great as some Chinese are anticipating.

Meanwhile, the Chinese economy is undergoing a period of high growth. As a result the domestic demand for automobile products is expected to soar over the next five to ten years. According to statistics, since the beginning of the 1990s, the annual national automobile sales has grown at an average rate of 14.5%, and corresponding rate of increase is as high as 31% for sales of cars.

Recent research studies have shown that cars owned by the Chinese population will average 47 per 1,000 people by 2010. Accordingly potential national demand will be 5.8 million automobiles and 2 million cars in 2005, and 10 million vehicles and no less than 4 million cars by 2010.

In the coming years the competitiveness of China's automobile industry will significantly improve along with the expansion of the domestic market for automobile production. At present, automobile plants are being expanding and prices for domestically built cars are to fall markedly over the next few years.

This means that the Chinese automobile industry will be in a better position for competition. On the other hand that the China WTO entry will not exert as great an impact on the automobile industry as some people anticipate, according to economists.

However, the Chinese automobile industry at present falls far below the best international standards of production, prices of products and technological levels. Protection has not helped to improve scales of production, efficiency, technology and reduce the cost of its production and operation. Weak market demand and imperfect competition are the main reason for low levels of production concentration, limited size of individual enterprises, low efficiency, inadequate competitive power, etc. Because of these factors, a constantly expanding demand and increasing competition are what the Chinese automobile industry require in seeking development.

China's WTO entry will be conducive to expand the domestic automobile market in order to enhance automobile industry's competitive power. That means it will establish highly efficient, pro-competition market mechanisms, using market means and competition to promote the merger with giant automobile manufacturers in the world and re-organization of the existing manufacturing plants.

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