Put the pedal to the metal subsidies to Chinese industry economic Autoparts 2001-2011

Thorium.

Put the pedal to the metal subsidies the Chinese auto parts industry from 2001 to 2011.
For graphics and full tables, see the PDF of this publication.
China is currently the world's largest automotive market, it is also one of the largest producers of auto parts and exporters in the world, exports, mainly to the United States, which constitutes about one third of its Production the Chinese government has provided subsidies for auto-parts manufacturing in China, and strategic decisions by Chinese policymakers and foreign companies have ramifications for the US and the global economy.
Since 2001, the Chinese auto parts industry has received about 27 5 billion in grants over the next decade, the central government of China is committed to paying a Sept. 10 billion more in subsidies for industrial restructuring mergers mainly outgoing and acquisitions and technological development of the auto parts industry.
The Chinese auto industry and auto parts have also benefited greatly from other central government policies governments and 24 provinces of China ranked the automotive industry as a pillar industry for the past decade, the political Chinese auto parts government was one of broad institutional support for the acquisition and development of advanced technology, including new energy and green technologies.

The industry of Chinese auto parts increased by more than 150 since 2004. However, despite the official approval of the consolidation, the industry remains highly fragmented with more than 10 000 members and more than 15,000 non-registered manufacturers.
Although fixed investment in auto parts increased, the value of production increased even faster, demonstrating the transition of China's auto parts industry in the manufacture of higher added value and success of government policies that encourage technology development a number of domestic Chinese companies are emerging as world class competitors.
China is the fourth largest exporter of auto parts in the world after Germany, the US and Japan, and also the fourth largest exporter of auto parts to the United States after Canada, Mexico and Japan, having surpassed Germany in 2008.
While other foreign automakers operating in China have linked to auto parts suppliers at home, American automakers have cut ties with suppliers in the United States or encouraged them to manufacture in China global automotive strategy US centers currently on manufacturing in China and export back home as a result, China's exports of auto parts to the United States are three times higher than the next highest commercial destination, Japan.
In auto parts, China runs a trade deficit with all major car producing countries except the United States.
US imports of auto parts from China have increased faster than those of any other country between 2000 and 2010, imports of Chinese auto parts to the United States increased by about eight times and should continue to increase over the same period, the US trade deficit with China on auto parts increased by nine times.

Specific grants from 2001 to 2011 the Chinese auto parts manufacturers included about 2 3 billion in 2001 to 2009 grants to 73 companies reported in their annual reports; about 1 billion coal subsidies from 2001 to 2010; 0 6 billion in subsidies for electricity from 2002 to 2010; 0 3 billion subsidy for natural gas from 2004 to 2010; about 1 6 billion in grants for glass from 2004 to 2010; about 3 2 billion grants for the cold rolled steel from 2003 to 2010; and about 18 4 billion in subsidies through industrial restructuring and technology development policies from 2001 to 2011 by the central government and seven local governments.
auto parts consumption is directly related to the demand for new vehicles in January 2009, for the first time, China overtook the US to become the largest car market in the world by volume Bloomberg 2009 as subsidies Chinese government and other political spurred demand, automakers sold Aug. 13 million vehicles in China, an increase of 48 over 2008 International Trade administration in 2010, compared to 10 4 million cars and trucks light sold in the United States, the lowest level in 27 years.
In 2010, estimates have China production, second only to Japan in the production of cars and second passengers after the United States in the production of commercial vehicles 1 China Automotive Review states that vehicle sales in China could achieve about one-seventh of the vehicles in the world 18 million units in 2010, a level that will solidify the position of China as the largest market in the world.
Meanwhile, JD Power and Associates estimates that vehicle sales in the US could reach nearly 11 Cable 6 million units in 2010 In December 2010, General Motors announced that Shanghai GM, one of its two joint -ventures JVs in China now owned SOE Shanghai automotive Industry Corporation SAIC, has managed to become the largest automaker GM China became the first passenger car manufacturer in China to achieve annual sales of cable 1 million vehicles in 2010.
While auto sales in the world have collapsed during the recession of 2008, the Chinese central government cut sales taxes on small fuel-efficient cars and has spent 730 million in grants for buyers larger cars, pickup trucks, and minivans.

Stimulus spending on road construction and other public works also helped to boost sales of vehicles Figure A follows the increased number of cars produced and sold in China 1994-2009 While these actions have boosted demand the central Chinese provincial governments and continued to subsidize the production of auto parts.
However, the growth of China's auto parts industry also reflects the global strategies and decision-making and distribution of multinational companies, including U S companies see Haley U C V 2001; Haley and Haley, 2008, 2012 This document covers some of the subsidies that the Chinese government has provided auto parts manufacturing in China and some of the ramifications of Chinese policymakers and foreign companies of strategic decisions on the U S and economies world.
China's auto parts industry has expanded rapidly since the early 2000s on the back of the unprecedented growth in the automotive industry of the country, the industry has increased by 150 from 2004 to 2008; Sales recorded in 2009 amounted to 5 billion 136 The number of auto parts companies registered with the Chinese government increased from 4205 in 2002 to 10331 in 2008 and employed about 1 9 million people.
Approximately 15,000 unregistered automobile components manufacturers also seem to exist in China KPMG 2010 2011 These unregistered companies include captive operations diverse groups whose main products are auto parts; small manufacturers of replacement equipment; or small business supplying parts of the commercial vehicle, agricultural and off-road sectors.
Statistics partial year from January to August 2009, the China Association of Automobile Manufacturers CAAM 2010 2011 show that the total output value of 10 761 Chinese auto parts companies exceeded 110 billion and is expected to reach 176 billion in 2010, Xinhua News Agency 2010 2010 analysts predicted revenue of 195 31 billion industry, up 10 2 from 2009 and an annualized growth of 23 2 from 2005 using 2010 constant dollars, slower than previous years due the global financial crisis and downstream demand slightly lower IBISWorld 2010 2011.
Figure B shows the auto parts industry growth in China 2003-2008 While fixed assets increased, the value of production increased even faster demonstrate the transition of China's auto parts industry in the manufacture of higher added value and success of government policies on technological development and the creation of world-class competitors.

Despite the rapid growth of China's automotive industry over the last decade, the industry of automobile parts is relatively low, but is growing at a rapid pace in value, China's auto parts industry equivalent to only one-fifth of the US, and a total -twentieth This small part of the world that reflects the low position as China's auto parts on the chain occupy value.
During the past decade, the Chinese government raised various subsidies for manufacturers of international auto parts relocate the higher value-added production to China, for example, during the second half of 2008, Honda has increased the local content the Jazz produced in Guangzhou for export, from 60 to 90, some analysts expect the industry to reach about 350 billion in value by 2015, 5 billion against 136 in 2009 2010 2011 KPMG.
Figure C describes the value in auto parts chain of auto parts industry of China include those used by OEM original equipment manufacturers, as well as spare parts for original-equipment parts enter the assembly of automotive new motor vehicles, light truck, or truck, or buy these OEM auto parts for their service networks.
OEM parts suppliers are divided into three Tier-1 suppliers levels sell finished components directly to OEMs Tier 2 suppliers sell parts and materials for finished components to Tier-1 suppliers suppliers not level-3 in Figure provide raw materials such as steel to one of the above suppliers or directly to the vehicle assembly.
Many overlap exists between levels, with many manufacturers with captive in-house auto parts Most OEMs to focus on their core competencies in the assembly and the source of auto parts non-core through their networks global suppliers generally, China's largest auto parts manufacturers with economies of scale and strong research and development R & D directly provide OEM system modules, while smaller companies focus on market segments secondary.
Chinese government policy updated successfully aspects of the chain of auto parts value Rodman Renshaw 2010 2011 First, over the past five years, many automakers have transferred the design functions to their Tier-1 2 for suppliers meet specific needs OEMs, Tier-1 suppliers have also started to customize their many Tier-1 suppliers products that used to work with OEM models have started to offer their own.

Second, car manufacturers have started to implement just in time and quality to source production technology for cost savings and quality assurance, they began to rely on its rank 1 suppliers get the same result, foreign automakers have become more involved in the specification of their Chinese Tier- 1 quality systems of suppliers and began to cultivate long-term relationships with these vendors correspondingly, many car manufacturers have demanded that their suppliers Tier-1 work near them.
Finally, the United States and other global automakers have begun to allow their Tier 1 suppliers in their global Chinese-purchase systems major automotive companies have created the Global purchasing and supply systems for approving their quality production Tier 1 suppliers of control systems and once a Chinese automotive company -Parts between such global purchasing system, it can bid for worldwide supply contracts with car manufacturer running its OEM standards.
Despite the government's efforts to consolidate the Chinese auto parts industry remains highly fragmented in at least 20,000 small businesses Figure D shows that foreign firms accounted for only 23 of all the auto parts enterprises in China.
However, as Figure E shows, foreign companies are seven of the 10 largest auto parts companies in China, as measured by the number of plants The three Chinese companies on the list represent the automatic weapons parts of three major manufacturers vehicles SAIC country, First Auto Works FAW Group and Dongfeng Motor.
In 2009, over 70 of the Fortune 100 auto parts in China had manufacturing operations, and many continued to open or expand their operations in China, for example, GM reported that it had more than 198 suppliers China International which provided its global operations in 2009 Trade administration.

The proportion of Chinese foreign companies remained roughly the same in the list of top 50 auto parts manufacturers Top 50 in the 2008 list featured 13 Chinese companies, the balance of Japan as 13 companies, Europe 12, North America 10 and South Korea 2.
In the ranks of the top 50, their major customers dictate business models of companies Large companies managed integrated conglomerates vertically State A handful of Chinese groups, such as Wanxiang, are positioned as auto parts companies independent Chinese car companies such as Chery and Geely, are supplying their largely components at the lowest possible price, not only reduce expenses, but also to meet the technological standards and strengthen the export potential.
Strict regulations do not allow fully foreign companies in automotive assembly in 2009, was an increase of 73 JVs share of passenger car production in China, against only 5 in the production of commercial vehicles Rodman Renshaw 2010 2011.
More than 25 foreign JVs manufacture in China passenger car, and Figure F shows representative JVs between foreign companies and government-owned SAIC, Dongfeng and FAW are the dominant public companies in the FAW automotive sector has JVs with Volkswagen and Toyota Dongfeng and Nissan with Citroen.
Local governments also play a major role in the industry of Chinese auto parts, the government of Shanghai with SAIC, which in turn is a joint venture partner of GM and Volkswagen Similarly, the provincial government of Anhui Chery owner, the Liaoning provincial government owns Brilliance Automotive, Beijing municipal government owns Beijing Automotive Industry Company BAIC and currently has a joint venture with Daimler, his latest in a long line; Beijing Jeep formed China's first joint venture created in 1984 with American Motors AMC Tianjin Automotive Industry Corporation CIAT and Guangzhou Automotive Industry Corporation GAIC also fall under their municipal governments control most Chinese automakers, especially those belonging to local authorities seem benefit for the financing and employment and the potential tax revenues from automotive to local government companies interest and support.
Since 2004, the government allowed 100 foreign ownership of Crown corporations for the development and self-parts Reform Commission in 2004, however, the property of direct and indirect Chinese government or influence remains prevalent Most large pieces self companies have affiliations with major local assembly of groups of vehicles that governments partly own unaffiliated Other auto-parts companies benefit from government property directly, for example, the municipal government has partially Xiaoshan Wanxiang Group the most foreign auto parts companies entered China through JVs with local and regional governments, ensuring access to government equity and the almost guaranteed preferential access to bank loans.

According to AT Kearney, in 2009 10 auto parts enterprises accounted for 18 of the total market for auto parts Figure G shows revenue breakdowns by ownership shows that foreign companies usually large companies and private generally small and belonging to the family have the largest share of revenue in 2009, only 38 auto parts companies recorded annual revenues of 4 million 146 foreign companies have dominated in terms of value and also operated earlier in the value chain Fiducia China believes that foreign companies manufactured over 90 of the function key auto parts in China has been the perception of high import taxes of 25, later reduced to 10 for auto parts imports, a move that forced foreign companies to set up their own auto parts factory of manufac tion and to invest heavily in R & D Because no foreign ownership cap exists for the creation of auto parts companies, most preferred to operate as wholly foreign companies with limited technology transfer to the Chinese domestic enterprises, Unless forced to do 3.
Table 1 shows the wide geographic dispersion of the auto parts industry in China leading vehicle manufacturers and auto parts are found in all major industrial regions, between coastal provinces from north to south, and several inland provinces along the river Yangtze.
However, as Figure H shows, auto parts operations and industry cluster around the relatively well developed in China and the Middle southern regions of China, regions whose per capita income higher, the largest populations, and therefore use more automobiles in 2010, Zhejiang, Jiangsu, Shanghai, Shandong, Guangdong and Hubei represented about 57 5 of total industry revenues.
In addition to these major centers, new car manufacturers particularly car manufacturers continue to develop in places with no history of previous car Chery, based in Anhui, and Geely, based in Zhejiang, are the two examples of leading, but more than 100 other companies are scattered throughout the country, most of them producing less than 50,000 vehicles per year.
To date, investment in vehicle assembly plants has more than doubled in the general political and auto parts company's strategy is to first establish assembly plants of vehicles, then bringing auto parts manufacturers to provide, for example, in 1997, Guangzhou had no industry of auto parts Since then it has turned into a major automotive centers in China by persuading Honda, Toyota and Nissan to open plants first and then make their auto parts networks.
Globally, the production of auto parts requires three times as much capital investment to final assembly of the vehicles in the vehicle supply chain fully developed However, in China, the ratio of capital investment in production auto parts to vehicle assembly is about 0 3 Xinhua News Agency 2010; Therefore, the industry of Chinese auto parts has room for investment expansion auto parts will likely grow much faster than the assembly of vehicles in the coming years, the assembly sector has already invested heavily in production capacity, and strong support from the central and local government exists for technically producing advanced and specialized auto parts in China in addition to the central government, 24 provinces individually consider auto parts and cars as a pillar , the strategic industry, key provincial and national security Haley, GT 2007, 2009.

Despite ranking China the world's biggest auto market, China's car ownership rate is still very low compared to developed countries China has 24 cars per 1,000 people, while the world average is 120 The United States has the greater car ownership, with 765 per 1000 Rodman Renshaw 2010 2011 with the booming economy and rising incomes in China, many foreign companies expect an increase in the penetration of private vehicles in the coming years and they considered it in their strategic expansion plans in addition, these companies expect that the favorable government policies such as preferential sales-tax rates stimulate durable goods consumption expenditure such as cars 4 .
According to CSM Worldwide, in 2008, North American and European countries have excess capacity self-production of 44 and 23, respectively, from 2009 to 2011, the global automotive industry could have an average production capacity over 30 5m units, exacerbated in part by the global recession, however, car companies in China are expanding production capacity to exploit the expected growth in domestic demand.
In November 2009, the National Development and Reform NDRC announced that China's automotive industry overcapacity would probably given the current market growth of 10 Asia Pulse 2009 Given the current level of investment and corporate planning production of market expansion, industry capacity utilization rates will be lower than 70 in the years that followed, according to the survey of the NDRC led Asia Pulse 2009 industrial parks for automotive parts and accessories have been implemented quickly and widely around the nation, even in some areas with relatively weak automotive industry, as those around the cities of Yinchuan, Jiangmen, Huizhou and Neijiang in 2009, Great Wall Motor's Tianjin invested $ 1 24 billion to produce 500,000 vehicles in the three years in 2010, China had more than 30 bases similar to the design stages for the production of auto parts and accessories; res around the country.
The New Energy Vehicle NEV sector, to which the Chinese government pays special attention has also attracted significant investment in 2009, Beijing intended for NEV production capacity of 500,000 completed vehicles by improving the existing production capacity in 2011 and encouraging electricity production vehicles, plug-in hybrid electric vehicles and hybrid electric vehicles ordinary However, by the end of 2009, the production capacity at the design stage had already exceeded the target of 500,000 completed vehicles the country had at least 19 companies that invest more than 15 million in the large-scale creation of sub cell voltage production bases in November 2009, Tianjin Lishen battery had invested 110 million to expand production of lithium batteries and planned to invest another 220,000 in the next two months Hunan Shenzhou science and technolo gie had invested 44 million in a base of Tianjin, and put in an additional 205 million for the planned battery always invest 193 million to set up a cell factory with an annual production of 365 million ampere hours Ah In Moreover, China CITIC Guoan Mengguli BYD and had similar plans Chen Bin, head of the industry department of the NDRC, said supply industry could be much heavier than the market demand beyond 2010 under the current expansion of the 2009 Asia Pulse plans.

In 2008, China became the fourth largest exporter of auto parts in the world after Germany, the US and Japan International Trade Administration, 2009, 2010 The latest trade data of the Administration of International Trade, which gathers auto parts industry in the broad sense and including tires, glass, body, and other products that other trade aggregations do not cover, show that in 2010, Chinese exports estimated parts 43 car approached 86 billion an increase of 162 16 7 billion in 2005, the International trade administration in 2011.
For China, most auto parts imports consist of high-end systems and components to be integrated in Sino-foreign carmakers car in Japan accounts for about half of total imports, and Germany about a quarter, that reflecting the role of Volkswagen in the mass market, BMW and Mercedes-Benz in the luxury market CAAM 2010 2011, 2010 2011 Netscribes, China Customs 2010 2011 the three companies have a high dependence on imported components however, China imports very little from the United States, reflecting the presence of US companies at the top end of China's auto parts industry.
Figure I shows that JVs serve the largest auto parts importers Unlike Japanese and German JVs, US auto JVs rely to a much more on Chinese auto parts manufacturers, contributing to bilateral trade imbalance by reducing their use of States States - manufactured parts the United States was also by far the main destination for Chinese auto parts exports, indicating the tight integration auto parts companies in the United States in machines for the Chinese exports.
In auto parts, China runs trade deficits with all other major producers of cars, including Japan, South Korea, and Germany, however, China's trade surpluses on auto parts with United States is a notable exception, like other foreign automakers operating in China have linked to auto parts suppliers at home, US automakers have links increasingly cut with US suppliers or encouraged to make the in China.
In 2006, Ford announced that to reduce costs, the company plans to double the value of auto parts that originated in China at around 3 billion about 1 6 billion in 2005 Dyer 2006 In 2008, GM, which was the purchase of 20 million pieces per month of 190 Chinese suppliers, announced that he intended to buy more and automotive components increasingly sophisticated in China for assembly worldwide 5 company said it would increase its procurement spending in China 25 per year for the period 2005 10 2008 Zubko US global strategy of the automobile has gradually focused on manufacturing in China and export to the house by therefore, China's exports of auto parts to the United States are three times higher than China's next destination negotiation, Japan.
China exports of auto parts are expected to grow significantly in the future, mainly because of two factors exports to the carmakers overseas and exports to Tier-1 suppliers abroad six foreigners, mainly automotive manufacturers American centers captivity in China are likely to provide their bases by example, GM and Ford recently announced that by 2010, they will buy more than 10 billion and 7 billion automotive parts and accessories, respectively, of their supply centers in China.

In 2008, China surpassed Germany to become the fourth largest source of import auto parts from the United States after NAFTA partners Canada and Mexico, and Japan, and in 2011 was among the sources the highest growth of US imports as well as Korea and Mexico as Figure D shows, from 2000 to 2010, imports of Chinese auto parts to the United States increased by about eight times and should continue to increase during the same period, the US trade deficit with China on auto parts increased by nine times.
In 2009, the NDRC, central economic planning agency of China has issued guidelines on promoting health and sustainable growth of the national-Made Auto Products scale to increase exports auto parts According to the guidelines, the government facilitate automakers and auto parts efforts to obtain loans from domestic banks to fund their exports the government also promised the credit insurer's export services belonging to the State, the credit insurance China export Co to manage credit risks on overseas markets for exporters of auto parts in China automotive Technology research Center in 2009.
The Chinese government has also promised to help auto companies and domestic auto parts to build centers overseas R D and acquire their foreign peers to improve their technological capabilities and product development.
With his support, the government hopes that domestic automakers can expand their exports from mainly commercial vehicles today to passenger vehicles, compact cars and small and medium-sized buses, according to the directives It also provides domestic parts suppliers to shift their export focus from mechanical products to electrical and electronic equipment and products with its support measures announced recently, the NDRC should see the value of exports of automobiles and auto parts made by domestic companies grow 10 years over the next two years and reach 85 billion by 2015 China Automotive Technology Research Center, 2009.
The auto parts costs account for about 70 of the total production cost of the entire auto 7 Table 2 shows some of the main raw materials and sub-components used in this very complex industry that covers auto glass float glass , car tires, car wheels, engine oil radiators and intercoolers, and car batteries most companies focus on the parts or in some markets, and most focus on simple products only a few large companies can make a wide variety of auto parts.
In general, the Chinese auto parts sell about 30 to 50 less than comparable auto parts manufactured in Europe, North America or Japan Cost estimates in the Chinese auto parts industry is particularly difficult because of subsidies suppliers of level-3, including steel manufacturers and glass, and energy prices controlled by the government see Haley UCV 2007, 2008, 2009, 2010; Haley and Haley 2012.

In 2010, parts and mechanical accessories including bearings, filters, covers, brakes and clutches, has the largest segment of this industry, which represents 56 of the total mechanical parts revenue made up the majority of automotive components, and their prices have risen in recent years due to rising commodity prices electric motors, including starter motors, alternators, control units for electronic and mechanical and electronic drivers was the second largest industrial sector, accounting for 23 of the total revenues of electronic parts and accessories, including electronic control systems for engines, anti-lock braking systems, meters, GPS, sensors, entertainment systems, and elements used for control, security, communication and entertainment f is the third industrial sector in the industry, which represents 21 of the total turnover.
Figure K provides a breakdown of costs for China's auto parts industry 8 Raw materials and subcomponents purchases, including iron, cold rolled steel, glass, rubber and pieces of Machine helped 66 manufacturing cost of Chinese auto parts work accounted for only 5 of the costs, with another 2 to 9 total management fees from industry salaries have increased significantly during the period in the study; the annualized growth was 22 Total salaries have experienced the strongest growth in 2008, when the level of employment increased by IBISWorld 45 2010 2011 Average wage per employee increased steadily during the current performance period and, at the same time, the share of wages in industry revenues decreased this indicates changes in technology, increased use of machinery and equipment, and requirements for higher skills in the services sector and the energy contributed 2 of total costs, taxes and interest 9 8 Other costs depend on the operations of individual companies, such as logistics and transport, storage, maintenance, outsourcing, insurance, advertising, and other expenses; the costs of these inputs differ between companies.
The industry of Chinese auto parts has a capital intensive 10 foreign companies and large-scale production public companies requires significant capital to install automated processes, equipment, and upgrades of plant and machinery equipment and upgrades to the process and product development require significant investments many manufacturing processes involve repetitive activities that large and foreign companies have automated to increase production speeds and manufacturers cost savings small scale national generally have a lower capital investment level than larger firms because of the high costs of acquiring new equipment, and because basic auto parts they produce in 2011, foreign capital accounted for more than 36 car parts China's foreign companies monopolize the Chinese market production of certain complex automotive components such as electronic controls upscale, fuel injection systems, sensors, braking and steering systems.
The role of government policy in China's auto parts industry.
The automotive industry in China enjoys considerable support from the Government The Government considers this industry as a pillar or industry of strategic importance for the economy, and adopted various policies and initiatives to stimulate growth strong and Haley development, GT 2009 As Zhang Ji, deputy director of the import and export of machinery and electronic products, Ministry of Commerce MOFCOM of China said in an interview cars are differently from other goods auto exports adds to the dignity of the auto industry's overall economic strength of a country, the government should provide strong support China automotive Review 2006.
The government policy to increase domestic auto and auto parts manufacturing with foreign partners, allowing the transfer of technology and the creation of a basic supply auto parts exports 11 The government offered the market access to foreign auto companies in exchange of technology; both the acquisition of soft and hard technologies, not the acquisition of capital, motivated China's opening of its automotive industry to foreign direct investment Thun in 2004 the central government's policy also aims to modernize and restructure public enterprises to create key players and national champions in their industries and to move the imported products on the internal market of China national champions in the automotive sector include SAIC, FAW and Dongfeng, which include manufacturers captive auto parts vertically integrated.

Soviet aid helped launch China's auto industry in 1953 with the creation of the first Chinese auto company, FAW late 1970s, China's automobile industry continued to transform its open door policy need China to modernize its foreign necessary industrial infrastructure technology, management and financing to supplement a low domestic savings and emerging R & D capabilities substitution policies imports built on a protectionist framework helped the auto industry and auto parts to evolve and housed in the 1970s, the Chinese auto industry has low production capacity concentrated on producing trucks in 1978, there were 56 self-assembly factories that produced just under 150,000 units based on drawings of the is 1950 1994 Ministry of machines.
In 1984, Premier Zhao Ziyang announced that China plans to produce exportable sedans global standards to increase production volumes and to move from a mentality all under one small-scale development of a roof cooperative industrial complex system centered around large-scale plants based on modern technology Iwagaki 1986 11 specific objectives included the consolidation of production in the industry in three large and three small producers with strong local content, the acquisition of technology tip, and achieve high volumes JVs with foreign companies serve industrial upgrading primary vehicle Thun, 2004.
In 1986, the central government has designated the automotive industry as a pillar of the national economy in 1987, the government began to encourage joint ventures with foreign car companies while its trade policy continued to fuel production domestic auto parts the new policy includes compulsory licensing of imports and new production facilities in 1991 year plan, Beijing reference to the automotive industry as a pillar industry for China in 1994, the planning Commission of State issued a declaration formalizing industrial policy objectives of the State for the automotive industry; he modeled the statement on the Japanese and Korean experiences perceived, with the exception of the dependence of industrial modernization JVs since 24 provincial governments have also identified the automotive industry as a pillar industry with the local government support for the restructuring, growth and exports.
The policy of the automobile industry development AIP published by the NDRC each five-year plan is a model for the development of China's automotive industry The 2004 AIP encouraged local manufacturers to develop R & D capability to produce vehicles independently and to increase exports 40 to 35 billion by 2010, an amount representing approximately 40 50 production the policy also aims to have car parts come from a series of clusters, where the domestic companies could establish their own brands and compete in international markets with advanced technology and capital-intensive products exports account for about 60 the plan fell a little short of these goals.
China 2004 AIP also formalized some technology transfer requirements for foreign companies wishing to invest in China's auto sector Pursuant to Article 47 of the IPA 2004, foreign investment projects in the automotive industry China requires the establishment of R & D facilities with an investment of at least 500 million RMB in Annex II to the 2004 AIP, foreign investors seeking the approval of new car production plants must submit agreements technology transfer of business Lawyers 2007 Consultative Group in 2011, Beijing announced that foreign auto companies that want to expand in China must launch new brands with their Chinese partners earlier in 2011, Volkswagen AG received government approval for build a new assembly plant in south China only after agreeing to create a n ew brand for its JV with FAW The government-funded China Automotive Technology and Research Center CATARC concluded that with this rule, the government hopes to force global automakers to contribute more technolo gy to their joint ventures in China Automotive Technology Research Center in 2011.

In 2004 AIP, two important laws limit foreign ownership to 50 shares of a vehicle manufacturing company in China and small manufacturers of foreign vehicles to two local JV partners foreign OEMs have had to set up JVs for vehicle production, a rule that implicitly requires cooperation on the distribution of vehicles with their local partners AIP has also paved the way for China's auto parts industry to be part of the global car buying process, and it started restructure the auto industry in large groups capable of competing globally in its 11th five-year plan in 2006 10 for the automotive industry, the government has eliminated the need for approval from the state for new investment in the manufacture of auto parts to create a strong platform for R & D in auto parts and boost tran sfer of technology from foreign companies, Beijing had already removed the 50 property restriction on production JVs auto parts from 2010, auto parts companies may have 100 foreign OW nership and begin production without the permission of the State while the self-assembly companies still can not.
Unlike the central government policies, the provinces often issue policies suddenly, taking the markets by surprise, for example, in 1999, local governments in 13 cities have banned the use of diesel vehicles with little warning or time Governments have since retracted this policy of local governments often pass laws that promote local economies and businesses rather than national interests JD Power and Associates 2007 for example, some provinces set vehicle characteristics for taxis to match those of cars manufactured locally fleets as government have always been the biggest automotive consumers, these regulations have a significant impact on auto sales and auto parts.
Provincial and local governments also actively implemented the coordination of development policy to attract investments by unifying the production chain within industrial clusters within clusters, the interconnected companies in a part of the industry in particular related production factors, skilled labor pools, channels of distribution and communication network associations Specialty steel industry of North America, 2008.
To help the Chinese auto industry negotiate the global economic crisis, the Chinese government has so far introduced two stimulus packages The first, in January 2009, sought primarily to stimulate vehicle sales Its range of policies included reduction half of the purchasing sales tax on cars with engines of less than 1 6 liters, offering substantial subsidies for rural residents to trade in older vehicles for new, and lower retail fuel prices on second package, announced in March 2011, included initiatives to restructure and strengthen the industry he announced the goal of making new energy cars currently account for 5 passenger vehicle sales, and he saved this objective by providing funds for research on alternative energy and improving vehicle safety the government also encourages auto-financing companies to loosen credit requirements and lower interest rates the package also reiterated the government's determination to consolidate the first 14 companies, including their home p artistic leaders to 10 major auto groups organized in two distinct levels 1 level companies with an annual production capacity of 2 million units, and Tier-2 enterprises with an annual production capacity of 1 million units.
Since 2000, Beijing has published at least three plans to consolidate the auto industry without discernible effect because the plans have met with provincial interests Haley and Haley 2007, 2012 For example, in 2000, Beijing released a plan to consolidate all of China's automakers in the three largest public enterprises Almost immediately, Chery Anhui province, founded in 1997, began selling a mini car rather than forcing close to Chery, Beijing needed to sell 20 of its shares to SAIC based in Shanghai three years later, Chery SAIC redeemed its shares in 2009, Chery sold more than 500,000 cars as the biggest independent automaker in China.

In addition, the 2009 stimulus plan stipulates that domestic automakers will export 20 of total production The plan also aims to increase the market share of domestic brand passenger vehicles to 40 from 34 in 2008. Towards its efforts to increase R & D capabilities of the automotive industry in China, the government has also mandated auto newly approved projects to engage 60 million to RD as stated earlier in this report, the government plans to set up a production capacity of NEV 500,000 and increase the market share of 5 NEV automobile total sales the government is also continuing its financial and economic subsidies to the auto parts industry.
In 2009, GM offered an overview of its R & D capabilities and cooperation with the Chinese government when it introduced the Chevrolet New Sail, which it developed entirely in China Pan-Asia Technical Automotive Center CAPET in Shanghai, a joint venture 13 years with SAIC, GM's local partner developed the product JD Power analyst John Zeng said GM takes leading international automobile manufacturers in product design and R & D in China.
GM is the foreign brand that really true R D facilities in China, Zeng said, so they can make local design to make their own products to market.
GM began exporting the new sail Chile Automotive News China in 2011 In February 2011, the Company announced plans to introduce 20 new models and improved in China over the next two years he develops in different segments During ' a Beijing press conference, GM CEO Dan Akerson s noted that by the end of 2011, GM would open the doors of its 150 million GM China Advanced technical Center in Shanghai CATC for RD on auto parts and automobiles Automotive News China in 2011.
As part of our overall strategy of product development, the CATC will create advanced technologies and leading global research GM in targeted areas, said Kevin Wale, president and managing director of the GM group in China GM Media We expect 2010 to become one of the most important and comprehensive technical facilities and GM design worldwide.
The CATC will incorporate 62 new testing and research laboratories, and hire more than 300 engineers and scientists Its laboratories include one propulsion systems Advanced Science Lab China R & D, manufacturing, Megacity smart traffic, advanced vehicles driven customer, the battery material -cell and manufacture and lightweight materials; 2 the engineering laboratory R & D vehicles on electric vehicles, alternative energy vehicles, battery technology in collaboration with Chinese suppliers and product development featuring technological solutions and cutting-edge design with GM JVs domestic; 3 and propulsion systems advanced Powertrain Engineering Lab R & D, including electrification technology, alternatives to petroleum-based fuels in conventional powertrains, and unique conventional powertrains for the local market, as well as new materials for products powertrain the new facility further engineering and development partnerships GM products in China, including CAPET and China Automotive Energy Research Center in Beijing CAERC According Wale, as a global technology leader and leader global industry in China, GM is committed to working with the Chinese government, industry partners and the academic community in the development of tomorrow's vehicles GM Media, 2010.

The central Chinese provincial governments have implemented a series of direct and indirect government subsidies to carry out their industrial policies These include government support measures.
Direct subsidies to businesses, including subsidized financing, cash grants, tax subsidies, export subsidies, interest-free loans and grants D. R
Indirect subsidies to the industry, including governmentally controlled prices for energy, raw materials and key inputs.
According to Zheng Xinli 2010, deputy director of the National Committee of the Economic Committee of the Conference Advisory Chinese people and former deputy director of the Policy Research Center of the CPC Central Committee, industrial upgrading, including automobiles and auto parts, is an investment priority for the Chinese government's 12th five-year plan will see the government increasing its input in R & D and encouraging mergers and acquisitions MA to acquire foreign technology, he said Geely overwhelmed FAW Group, Dongfeng and DCAF SAIC average and RD -High end automotive technology through the acquisition of Volvo, so we should make the most of international scientific and technological resources, and improve our capacity for innovation by MA Zheng, 2010.

China's four largest state banks Industrial and Commercial Bank of China ICBC, China Construction Bank CCB, the People's Bank of China and Agricultural Bank of China account for more than 60 of all loans Pursuant to the central or local government industrial policies, these banks made loans based on political directives or policy loans, rather than borrowers creditworthiness or other factors based on the market, the Chinese government asked banks in China to provide loans to continue its industrial policy to many times in one example, SAIC, China's largest automaker, has received huge amounts of bank credit expansion on the daily market of the people online in 2000 the Chinese government has also provided other companies in the China's auto sector with significant subsidies in the form of soft loans subsidized for strategic public enterprises restructuring and technical transformation of key production technologies.
This section presents the calculated subsidies provided directly to enterprises in China's auto parts industry, as stated in their annual reports, and indirectly to industry as subsidies for coal, electricity, natural gas, glass and cold-rolled steel, as revealed in political declarations description data and methodology and mathematical equations to calculate the subsidies, are in the Annex as the figure shows, the discernible subsidies the China auto parts industry 2001 to 2011 totaled at least 27 5 billion, a change of 90 the Chinese central government has committed an additional 10 May billion in grants for 2012 to 2020 Chinese government subsidies have increased steadily over the past decade, but increased more strongly after 2008, with an increase of the year known r twelve months 125 from 2008 to 2009 alone This increase is consistent with Chinese policy statements and announced support for R & D in auto parts.
Since the calculations presented here include only subsidies that could be located, confirmed and registered, all subsidies to the Chinese auto parts industry in this report are likely to be conservative estimates calculate missing data prevented subsidies for all years of the study and for the vast majority of more than 10,000 companies and 24 provinces registered Chinese auto parts independently list the automotive industry as a pillar industry trend of rising subsidies explains to some extent why the Chinese auto parts sell about 30 50 least comparable auto-parts manufactured in Europe, North America or Japan, despite the rapid rise in commodity prices, as mentioned previously, accounts work for only 5 costs Chinese production of auto parts.
Grants presented in annual reports Chinese auto parts companies have reached about 2 3 billion between 2001 and 2009. Only 73 companies with more than 10,000 registered businesses reported they received subsidies The companies reported that income subsidies grants and public subsidies without repayment terms, which amounted to 951 million euros; and tax refunds less VAT refunds, which amounted to 1 36 billion Most of these companies had no legal requirements to disclose cash donations or government grants, and many of their demands managers statement probably misunderstood see Yu 2009, so the report is sporadic with many missing data Figure M indicates the presence of certain subsidies declared each year of the period indicated.
During the study period, auto parts companies have benefited from a variety of grant programs if they met the performance requirements for export or purchased accessories and equipment made in China, rather than imports Grant programs included grants, loans discounted led politics, and other credit services from the public banks, the benefits of tax corporate income in foreign capital, tariff exemptions and tax refunds Revenue Haley UCV 2007; Szamosszegi 2007 In general, subsidy income in the annual reports of companies included interest rate subsidies and investment grants that the companies received central and provincial governments in interest subsidies were repayments by the Chinese government to interest charged by banks to companies who qualify for these investment grants subsidies were payments to encourage foreign investors to create technologically advanced companies in China.
BYD, one of the largest rechargeable battery manufacturers in the world lithium-ion, and a society in which Warren Buffet has invested 232 million in 2008 Oliver 2008, demonstrates the effects of government subsidies on company operations in 2008 BYD published financial statements showed low margins for all its products, including auto parts without local government subsidies reported, profits BYD BYD have declined 26 used more than three quarters of its grants and subsidies government for automotive research and development, the rest to pay interest on bank loans the conditions of the grant does not specify the repayment terms of most BYD grants and subsidies seemed to come from the government of Shenzhen city local, but the distribution between Beijing and allowances s Shenzhen remained unclear b anks state-run Shenzhen also generously lent BYD without demanding collateral unsecured BYD bank loans stood at 1 3 billion by the end of 2008, with 77 o f such as unsecured loans.

Subsidies for coal consumed by China's auto parts industry amounted to about 1 billion between 2001 and 2010, the total thermal coal subsidies estimated 3 million 76; the auto parts industry is a small coking coal user, and the total of those grants totaled 23 million figure N indicates the presence of subsidies for thermal coal and coking subsidies for coal increased more strongly 2008, when the price of thermal and coking coal skyrocketed.
Chinese subsidies for thermal coal have generally been used to offset fluctuations in world prices; Subsidies and price go up and down in tandem as a major thermal coal producer, China domestic price directly influenced by the rise in domestic supply in response to rising world price subsidies for thermal coal used by China's auto parts industry whose calculations depend on the market price may show delays that transpire between coal production when demand increases and make it to market interviews with analysts of the industry indicate that in 2002 and 2003, China's auto parts industry has paid a premium for the same thermal coal, the Chinese auto parts industry paid a premium for coking coal in 2009 in 2009 the world coking coal prices fell by 57, while the price of Chinese coking coal fell by only 22.
China has the world's largest coal market, twice the size of the US market Although down from a post-reform 76 summit in 1990, coal still meets over two-thirds of China's energy needs More 75 of the demand growth in recent years has come from the energy sector, demand for electricity has soared 50 coal not consumed by the energy sector, the majority is sold directly to the industry for use in boilers, coke oven and place in Haley closing energy production, UCV 2008 Since the 1980s, China has gradually liberalized coal prices Like many other Chinese products, prices of two-tier system has emerged, the first set by the NDRC allocated quota regime and the second set by the market for other demand in early 2007, the Chinese government abolished the two-tier system, e t both contracts and spot coal must now be negotiated at market rates, however, inherited behaviors linger, especially among public enterprises Haley UCV 2008, 2009.
Subsidies for the electricity used by the auto parts industry in China amounted to 596 million between 2002 and 2010, total provincial grants estimated at 343 million; total subsidies to the coal price increase, which took effect in 2005, was 253 million figure O indicates the presence of certain subsidies for electricity each year of the period indicated.
Subsidies or price adjustments for electricity permeate the system, particularly at the provincial, and some of these price adjustments sometimes become declassified see Haley and Haley in 2012 for a detailed discussion The NDRC April 16, 2007 has absorbed 14 provinces to immediately end their preferential electricity-price policy for local businesses, high energy consumption, in an attempt to curb the development of the 2007 Pulse Asia industries Because this briefing is based solely on published prices the information of the NDRC on the provinces that have subsidized their industries, the provincial electricity subsidies are probably underrepresented.
The grant coal-price increase reflects the predominance of coal in China's electricity fuel mix of substantial increases electricity production increased thermal coal demand The government connects more than the price of electricity with coal costs and electricity consumption with the introduction of more transparent pricing mechanism in 2005, the State Council approved the implementation of a new price setting mechanism to connect the electricity costs to coal costs increased coal prices are passed on to electricity consumers when the price changes of the average coal more than 5 in six months if changes in the average price of coal is less than 5 in six months the percentage price change is reflected in the next six months, however, table 3 shows the central government simultaneously provides subsidies for electricity production, in force since 2005, to offset the higher price electricity These grants are then passed to electricity consumers Haley UCV 2009, 2010.

Subsidies for natural gas in the automotive parts industry totaled about 311 million between 2004 and 2010. As shown in Figure P, in previous years the auto parts industry paid a premium for natural gas, but in any if it is not a major user of the resource.
The Chinese central government has controlled the prices of natural gas and tried to keep the prices of gas for industry in competition with other developing countries, but this approach has not led to the development or import of sufficient quantities of natural gas to meet the burgeoning demand December 22, 2005, the NDRC announced that it had changed the natural gas pricing system and allow an increase in natural gas prices by 8 per year as a result, the price of natural gas increased and subsidies for this energy source also increased although Beijing naturally fixed gas prices, they vary by province and industry.
As Table 2 shows, the complex auto parts industry is a major consumer for various industries upstream, including raw materials and subcomponents, each with their own costs and regulatory environments structures This briefing is focuses on two main entrances of automotive glass and laminated COLD steel sheets for further analysis of the structure and the subsidies received by China's flat glass and steel sectors, see Haley UCV 2008, 2009.
As Figure Q shows, grants for glass in the Chinese auto parts industry approached about 1 6 billion from 2004 Fuyao Glass 2010 is the largest auto glass manufacturer in China with more than 50 market as FIG R shows, subsidies for cold rolled steel sheet amounted to about 3 2003-2010 2 billion industry of automobile parts has paid a premium for the steel sheets, cold rolled 2003 Moreover, despite a generally strong growth of glass and steel subsidies for the period under review, grants to the two inputs fell in 2009 as the global financial crisis hit sales of auto parts and production, however, production resumed in 2010, subsidies for glass and cold-rolled steel picked up as well.

The report describes how the Chinese government the Specialty Steel Industry of North America 2008 provides raw materials to producers in preference to key industries, subsidized prices in 2007 testimony before the US-China Economic Review Commission and safety USCC 2007, 40 have also concluded that p PROVINCIAL and municipalities subsidize purchases of raw materials by requiring other public companies or to pressure their own suppliers to provide these inputs below market price or even below cost Haley, GT 2007 in 2008, in investigations in CVD of products imported from China, the US Commerce department revealed that the Chinese government gives grants subject to substantial compensatory measures to downstream products producers for the supply of inputs raw materials at lower price specialized market of the steel industry in North America, 2008, 51.
Indeed, Article 32 of the revised version of the 2009 plan of the central government AIP for China's auto parts industry reiterates government subsidies of downstream industries indicating the key support will be given to the development of iron manufacturers building and the steel sheet of steel for support sedans will provide the establishment of design professionals molds and manufacturing centers to improve the design capabilities and automobile manufacturing mold A will be supported technological advances in the petrochemical business and the improvement of products so as to cause the quality of petroleum products such as processed oil and the lubricating oil to reach the international advanced level and meet the development needs of the automotive industry .
Technological development and subsidies for industrial restructuring.
The central and local governments distributed seven Chinese around 18 4 billion in subsidies to the industry of automobile parts through technology development policies and industrial restructuring from 2001 to 2011 Table 4 presents the identified subsidies Moreover, the government central China has already committed $ 10 9 billion for the disbursement of technology development and industrial restructuring subsidies between 2012 and 2020.
In 2007, the automotive sector remained among the R sectors D intensive in the world, with four carmakers, Toyota, Ford, DaimlerChrysler and General Motors, among the top 10 R & D investors in the world in all sectors 2008, despite the global decline in auto sales, the global automotive R & D investment accounted for 16 of total spending in effect, R & D spending in the industry has increased, but only by 6 0 Toyota, Ford and General Motors continued among the top 10 investors and dehoff Jaruzelski 2007, 2009.
Understand that R & D investments underline the global competitiveness, auto policies from the Chinese government strongly encourages the development of advanced and ecological research capacities in the local supplier industry, for example, Beijing aims to have a total annual production capacity China pure electric, plug -in, hybrids and other NEV reach 500,000 units in 2011 ITA 2009; as noted earlier in this report, the NDRC said the auto parts enterprises in China may have exceeded the production target one year earlier, in 2010 to establish global competitiveness, China's policies have tried 1 to strengthen capabilities through domestic R & D and 2 Zhongxiu to attract foreign direct investment and Zhi 2009 the government considers technological development and industrial restructuring in the automotive sector as the main engine for the entire Chinese economy, including several commodities and services-related sectors such as machinery, rubber, petrochemicals, electronics, glass, steel, textiles, automobile financing, and auto distribution channels.

Most local companies R & D efforts, including industry leaders such as BYD, do not meet global standards, for example, the founder of BYD, Wang Chuanfu, said that in the development of new products, BYD had learned 60 public documents, 30 of finished products, and only 5 of the own R & D BYD Our creativity comes from picking patented technology pieces and put together the pieces that are not patented GaveKal Dragonomics 2009 therefore, the central authorities and local Chinese see as their priority huge support to local businesses improve industrial processes around the patents, the acquisition of technology and copy competitors to catch up.
Local content, counterfeiting and foreign acquisitions.
Foreign companies and governments have been hit by several major problems concerning the production of Chinese auto parts and subsidies that drive their production The report concludes by focusing on three issues of local content, counterfeiting and M A.
The International Trade Administration in 2009 said the car insurance policies from the Chinese government, including R & D activities related to automotive, strongly encourages the development of the industry of local suppliers Yet according to the Chinese government, since the accession of China to the WTO, the Chinese bureaucrats have worked hard to eliminate all WTO prohibits local content requirements of the legislation Officially, Chinese law does not contain the requirements for the content or at regional level or national in the sector all reality in the auto parts industry seems somewhat different.
In spring 2006, the United States, the European Union and Canada requested settlement of the WTO dispute with China regarding the regulations on imported auto parts Countries have argued that China auto parts tariff classifications resulted in higher tariffs that China agreed in its WTO accession agreement and discourage automobile manufacturers in China to use auto parts imported Chinese regulations have imposed the same duties for vehicles imported if imported parts auto parts exceeded a fixed percentage of the final contents of the vehicle or vehicle price, or when specific combinations imported auto parts were used in the final vehicles the motor on price is generally 25 and the tariff on imported parts is generally 10 in 2008, China has appealed Decision of the WTO that China must bring its import duties for foreign auto parts into compliance with international trade rules, however, in December 2008, the WTO rejected China's appeal in September 2009 in response to the decision of the WTO, China has removed the additional charges on imported auto parts ITA 2009.

In 2011, Beijing has removed tariff barriers but non-tariff barriers continue in the industry of Chinese auto parts Specifically, local content requirements continue unofficially and informally, especially in the provinces, as neibu undisclosed rules for approval of foreign investment projects neibu exists Gongkai side or government regulation OECD 2003 for automobiles and auto parts, project loans from banks of Chinese politics and the provincial governments have become dependent the willingness of foreign companies to hire local content reports refer to a 60 secret rule under which foreign companies must have 60 local content for obtaining state grants, bank loans, and even access to 12 provincial markets in 2002, Beijing enacted the market Act s government of the People's Republic of China, which continues to influence the purchase by public enterprises, particularly in projects that require investments of the government in 2009, China began to disburse 586 billion economic recovery the NDRC and eight minutes teria have jointly issued circular 136 113 investment projects the government should purchase domestic products unless these domestic products, construction, engineering or services are not available in China or can not be acquired on reasonable commercial terms projects requiring imports require prior approval of the competent government authorities.
Although never officially recognize the existence of the regulation of local content, the Chinese government has used other regulations and incentives to implement the agreements content of foreign companies NDRC A 2007 circular Suggestions for structural readjustment of the industry automotive, said Sino-foreign joint ventures should participate in activities under the terms of contracts signed by both parties and approved by the Government Those who fail to do what is necessary in contracts should correct their actions in a timely manner if no correction is made, the construction of any new plant will be temporarily interrupted and any application for the promotion of new products will also be suspended.
foreign assemblers must satisfy the feasibility of products and Chinese government officials classified the requirements of new foreign products companies as unfeasible for not honoring some local content agreements they had signed an official involved in the development rules on foreign companies new product feasibility reports said the feasibility report on a new product, localized production is a fundamental requirement cited in Liao, 2007.
Foreign companies have responded to the Chinese persuasion on local content in 2006, Helmut Panke, CEO of BMW, went twice to Beijing for secret talks with Bo Xilai, Chinese Minister of Commerce Soon after, Eberhard Schrempf, president of BMW Brilliance and CEO, announced that BMW would increase local production in China, with local procurement to go from 111 million in 2005 to 384 million in 2006, the company also said it would increase the number of suppliers local 45-83 over the same period in May 2006, Till Becker, President and CEO of DaimlerChrysler Northeast Asia, said Beijing-Benz DaimlerChrysler increase local procurement in China from 100 million to 840 million within two years on its cars produced locally in response, in July the same year, the General administration of Customs of China announced that it was delaying the date of intro uire the rules completely flattened CKD auto parts imports from 1 July 2006 to 1 July 2008 Li Ao, 2007.
Chinese counterfeit auto parts pose big problems for US and other foreign companies global strategies Frost Sullivan estimated that around the world, counterfeit auto parts could generate sales of 45 billion in 2011, against 12 billion in 2008 According to the Association of Japan Auto Parts Industries, over 83 of these counterfeit auto parts came from China Chinese counterfeiters copied generally high volume of spare parts such as spark plugs, oil filters, brake pads and steering parts, although complex, counterfeit parts such as air bags had also become common in 2011 , TRW automotive believes lose more than 20 Chinese market with counterfeit brake pads, rotors and air bags in 2011, Corteco China sold 5 million of the 30 spare oil seals sold every year in China, but believes that without false notes, its market share would have increased to 25 charges of oil seal Corteco 45 yuan, but a fake Chinese seal oil, which integrates rubbe Chouc low and metals that caused Eaks and unstable car, costs 20 yuan In 2010, Chinese government officials have closed a factory in Guangzhou which false product seals Corteco oil and had actively made since more than a decade Corteco said the Chinese government had closed the infringer every year, and he almost immediately returned stronger and more sophisticated in 2008, the infringer had an annual production capacity of 7 million seals oil; in 2011, the infringer had raised the annual production capacity of 10 million oil seals Chow 2011 many of these forgers had received grants and support for local authorities In response, foreign companies have begun to mark their parts self with radio frequency identification tags; over 90 of TRW products foreign companies have also formed are quality brands protection committee to fight against counterfeiters by working with local governments and the police to close plants, but strategies to date have been ineffective .
In March 2011, US diplomatic cables released by WikiLeaks have provided an overview of copyright violations BYD While BYD has certainly achieved some success based on a business approach of copying and modifying car designs just enough to convince Chinese courts that the company has not infringed the patent, it is much less certain that foreign courts will be as sympathetic, Guangzhou Consul-General Brian Goldbeck wrote in an October 30, 2009 cable marked for the eyes of the US government mentioned in Berkowitz Krolicki Yee and 2011 According to the US consulate, the company also sold vehicles at a cost to increase its market share and may have advertised safety ratings that did not BYD, which received large government subsidies from Shenzhen, a price actually used as a tool to get market share of the US consulate cables indicate that BYD sold one model for a profit of less than 146 per car but BYD has continued to attract foreign JV partners in early March 2011, the Chinese government has approved a joint venture between BYD and Daimler AG Daimler JV seems to provide a low-risk way to guard against future regulation a source close to Daimler side of the negotiations said that the German automaker has signed the agreement fully aware of the reputation of BYD auto parts companies also expressed concerns about the technology BYD fly specifically, the auto parts manufacturers in the United States have complained that BYD would require first order parts like door panels, then drop the business, reverse engineer the part and use on future models Berkowitz Krolicki and Yee 2011.

In addition to imports, US auto parts firms face strong competition from foreign suppliers that have built factories in the United States and compete now in the market with the traditional suppliers of the United States in 14 the percentage of auto parts new US domestic supplier base has increased from 12 in 1997 to 35 in 2010, 15 the Chinese are among the fastest growing of these new domestic suppliers A major goal is the transfer of technology to China auto auto parts to the United States and companies to help Chinese enterprises to engineering and technical expertise and also the sale of plant equipment therefore competitive Chinese auto parts firms seek to manufacture and sell for US close to their American mentors.
One such company, Wanxiang America is a subsidiary of Wangxiang group, partly owned by the Xiaoshan municipal government in China Wanxiang America produces bumpers, bearings, seals and transmission parts for automakers, including GM , Ford, Chrysler and Toyota the company manufactures in China to prevent the United States rising production costs, and the US subsidiary focuses on processing and assembly in 1995, Wanxiang America was approximately 3 to 5 million figure business; in 2010, there were about 2 billion in Wanxiang America sales aggressively pursued MA Ni Pin, CEO of Wanxiang America, said, We can provide value to these assets we buy and help to stabilize and cool their structure to grow, adding that AD has become the company's business model city in 2011 Yuwei Wanxiang strategy appears both opportunistic and planned Often, the company buys bankrupt companies or those who have liquidity problems Paul Cumberland, Director of Wanxiang America investments, said: We have done everything to buy individual private property companies to buy a division of a company really great deals from 30 4-300000000 city in 2011 since its Yuwei establishment in 1994, Wanxiang America acquired more than 20 US companies in several states, including Illinois, Michigan and Missouri, and averages two or three acquisitions each year, for example, in 2007, Wanxiang America acquired coupled North American pr oducts business of Dana Corporation, and under the protection of Chapter 11 bankruptcy; in 2008, Wanxiang subsidiary based in Pennsylvania, Neapco LLC, bought Ford drive-shaft business; in October 2010, Wanxiang America acquired 51 DR Technology, 13, automotive sensor manufacturer Carol Stream, Illinois and a former supplier to Yuwei Company 2011 Other Chinese auto parts companies have followed suit with similar MA, for example, April 2009, parts maker Delphi in the US has confirmed the sale of its divisions brake and suspension BeijingWest Industries for 100 million China Daily, 2009.
Usha CV Haley is chaired Professor of International Business at Massey University, Auckland, New Zealand and research associate at the Economic Policy Institute readers with questions on data and sources used for this report, or other questions may contact the author at Tel Fax 1 -212-208-2468 and this is the final report of a series of EPI studies on Chinese subsidies Haley More information about his research on Chinese subsidies is available.
EPI is grateful for the Alliance for American Manu manufacture for the support of our pro grams of research and publication.
Annex data, methods and measurement of variables.

The WTO subsidies generally defined as unrequited transfers from governments to businesses, including direct payments, tax benefits, contingent liabilities and the purchase and supply of the Global Organization of goods and services trade in 2006 China defines more closely subsidies that direct payments without compensation from governments to businesses, including the return of the VAT tax value Girma, Gong Yu and Gorg 2007 This Backgrounder uses the definition of WTO.
Institutional problems, including insufficient infrastructure to collect and disseminate data and strategic efforts to conceal operations through the creation of an informational black hole obstacle to the collection of high quality industrial statistics and the business in China 16 A report on Chinese subsidies by the Specialty steel industry of North America has highlighted some problems with obtaining valid and reliable data on the issue information on the nature and type of aid received by Chinese producers is complicated, because the company reports in China is limited and often unavailable, especially public companies, in fact, a report by the Office of the United States trade representative described the difficulty of information on Chinese support measures following China's subsidy programs are often the result of internal administrative measures which are not made public Sometimes they take the form of tax cuts on income or exemptions they can also take a vari ety of other forms, including mechanisms such as allowances credit, low interest loans, debt cancellation and reduction of transport costs as a result, due to the lack of publicly available information in China, do not identify the recipients of grants from the Chinese government, most cases, in this specialized report of the steel industry of North America 2008, 33.
For this analysis, and leveraging our previous work in the area, George Haley and I data from several reliable sources across China, Hong Kong, the United States, Mexico, Taiwan, the UK and Australia, including organizations from the Chinese government as the China Association of automobile manufacturers, China officially sponsored think tanks such as the China automotive Technology Research Center, agencies of the United States such as the International trade administration, international organizations such as the international energy Agency, international investment companies such as Rodman Renshaw, individual companies such as Fuyao glass, and information companies in the targeted market such as JD power and Associates More information about these sources are found in the reference section at the end of this document, the co intersected data etween at least two sources where possible, and when differences arose, we used the most conservative data we verified the estimates against accounting dat one provided by the individual companies and interviews with managers and data set disposal unclear.
In the case of low quality data, analysts generally adopt the approach price differential to measure grants from the World Bank in 1997 According to the price gap approach, subsidies to consumers to reduce the price of the end user and result in higher consumption levels for end users prices are compared to reference prices to measure the price gap the reference price represents the effective price that would prevail in a market undistorted by subsidies and matches the opportunity cost of the last unit consumed the reference price is usually adjusted frontier price to reflect the margins of transmission and distribution and taxes specific to each country for traded goods, or long-run marginal costs the production of goods are not traded significantly the approach is designed to capture Net Effect of the different policy instruments that affect a good price from the price difference can be represented as the dollar value of the subsidy per unit of good or subsidized percentage of the reference price.
Several questions and assumptions determine the calculation of subsidies Estimating the reference price plays a key role in determining the price differential and therefore the size of the different reference price subsidies can produce very different grants estimates choice the exchange rate used to compare national and international awards also assumes importance the use of official exchange rates can yield very different results from the use of PPP power parity, as the end-user prices may differ considerably between countries in 2007 economist nontradable, multiple prices in an economy like this exists in China can also affect the estimated price for the end user This information document uses the official exchange rates for the years in question; the reference prices are global prices indicated the natural gas industry, thermal coal and coke, glass and cold rolled steel as indicated by the 17 industry practice.

It identifies information document and subsidy measures for the auto parts industry in China, especially subsidies declared by enterprises, coal, electricity, natural gas, glass and cold-rolled steel , and government subsidies for industrial restructuring and technological development the mathematical equations to calculate grants are available in the PDF version of this document.
1 According to the European Automobile Manufacturers Association, 2010, 2009, 47 5 million passenger cars produced in the world, the EU produced 29 5 but China conducted between nations with 22, followed by Japan 5 countries with 14 of NAFTA in the United States, Canada, and Mexico combined product May 8 passenger cars of the world, light trucks in the United States are a higher proportion of vehicle production in the other country.
2 Transfer of technology in the automotive sector has not always succeeded View Haley Haley and Tan 2004 interviews with senior Beijing Jeep about their experiences.
3 See Haley G T 2007 2009 for some of the constraints faced by foreign automakers and parts in China.
4 Author interviews with industry analysts, Haley and Haley 2007, 2008.

5 Bo Andersson, vice president of global purchasing and GM supplier chain, said that 90 of the materials and parts in a GM car made in China were purchased locally and 60 were from foreign companies and 40 Zubko local Chinese companies in 2008.
6 Author interviews with industry analysts and experts.
7 Author interviews with industry analysts and experts.
8 interviews of the author, and KPMG 2010 2011 2010 2011 IBISWorld.

9 However, research conducted by the author shows that wage management and labor account for about 15 auto parts costs the United States, which is not the differences in productivity between the US and China, remain important.
10 independent research revealed that the author, 2010, using depreciation as a proxy for capital, and wages as labor indicator, capital intensity to work for auto parts production China approximated February 1, meaning that the average company in the sector required two working units for each input of capital.
11 See Haley and Haley 2012 and Haley, Haley and Tan 2004 for how the policy development process in China and the divergence of interests between the center and the provinces receive grants.
12 Nancy Leigh, Partner, Baker McKenzie, Hong Kong.
13 Opinion on the implementation of the decisions on the expansion of domestic demand and promote economic growth and the continued strengthening supervision of projects and tenders, call 1361 circular deals on 27 May 2009.

14 The author is indebted to Dennis DesRosiers Automotive Consultants DesRosiers, Ontario, Canada for this observation.
15 Data Dennis DesRosiers Automotive Consultants, DesRosiers Ontario, Canada, earned at least March 10, 2011.
16 For a more detailed discussion of the issues surrounding data collection in China research grants, see Haley UCV 2009, 2010 For the black hole of strategic information deliberately created by government policies in China and East Asia see Haley, Haley and Tan, 2009.
17 For the methodology used for grants calculated glass, please see Haley U C V, 2009.

18 Six provinces pay for electricity subsidies, but has not been specifically identified by the NDRC; 22 auto-parts producers provinces have not been specifically identified as the payment of the electricity subsidy by the NDRC.
All China Marketing Research CAIR 2010 2011 January 2010 Accessed March 2011.
Asia Pulse 2007 China Halts preferential price of 14 provinces, 17 April.
Asia Pulse 2009 China Automotive Industry Analysis develops with overcapacity Concerns November 19.
Australian Bureau of Economic and Agricultural Sciences and 2010 2011 Accessed resources.

Development Policy 2009 automotive revised and promulgated on August 15 From 1 November, 2009 Translation by China law practice, Euromoney October 9.
Automotive News China in 2011 Upgrades vehicle GM R D efforts in China, February 19.
Beijing Waterwood Technologies Corporation Accessed 2010 2011 2010 2011.
Berkowitz, B and L C K Krolicki Yee 2011 Special Report Warren Buffett Chinese car business could fail Reuters March 9.

Bloomberg 2009 Vehicle Sales Top U S Tally for first time China, Feb. 10.
Bloomberg Bloomberg 2010 2011 Database Subscription required Accessed January 2010 March 2011.
Cable, J 2010 Automakers see China as an engine of growth IndustryWeek December 29.
January 2010 required Accessed March 2011 2010 2011 CEIC CEIC Data Subscription.
China Association of Automobile Manufacturers CAAM Accessed 2010 2011 2010 2011.

China Automotive Review 2006 The genes of the automotive industry in China are changing, Accessed January 2010 2011.
China Automotive Information Net 2010 2011 2010 2011 Accessed.
China Automotive Technology Research Center CATARC 2009 China Drafts strategies to boost exports Auto and Auto Parts, December 7.
China Automotive Technology Research Center CATARC 2011 New strategy to help automakers CATARC-analysis and forecasts of the automotive industry in China March 7th.
China Daily in 2009 BeijingWest Nets control of key units of Delphi, whose April 2.

China online data 2010 2011 Subscription required Accessed January 2010 March 2011.
Chow, 2011 N Flood Counterfeit Parts China Automotive Aftermarket New s February 11.
Credit Suisse First Boston 2010 2011 2010 2011 Accessed.
Dyer, 2006 G Ford to double China purchases Finan cial time on October 26.
Economist 2007 Unless Fiery Dragon November 29.

European Automobile Manufacturers Association, 2010 The automotive industry Pocket Guide second edition.
Fathom China Ltd. Accessed 2010 2011 2010 2011.
GaveKal Dragonomics 2009 China BYD Electric Car Pioneer Special Report, September.
Girma, Gong Y S, M and Z Yu Gorg 2007 Can Production subsidies proof Foster export business of China enterprise-level data Working Paper Series No. 6052 London England Center for Economic Policy Research, in January.
GM Media GM China in 2010 groundbreaking ceremony for Advanced Center in Shanghai Technical Press release, 19 July.

China Guardian 2010 U S as is taking over the world's largest auto market, January 8.
Haley GT 2007 Testimony Overview of China's pillar and hearing of strategic industries on the extent of government control of the Chinese economy and its impact on the US US -China Economic Commission and security review, on 25 May.
Haley GT 2009 Testimony on the used state companies implementing audience Vehicles Industrial Policy on industrial policy of China and its impact on US businesses, workers and the Committee on Economic and Security Review US economy US -China, March 24.
Haley G T V and C T C Haley Tan 2004 The Chinese Tao of Business The logic of successful business strategy Hoboken, N J John Wiley Sons.
Haley G T V and C T C Haley Tan 2009 New Asian Emperors The Business Strategies of Chinese overseas Hoboken, N J John Wiley Sons.
Haley U C V 2001 multinational companies in ethical political environment, values ​​and strategies Singapore US UK World Scientific Press.

Haley U C V 2007 Testimony China grants Hearing on trade with China, Committee on Ways and Means, Subcommittee on Trade, 110th Congress, Washington, D C. February 15
Haley U C V 2008 S Hedding light on subsidies for energy in Chi na analysis of the steel industry in China 2000-2007 Washington, D C Alliance for American Manufacturing.
Haley U C V 2009 through grants Looking Glass China China's glass industry economic policy 2004-2008 Institute Backgrounder No. 242 Washington, D C. PPE
Haley U C V 2010 No Paper Tiger Grants to China's paper industry economic policy 2002-09 Institute Backgrounder No. 264 Washington, D C. EP.
Haley, Haley UCV and GT 2007 Understanding subsidies to the Chinese steel industry 2000-2007 energy Full presentation on fires prompted the US International Trade Commission, the seminar series industry, Washington, DC December 5.

Haley U C V T and G Haley in 2008 subsidies and China Price Harvard Business Review June, pp 25-26.
Haley U C V T and G Haley 2012 grants coming to the Chinese industry state capitalism, business strategy and business policy, New York, Oxford University Press N Y.
IBISWorld 2010 2011 Subscription required Accessed January 2010 March 2011.
Interfax China 2010 China Mining Weekly Metals 2011a on various subscription required.
Interfax China 2010 China Energy Weekly 2011b various subscription required numbers.
International Energy Agency 2010 2011 January 2010 Accessed March 2011.

International Trade Administration ITA 2009 U S Auto Parts Industry annual assessment of Washington, D C. Office of transport and equipment, U S Commerce.
International Trade Administration ITA 2010 on the U S Auto Parts Industry Road annual assessment of Washington, D C. Office of transport and equipment, U S Commerce.
International Trade Administration ITA 2011 on the U S Auto Parts Industry Road annual assessment of Washington, D C. Office of transport and equipment, U S Commerce.
China Investment Association 2010 2011 24 CHANNEL_ID item_id Viewed 126 2010 2011.
ISI Emerging Markets 2010 2011 Subscription Required Accessed January 2010 March 2011.
Iwagaki, M 1986 The state of the automotive industry in China, JETRO, China Bulletin 63.

Jaruzelski, B and K dehoff Customer Connection 2007 Global Innovation 1000 Resilience Report, company Booz-Allen-Hamilton.
Jaruzelski, B and K dehoff 2009 Lower profits, expenses Steady Global Innovation Strategy 1000 companies 57 Winter.
J D Power and Associates 2007 China Automotive Compo nents Outlook Automotive Resources Asia Ltd.
Just-Auto, 2010, China's exports Auto Parts up 44 on December 10.
Liao W 2007 Joint Venture Partners Foreign urged to honor some contractual commitments China Automotive Review March.
Liu, W and H W Yeung 2008 China Industrial Sector The dynamic Eurasian Geography and automotive eco nomy 49 5523 48.

MEPS International Ltd. 2010 2011 Independent Steel industry analysts, consultants, subscription required reports and publications 2010 2011 Accessed.
Ministry of machines, people of China 1994 Republic Dan GDAI Zhongguo Guoji jiaoche gongye fazhan yu Zhongguo jiaoche gongye fazhan Zhanlue The development of Sedan International Contemporary Chinese Auto Industry and the Chinese Sedan Auto Development Strategy Beijing Ministry of machinery .
Mining Exploration News 2010 2011 various issues.
National Bureau of Statistics, China 2010 2011 2010 2011 Accessed.
January 2010 necessary Accessed March 2011 2010 2011 Netscribes Market Insights, Research Analytics Subscription.

Organization for Economic Cooperation and Development OECD 2003 China Progress and Reform Challenges for Investment Policy Reviews OECD Paris, France OECD Publishing.
Oliver, 2008 C Warren Buffet Looks to the electric car in BYD Stake MarketWatch 9 October.
Daily Online Banking 2000 Shanghai People's Backs automotive, July 8.
Rodman Renshaw Accessed 2010 2011 2010 2011.
Roland Berger Consultants Accessed 2010 2011 2010 2011.
Sinofile information services 2010 Auto Parts trade surplus widened, November 8th.

Specialty North American steel industry 2008 Specialty Steel Subsidies China, Massive, Pervasive and Illegal Washington, D C SSINA, October.
State Development and Reform Commission of the Republic of China 2004 Automotive Policy development of the popular industry No. 8 of the decree, June 28
SteelontheNet 2010 2011 2010 2011 Accessed subscription required.
Sun, The 2010 China development and policies of the new energy automotive industry, ITEC Working Paper Series 10-02, Institute for Technology, Enterprise and Competitiveness, Doshisha University, Japan, in March.
Szamosszegi, 2007 How A Chinese intervention subsidies and public procurement have led to the case study Offshoring U S Auto Parts Production Washington, DC American Iron and Steel Institute and the Steel Manufacturers Association .
Thun, E Industrial Policy 2004, Chinese FDI, settlement, and dreams of national champions in the area Auto Journal of East Asian Studies 4 453-89.

Lawyers Advisory Group trade in 2007 China's laws, regulations and practices in the areas of technology transfer, investment trade-related measures, subsidies and protection of intellectual property compliance Raise Concerns WTO US -China Committee on economic and security review in September.
U S -China Economic Commission review and security USCC 2007 Report to Congress, November.
U S International Trade Commission 2010 2011 USITC Interactive Tariff and Trade Dataweb Accessed January 2010 March 2011.
Ward Automotive Group 2010 2011 the subscription Auto Key data required Accessed 2010 2011.
World Bank 1997 Enlargement of measuring wealth of sustainable development indicators of the environment and the monograph series of studies on sustainable development of the environment No. 17 Washington, D C. World Bank.

World Trade Organization World Report 2006 Trade Study links between subsidies, trade and the WTO in Geneva, Switzerland WTO.
Xinhua News Agency 2010 Investment in Auto Parts Industry in China to peak in 2010, on January 25th.
Yu W 2009 Journal analysis of government subsidies of Huangshan University 108-11 March 11 in Chinese.
Yuwei Z 2011 company that went from China Plan daily Ridiculous January 14.
Zheng X 2010 Speech at the Chinese model priorities of the Forum and Investment Association 12 Year Plan Forum on China's investment and the Central University of Finance and Economics, Beijing, in December.
Zhongxiu, Z and L Zhi 2009 Global Supply Chain and the Chinese automotive industry econom y 42 27 June 44.

Zubko, 2008 N General Motors to increase supply in China IndustryWeek January 1.
EPI is an independent think tank nonprofit that research the impact of economic and political trends on people who work in the ENP search US aid policy makers, opinion leaders, lawyers, journalists and public understand the problems of the bread and butter affecting ordinary Americans.
1225 Eye St. NW, Suite 600 Washington, DC 20005 Telephone 202-775-8810 2016 Economic Policy Institute Privacy Policy Contact Us.
Research and public awareness initiative to make wage growth a priority of national emergency policy.
The authoritative analysis of living standards of American workers.
interactive tools and videos bringing clarity to the national dialogue on economic inequality.

A national campaign promoting policies to weaken the link between socioeconomic status and academic achievement.
A network of state and local organizations by improving workers lives through research and advocacy.

• Thorium.



Put the pedal to the metal subsidies to Chinese industry economic Autoparts 2001-2011, putting pedal, metal.