- Jan 25, 2006
Shanghai Surprise: Chinese government orders closing of 140 domestic carmakers
Much hay has been made of China's rise as an automotive power of late, and even its government has apparently had enough. The proof? China's National Development and Reform Committee has just ordered 144 domestic automakers to cease production-- part of an effort by the state to bridle excess capacity (said to be some two million units/year).
Firms taking umbrage with the CNDRC's edict have until February 10 to convince officials that 'they should be allowed to remain in business,' lest they be forcibly shuttered. Of those companies affected, 124 will be prohibited from manufacturing any automobile-related output whatsoever.
Beyond the alarm that China has more than 140 car builders to close to begin with, the CNDRC's latest move is sure to anger free-market advocates already wary of the nation's labor, trade, and environmental practices. Even more surprising, while the number of closures may strike the casual reader as massive, it is a but a sliver of the 6,222 "auto-related vehicle manufacturers" currently operating in China (a massive total that harkens back to the nacent days of the U.S. auto industry).
[Source: Shanghai Daily]