The Chinese Automotive Industry. Competitiveness in Comparison with Global Competitors

Table of Contents

1 Introduction

2 History of the Chinese Automotive Industry

The First Stage of Development

Governmental Discontentment and Policy Measures of the 1990s

The Second Stage of Development

Period after the Great Recession of 2008

Fostering of New Energy Vehicles and the Rise of Private Companies

Current Structure of the Chinese Automotive Industry

Component Suppliers Operating in the Chinese Automotive Market

3 The Special Role of Joint Ventures and Spillovers

The Theory behind Spillovers

Determinants of FDI Spillovers

Actual Strength of Spillovers in China

Actual Strength of Spillover Effects on Productivity

4 The Infant Industry Argument

Theory Behind the Infant Industry Argument

Infant Industry Argument applied to the Chinese Automotive Industry

Infant Industry Protection with Local Monopolies

Evaluating the Protection of the Chinese Automotive Industry

5 Assessing the Competitiveness of the Chinese Automotive Industry

Exports as a Measure for Competitiveness

Empirical Findings

Comparison with Global Competitors

6 Conclusion and Outlook

Objective and Thematic Scope

This bachelor thesis investigates whether China has succeeded in developing a competitive domestic automotive industry despite its heavy reliance on state intervention, protectionist measures, and foreign technology through Joint Ventures. The research evaluates the effectiveness of these policies by analyzing historical developments, the impact of spillover effects on innovation and productivity, and the industry's competitiveness through export market share data.

• Historical evolution of the Chinese automotive sector and industrial policy.
• Theoretical and empirical analysis of FDI-induced spillover effects.
• Application of the infant industry argument to the Chinese market.
• Quantitative assessment of export competitiveness across different product segments.
• The specific role and performance of component suppliers versus vehicle manufacturers.

Excerpt from the Book

Summary of Chapters

1 Introduction: Introduces the role of protectionism, Joint Ventures, and FDI in the Chinese automotive industry and outlines the thesis's core research question regarding the development of a competitive domestic industry.

2 History of the Chinese Automotive Industry: Provides an overview of the industry's development from the post-1978 reforms to the current era, including key policy phases and the rise of private companies and NEVs.

3 The Special Role of Joint Ventures and Spillovers: Reviews the theory of spillover effects and applies it to the Chinese context, assessing how FDI impacts local R&D, productivity, and innovation capabilities.

4 The Infant Industry Argument: Explains the theoretical framework of infant industry protection and evaluates the costs and benefits of China’s protective tariffs and quotas on the automotive sector.

5 Assessing the Competitiveness of the Chinese Automotive Industry: Uses trade data and export market shares to empirically measure the industrial competitiveness of Chinese automobiles and components against global competitors.

6 Conclusion and Outlook: Synthesizes the findings, concluding that while China has achieved massive output growth, its competitive strength is uneven, particularly highlighting the superior competitiveness of component suppliers over full-vehicle manufacturers.

Keywords

China, Automotive Industry, Foreign Direct Investment, Joint Ventures, Spillovers, Infant Industry Argument, Export Competitiveness, Trade Policy, R&D, New Energy Vehicles, Industrial Policy, Market Structure, Component Suppliers, Total Factor Productivity, Trade Data.

Frequently Asked Questions

What is the core focus of this bachelor thesis?

The thesis examines whether China has succeeded in building a globally competitive domestic automotive industry, exploring the impact of state-led interventions and foreign cooperation.

Which key industries are analyzed?

The analysis covers the Chinese automotive sector as a whole, specifically distinguishing between full-vehicle manufacturers and the automobile components supply industry.

What is the primary research question?

The research question is: "Did China develop a competitive domestic automotive industry?"

Which scientific methods are utilized?

The author uses a literature review to explore FDI and spillover theories, an application of the infant industry argument model, and an empirical analysis of export market shares using UN COMTRADE data.

What topics are covered in the main body?

The main body covers the historical timeline of the industry, the theoretical impact of Joint Ventures on technology transfer, the costs of protectionism, and a quantitative assessment of export performance.

Which keywords define this work?

The work is defined by terms such as automotive industry, FDI, infant industry protection, spillovers, competitiveness, and export market share.

How do component suppliers differ from car manufacturers in terms of competitiveness?

The study finds that while full-vehicle manufacturers still struggle to compete in high-end global markets, Chinese component suppliers have achieved significantly higher levels of competitiveness and integration into global value chains.

What role does the "Infant Industry Argument" play in the author's analysis?

It provides the theoretical justification for the high tariffs China imposed in its early developmental stages, though the author highlights the trade-off between domestic protection and consumer costs.

Are Chinese New Energy Vehicles (NEVs) mentioned in the analysis?

Yes, the author highlights NEVs as a strategic pivot for Chinese policymakers to bypass traditional combustion engine shortcomings and establish a pioneer position in global markets.