Globalization of Chinese econo

A new social and economic order is fast emerging and seems to be engulfing the entire planet. These trends constitute what has come to be popularly known as the phenomenon of globalization. It can be conceived as a process that embodies a transformation in the special organization of social relations and transactions, generating transactional or interregional flows and networks of activity, interaction and power [Herman, 1999]. Globalization will greatly impact China in all aspects, particularly in automobile industry. The Chinese automobile industry, with the globalization of the Chinese economy, will face enormous problems. Some of the significant problems and possible solutions will be discussed in this essay, including three inner constraints and two outer challenges. The three inner constraints are problems of small scale and fragmentation, ¡¥special treatment¡¦ and regional protection, and concerns over air pollution. The two outer challenges come from China¡¦s entry into the World Trade Organization (WTO) and foreign direct investment (FDI).

According to the China yearbook 2000, the number of privately owned vehicles was extremely lower than other develo

Another layer of complexity to the issues of automobile industry is introduced by the emergence of environmental protection. Wei [2002] reports that in terms of standard measures of air quality, the majority of Chinese large cities are to be among the worst in the world. Mobile sources, i.e. trucks and cars, were correctly viewed to be the principal reasons. Research by Wei [2002] suggests that over the past recent years efforts in improving the environment has boomed dramatically especially in central urban areas. Moreover, the focus of efforts in urban pollution control has gradually moved more towards trucks and cars. Wei [2002] comments that ways to deal with problems of automobile pollution generally include restrictions on driving and efforts to innovate cleaner combustion, through cleaner engines, cleaner fuel or both.

Apart from that, ¡¥special treatment¡¦ and regional protection are also unneglectable constrains. For many years the automobile industry has been singled out for ¡¥special treatment¡¦ by all levels of government. According to Wei [2002], the traditional forms of special treatment are favorable financing, e.g. open ended, no or low interest loans, favorable regulations, assistance in restructuring and restrictions on foreign participation.

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