China will be able to produce twice as many vehicles as it needs by 2010 if the current investment frenzy in the automotive sector goes unchecked, an official newspaper cited a top economic planner as saying on Monday, according to Reuters.
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Vehicle production capacity in China is expected to hit 20 million units in 2010, far outpacing anticipated sales of only nine million units, Chen Bin, head of the industry department of the National Development and Reform Commission, was quoted as saying in the China Securities Journal.
Annual capacity, now at eight million units, has already exceeded expected sales of 5.5 million units this year, but investments have shown no signs of cooling, Chen reportedly said.
Reuters noted that car makers such as Volkswagen, General Motors and Toyota are spending some US$15 billion to triple annual capacity to more than 7 million cars by 2008, which has sparked fears of an impending glut.
However, car sales in China climbed a moderate 17.9% in the first 10 months. Growth had slowed to just 15% in 2004 after a near-doubling in 2003, as Beijing cracked down on easy vehicle loans, the report added.
Experts now expect the market to grow just 10-15% in 2005 as Beijing keeps up credit curbs aimed at bringing about a soft landing of the world’s seventh-largest economy, Reuters said.
