Shanghai Habo Chemical Technology Co has unveiled the Habo No. 1, a Volkswagen sedan fuelled by hydrogen peroxide.

“This car only emits water vapour and oxygen,” company project manager He Limei told the Associated Press at an exhibition of ecologically friendly cars outside Shanghai.

The Habo was one of 150 experimental and advanced-technology vehicles on display at the Challenge Bibendum, an expo named for sponsor Michelin’s puffy mascot.

AP said China, now dependent on imported oil for 40% of its supplies, is pushing to develop alternative fuels and foreign automakers there are preparing to test cars and buses driven by fuel cells and petrol-electric hybrid engines.

“Using conventional internal combustion engine technology alone will be a source of huge pressure in terms of energy security and environmental protection in China,” Wan Gang, president of Shanghai’s Tongji University, which has its own automotive studies institute, told participants in the Challenge Bibendum.

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Efforts to develop “clean vehicles” are accelerating as China prepares to hold the 2008 Olympics in Beijing and the 2010 World Expo in Shanghai, Wan said.

AP said the vehicles displayed in Anting run on electric motors, petrol-electric hybrid engines, fuel cells and other technologies meant to cut pollution and boost fuel efficiency.

The Chinese government began looking at alternative fuels in the 1980s and is promoting diesel and fuels made of locally abundant materials.

Despite scant progress in putting any domestically developed alternative fuel technologies into commercial use, 43 Chinese-developed vehicles – 20 of them two-wheelers – were among the models displayed by both local and foreign automakers at the Bibendum.

According to the Associated Press, many in the industry say China’s status as a newcomer without big investments in aging technology could be an advantage, letting it jump straight to a newer generation of technology. The country has benefited from similar leapfrogging in telecoms and other new fields.

“One thing China has going for it is its relatively young automotive industry,” David Chen, vice president for General Motors China, told the news agency. “China’s automotive industry does not need to fully take the fossil fuel path. It is in an ideal position to develop alternative energy.”