Opinion | Heavy hand of government is driving China's car industry into the ground
Hu Shuli says subsidies for electric vehicles need to be more in line with market principles, to create a level playing field for foreign competition
In the first week after the Lunar New Year break, two events caught the eye. One was President Xi Jinping's interview with Russian media in Sochi, in which he described China's reform challenge now as being "10 per cent planning, 90 per cent implementation".
The other was the continuing media focus on the push by electric carmaker Tesla into the Chinese market, and the inevitable questions about China's electric ambitions. Why, we may ask, is the domestic electric car industry still sputtering despite the government's pledge to "overtake on the bend"?
Despite years of hard work, Chinese carmakers are still streets behind global leaders in terms of overall skills and marketing know-how
As Xi has rightly noted, while China should adopt the big-picture approach in some areas of reform, in others we have to start with the details, using one small change to spark a transformation of the whole. The development of the electric vehicle industry can be one such catalyst for change.
Since 2009, China has pushed its carmakers to develop cutting-edge technology to take the lead in electric vehicle development, in order to leapfrog the market leaders of petrol-driven vehicles. In May 2010, the government introduced a pilot programme offering subsidies for the purchase of new-energy vehicles in six cities. At the time, officials optimistically forecast that as many as 500,000 such vehicles would be on the road by 2015.
Disappointingly, by the end of 2012, only 4,400 Chinese-made hybrid vehicles had been sold to private individuals. BYD, China's leading electric carmaker, sold only 2,000 all-electric vehicles. By contrast, in 2013 alone, some 22,600 Nissan Leafs were sold in the US, adding to over 50,000 sold globally. In the US, electric vehicle sales last year reached 96,000.
Despite years of hard work, Chinese carmakers are still streets behind global leaders in terms of overall skills and marketing know-how, even though some domestic firms lead the market in specific technologies. Instead of overtaking on the bend, Chinese carmakers have been left in the dust.
The problem is systemic.