China forecasts major surge in auto exports

CHINA'S vehicle exports may increase at least 46 percent this year as car makers manufacture more sedans and trucks.

Auto shipments will exceed 500,000 units in 2007, the Ministry of Commerce said in a statement on its Website on Saturday, quoting Minister Bo Xilai at a meeting with the nation's car exporters. Last year, overseas sales doubled to 342,400 units, customs data showed.

China has more than tripled automobile output and sales since joining the World Trade Organization in 2001. Last year, it surpassed Germany as the world's third-largest vehicle maker.

The nation has designated eight port cities, including Shanghai, Tianjin and Xiamen, to serve as the country's main automobile and component export centers.

"China has to expand its overseas markets as production capacities for vehicles are rising much faster than we had expected," Zhang Xin, a Beijing-based analyst with Guotai Junan Securities Co, told Bloomberg News. "Many Chinese exports are currently sold to the low-end markets, including Africa and South America, with low margins."

The government will increase the threshold for exporters to improve the quality of vehicle shipments, the statement said. It will also encourage Chinese auto companies to invest overseas and merge with rivals, the statement said, without elaborating.

China's vehicle production will reach 8.5 million units this year, according to the ministry.

Output may catch up with domestic demand by 2012, earlier than a previous estimate of 2020, Guotai's Zhang said.

Auto exports rose 70 percent to 294,000 units in the first seven months from a year earlier, while the value of component shipments increased 32 percent to US$8.85 billion.

Exports of engine parts, wheels, tires, brakes and other components, helped by low labor costs, will rise to US$40 billion by the end of 2010, the China Association of Automobile Manufacturers reported.

China's auto production has experienced annual growth rate of 45.8 percent since 2002, a senior official with the top economic planner said on Saturday.

At the end of last year, the output value of the country's auto industry accounted for 3.7 percent of China's gross domestic production, said Zhang Guobao, vice minister of the National Development and Reform Commission.

Employment in auto and auto-related industries accounted for one-sixth of the nation's total work force, he said.