Good For China, Good For The World

ralphrepo · May 27, 2009

This is probably the best motor vehicle related news I've heard coming out of the PRC for a long time.

In a rush? For a quick synopsis, just read the red highlighted lines.

China Is Said to Plan Strict Gas Mileage Rules
By KEITH BRADSHER
May 28, 2009

HONG KONG — Worried about heavy reliance on imported oil, Chinese officials have drafted automotive fuel economy standards that are even more stringent than those outlined by President Obama last week, Chinese experts with a detailed knowledge of the plans said on Wednesday. The new plan would require automakers in China to improve fuel economy by an additional 18 percent by 2015, said An Feng, a leading architect of China’s existing fuel economy regulations who is now the president of the Innovation Center for Energy and Transportation, a nonprofit group in Beijing. The plan is going through the interagency approval process, with comments sought from automakers, and is scheduled for release early next year, he said.

The Chinese government tends to make few changes in automotive regulations once the interagency review process has started. The average fuel economy of family vehicles in China is already higher than in the United States, mainly because cars in China tend to be considerably smaller than those in the United States — and are getting even smaller because of recent tax changes. Cars with small fuel-sipping engines are now subject to a 1 percent sales tax, while sports cars and sport utility vehicles with the largest engines are subject to a 40 percent sales tax. Stricter fuel economy standards have won support from four interest groups within the Chinese government, said a Chinese government official who spoke on the condition of anonymity because he was not authorized to discuss the issue.

Many in the government see a strategic and geopolitical need to reduce China’s reliance on oil imports, the official said. China was self-sufficient in oil until 1995, but soaring demand means that China now imports nearly three-fifths of its oil, much of it from potentially unstable countries along sea lanes controlled by the United States Navy. Others in the government are concerned about limiting toxic air pollution and see reductions in the total combustion of gasoline as one way to achieve this. Still other officials are worried about the potential for international efforts to limit China’s emissions of global warming gases, or view greater fuel economy as a way to increase the competitiveness of Chinese car exports. “Different stakeholders have different views,” the official said. China uses a different system from the United States to regulate fuel economy.

China sets minimum standards for each of 16 weight categories and tests only urban fuel economy, not highway driving.

Adjusting for these differences is difficult and controversial. Mr. An estimated that the average new car, minivan or sport utility vehicle in China already gets the equivalent of 35.8 miles a gallon this year based on the American measurement system of corporate averages and will be required to get 42.2 miles a gallon in 2015. By comparison, President Obama announced last week that each automaker will be required to reach a corporate average of 35.5 miles per gallon by 2016. The details of China’s new fuel economy standards may favor domestic automakers at the expense of multinationals, several auto industry officials said. That is because the new rules call for the steepest increases in fuel economy — as much as 26 percent — for midsize and compact cars, market segments where multinationals are strong. Subcompacts, a market where domestic automakers are stronger, will be required to increase their gas mileage by as little as 9 percent compared with the existing standards, which took effect on Jan. 1.

Large cars, minivans and sport utility vehicles will face percentage increases between those extremes. The Chinese government had already cracked down on these vehicles by setting very high gas mileage benchmarks for them as part of the existing rules. When told late Wednesday of China’s gas mileage plans, Michael Dunne, the managing director for China at J. D. Power & Associates, the consulting firm, said that Japanese, Korean and German automakers had models of very small cars that they might start building in China if they have trouble meeting the new standards for larger models. “The short-term impact is it would favor the Chinese, no doubt about it,” he said. “Global automakers care so deeply about this market that they’ll do whatever it takes, and adjust.” Automakers were cautious in their responses to the Chinese initiative. “Ford China is pleased to be part of the industry consultation process on fuel efficiency,” said Whitney Small, a Ford spokeswoman. “Given our role in the process, it would not be appropriate for us to comment prematurely on an ongoing discussion.”

Several auto industry officials said that while a substantial increase in fuel economy standards is inevitable, two other issues have not yet been resolved.
One issue is how China treats imports. The current fuel-economy standards ban the production of any vehicle in China that does not meet the minimum requirement for its vehicle weight range. But imports are exempt, so practically all of the sport cars and large sport utility vehicles sold in China are imported.
One possibility is to tax imported or domestically produced vehicles that fall short of the standard instead of banning them. The United States does this. But new taxes are bureaucratically complex to impose in China. Imports made up only 1.9 percent of China’s car market in the first four months of this year because of heavy import taxes. The other unresolved issue is whether China will impose corporate average fuel economy standards in addition to minimum standards for each vehicle weight range, auto industry officials said. This would make it harder for companies to specialize in larger vehicles that may consume more fuel but may also be more profitable.

Source: http://www.nytimes.com/2009/05/28/business/energy-environment/28fuel.html?ref=global-home
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Those that have read my previous comments about motor vehicles already know that I'm a diehard fan of Mass Transit and don't care much for fossil fuel guzzlers to begin with. However, by mandating better mileage in the PRC, China has effectively set a new world standard. If vehicle engines exist that can produce that kind of mileage, there is no reason why, over time, those engines won't wind up in all cars around the world. Hence, this is a no brainer win - win situation for all, regardless of your politics.

intraland · May 28, 2009

isn't this the typical engine for the prius etc? Its either EV or hybrid motors that can achieve this. If they actually manage to make a car that has decent horses, room and the mileage, then i'll applaud.

ralphrepo · May 28, 2009

intraland said: ↑

isn't this the typical engine for the prius etc? Its either EV or hybrid motors that can achieve this. If they actually manage to make a car that has decent horses, room and the mileage, then i'll applaud.
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I think that's being a bit short sighted. Granted, it's all just talk right now, but the direction of it show tremendous promise. The rationale here is, just like when Japanese auto makers made better cars, US buyers forced American makers to follow suit. In many ways, if the Chinese auto industry produces eventually engines or vehicles that are more fuel efficient, there would be extreme market pressures on others to follow suit. It may not happen in a year or two, but the focus is good. Eventually, improved engines that are both efficient and power effective will be engineered.

That alone, IMHO is going to be good thing.

Good For China, Good For The World

ralphrepo Well-Known Member

intraland Well-Known Member

ralphrepo Well-Known Member