WTO Ruling Impacts Little On China Auto Industry
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Jia Xinguang, former chief analyst with the China National Automotive Industry Consulting and Development Corp, told Guangzhou Daily that the ruling won't affect much as China only imports a limited number of auto parts at present and moreover, output in CKD assembly plants only accounts for 1.98 percent of China's total production figure.
Rao Da, secretary general of the China Passenger Car Association, said even without the import rules regulating the quantity of components made in China, China can continue to level tax on completely knocked down (CKD) and semi-knocked down (SKD) kits at the rate of imported finished cars to prevent whole cars being imported in large chunks.
The dispute seems more political than economic in nature, a Reuters report cited Yi Junfeng, an analyst with Changjiang Securities, as saying. The case was widely reported as China's first loss since it entered the world trade body in December 2001.
Actually most foreign auto makers in the country, from General Motors to Volkswagen AG, have been stepping up local production to cut costs, the report said.
"Few of the foreign auto makers I talked to complained about high tariffs in the first place because locally-made parts in most cases make up more than 80 percent of their models built in China," Yi said.
The WTO ruled Monday that China broke the terms of its WTO accession by requiring that foreign brand cars made in China contain at least 40 percent Chinese-made parts and otherwise they be taxed as finished cars, but it supported China's treatment of import tariffs on CKD and SKD kits.
China has a maximum tariff of 25 percent on vehicles and 10 percent on auto parts.
China now has a "reasonable period of time" to make legislative changes, after which a separate WTO panel has to determine whether Beijing has come into compliance with the rules. Sanctions can be imposed If it is still breaking the rules.
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