Author: Deng Suyong, Yin Bogu Xinhua News Agency, Nanning, November 28 â€” Reporter Deng Suyong and Yin Bogu report from Liuzhou. Yang Hexiang, a researcher at the National Development and Reform Commission's Macroeconomic Research Institute, recently warned that China's auto industry is experiencing an overheated market with significant overcapacity in production. He highlighted that the country's total vehicle manufacturing capacity is set to far exceed actual demand, raising concerns about a potential investment bubble. At the 2005 Liuzhou Forum, Yang noted that major global automakers have heavily invested in China, leading to rapid expansion of the domestic auto market. However, this growth has also brought challenges. Currently, 27 provinces and cities are involved in automobile production, with 21 of them actually manufacturing vehicles. There are a total of 2,443 auto-related companies, including 115 complete vehicle factories, 551 refitting plants, 154 motorcycle manufacturers, 56 engine producers, and 1,567 parts suppliers, along with 168 supporting industries. Yang pointed out that current annual vehicle production capacity stands at around 5.5 million units. By 2007, this is expected to jump to over 15 million, far surpassing market demand. As a result, the industry will enter an era of oversupply. With increasing investments from foreign and private enterprises, excess inventory is likely to become the norm, while temporary structural shortages may occur only in specific segments. He further emphasized that Chinaâ€™s auto industry remains largely dependent on foreign technology and joint ventures, functioning more as an assembly hub for global automakers. The domestic market is dominated by international brands, with most new cars developed through technology transfer or partnerships. This has led to limited independent innovation and a heavy reliance on foreign expertise. To address these issues, Yang recommended that Chinese auto companies focus on developing new products and upgrading their offerings in line with market trends and government policies. He also advocated for strategic reorganization among firms to optimize the industry's structure, enabling them to better compete in an increasingly competitive environment.

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