People’s Republic without People’s Car: China’s Automobile Industry Path (1953-2000)

Mao Zedong’s dream of having a national automobile industry came true in the early 1950’s, when the First Automotive Works was founded with the aid of its communist ally, the Soviet Union. Today China is one of the main world producers of cars and Chinese multinationals have an increasing international presence. This paper aims to establish the role played by the Chinese government in the internationalization process of this industry both before and after China’s joined the World Trade Organization. The hypothesis is that Chinese government intervention established a basis for cross-hauling direct investment in automobile manufacturing. To test this hypothesis answer, I study the interactions and dynamics of national and foreign players from 1953 to 2000 taking into account when and how foreign automobile manufacturers were given access to China’s domestic market. The results found confirm that development during the years of Maoism obeyed to central state strategies, in which passenger cars were given a purely symbolic share. In and after the mid-1980s, development strategies shifted as to respond market-oriented economic growth. In addition, foreign investment and technology were both transferred through newly constituted Sino-foreign joint ventures, which, despite the strict conditions imposed by Chinese authorities wanted to enter Chinese market. However, the arrival of foreigners has been persistent in the long run which followed by achievements in national output, laid down a technological dependence path that forced indigenous manufacturers to initiate international efforts even before they had accepted global market rules.