China's unrest puts auto policy on back burner
Yang Jian is managing editor of Automotive News China.
The precarious leadership transition in China due to take place next month has caused the country's economic policies to be put on hold. That has kept auto executives guessing what economic policies the new leaders will pursue.
Chances that they will enact any new stimulus measures are small. This is not because the new leaders don't care about the auto industry but because they have more urgent matters to attend to.
Under the existing leadership, which took office 10 years ago, China's economy has grown 10 percent annually. It has become the world's second-largest economy and the largest auto market.
But China has been plagued by social ills. While creating a huge amount of wealth, the income gap between the rich and poor has widened. Michael Spencer, a New York University professor who won the Nobel Prize for economics, estimates that the top 20 percent of China's population earns 12.2 times the income of the bottom 20 percent.
Peasants earn only one-third the income of their urban counterparts. Many young peasants now do manual labor in Chinese cities but are denied the social security urban residents are entitled to.
That explains why most of the people who smashed Japanese cars and torched Japanese car dealerships last month are young workers from the countryside. They vented their anger not only at the Japanese but at China's social status quo.
The other urgent issue is government corruption. According to government statistics, more than 660,000 government employees -- many of them officials -- have been disciplined since 2008.
Anger over rampant corruption is growing in China. At last month's anti-Japanese protests, many people held up portraits of Mao Zedong. They were expressing their nostalgia for Mao's rule, when China was impoverished but government officials were relatively clean.
After the new leadership is sworn in, it will have two top priorities: maintain social stability by spreading wealth and rein in government corruption. With these urgent tasks in mind, the new leaders are not likely to place a high priority on stimulating auto sales.