SHANGHAI -- China's recent economic indicators suggest that the country's economy is losing steam.
The economy grew 7.7 percent in the first quarter, down from last year's 7.8 percent pace, and official statistics may be masking a more serious slowdown.
Still, foreign automakers in China should view the slight slowdown as an opportunity for better long-term growth.
China already has the world's second-largest economy -- behind the United States -- and it is natural for it to grow at a slower but sustainable rate.
More important, the auto industry will become even more vital as China's economy matures.
China's economic growth has long been driven by various industrial sectors. But most of those sectors -- ranging from coal mining to steel to solar panel production -- now suffer from severe oversupply.
In contrast, auto manufacturing is one of the few industries that remain healthy.
Some domestic automakers suffer from excess production capacity, but foreign automakers generally are operating their Chinese plants at full speed.
That's why General Motors, Volkswagen, Ford and others are adding plants in China.
The companies are eyeing huge untapped markets in China's inland cities. Overall, only 60 of every 1,000 Chinese citizens own a car, well below other global markets.
In fact, the central government has started to make it easier for foreign automakers to build assembly plants.
Last month, Beijing offered tax incentives to encourage foreign companies to construct plants in central and western China.
Changes are occurring at the municipal level, too. For instance, Guangzhou in south China's Guangdong province recently relaxed limits on the sale of new cars.
Guangzhou, where Toyota and Honda operate assembly plants, has a vested interest in their prosperity.
Under the new policy, residents in Guangzhou's suburbs are allowed to buy a second car. Car owners also may replace their cars even if those vehicles are less than 10 years old.
To revive growth, the central government likely will take more action to attract foreign investment in China's auto industry. This would be especially good news for global latecomers such as Renault and Volvo, which seek to launch or expand production in China.
It also would be good news for Toyota and other makers of conventional hybrid vehicles such as the Toyota Prius.
To date, conventional hybrids are ineligible for the subsidies that the government has offered for electric vehicles and plug-in hybrids.
But now that the economy is slowing, Beijing likely will introduce bigger incentives to encourage automakers to produce conventional hybrids in China.
The bottom line: Automakers can expect more friendly treatment in China as the government jump-starts the economy.