China's auto makers reject "excess capacity" warning

TIANJIN, Sept. 5 (Xinhua) -- Executives from China's auto makers Sunday rejected an official warning that unchecked growth in the industry was leading to excess capacity and could harm the wider economy.

Chen Bin, an official with the National Development and Reform Commission, China's top economic planner, Saturday said excess auto capacity threatened sustainable economic development and must be "resolutely" stopped.

But industry representatives and the China Association of Automobile Manufacturers (CAAM) Sunday argued car makers were only trying to meet expected demand in the world's largest auto market.

Dongfeng Automobile, a major Chinese auto manufacturer, had been running in top gear since last year, said Fan Zhong, a senior manager. "Our problem is not having enough capacity."

Most entrepreneurs at the International Forum on Chinese Automobile Industry Development in Tianjin had similar views.

Ford China was focusing on expanding capacity as demand kept rising, said CEO Robert Graziano.

The overall capacity of China's auto industry might seem excessive, but the market had huge potential for restructuring and growth, said Hu Xinmin, honorary chairman of the CAAM.

China overtook the United States to become the world's largest auto maker and auto market in 2009, with output and sales respectively hitting 13.79 million and 13.64 million units last year.

China's auto industry had been manufacturing at 120 percent of its capacity, and most manufacturers were operating more than 20 hours a day, said Xu Changming, head of information resource development at the State Information Center.

The sales was expected to grow by more than 15 percent annually in the next few years, Xu said. "There is no need to worry about excessive output."

However, Chen Bin warned that local governments had been making "blind" efforts to open new factories and expand capacity, as they were encouraged by the industry's healthy profits and economic benefits.

Twenty-seven of the Chinese mainland's 31 provinces, autonomous regions and municipalities have plants that are able to produce finished vehicles.

With the extension of the national auto replacement subsidy to the end of this year, domestic output and sales both exceeded 10 million units in the first seven months, according to data released by the Ministry of Industry and Information Technology last month.