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One of the biggest signs for change was the unprecedented decision by the government to allow the default of a stock-listed company. During the year we saw growing evidence of an economic cool down, such as falling property prices and rising inventories across all industries. But unlike in previous years, where the government was willing to switch into spending mode to keep the growth going, this time the government restrained from starting another round of subsidies and incentives Finally when it became all but certain that the 7.5% GDP growth target will be slightly underachieved （by 0.1%） the government let the markets know, that GDP growth alone will no longer be the single key measurement in assessing China’s rise. From now on the quality of growth will be equally important to improve the living conditions of the Chinese middle class.
This newfound focus on qualitative growth bodes very well for the future of Chinese automotive industry policies, which up until now have been largely focused on increasing production and sales figures. Top down growth targets on local and national level led to a nonsustainable capacity build-up in the lower and middle segments of the market. Without a central watchdog, or automotive Czar as it is called in other countries, local governments where free to subsidize carmakers and their products, as long as sales figures were going up.
This model began to show its first cracks after the end of the large stimulus packages from 2009/2010. Market share and sales figures of domestic brands imploded and led to speculation that the end for local brands is near. As with every doomsday scenario, the demise of local brands was highly exaggerated. What actually happened was that carmakers began to rethink their approach to product development and competency build-up. Those carmakers that embraced this approach were able to gain back market share and consumer trust, while at the same time laying out the foundation for the future by introducing modular platforms and world-class production systems.
Nowhere was the lack of central planning more evident than in the new energy vehicle （NEV） segment. Over the years ambitious targets have been set, ranging from 1 million to 5 million NEV on Chinese roads by 2020. By only focusing on high NEV production numbers, the central and local governments spend generously on subsidies for vehicle projects and later on directly incentivized the sales. Unfortunately this was done without actually assessing the economic and technical viability of these projects– worse it even led to different interpretations on what a Chinese NEV should look like.
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