Five Effects of China Becoming the World's Number One Car Maker

The current recession has not harmed Car manufacturing in China, in fact its official now that local demand for cars has surpassed the USA. China now is the World's biggest car market. How does this affect the Global economy, and what is the future for Chinese auto manufacturers?

1. Higher Oil Prices

With China becoming the biggest market for automobiles, the need for oil grows greater. This could result in higher oil prices, as Chinese consumers buy more cars, and as China is not an oil producer, the nation needs to find ways to import more oil.

2. Lower Car Prices in Asia

In 2010, China and ASEAN (Association of South East Asian Nations) have agreed to drop import tariffs. Previously many ASEAN countries imposed import tariffs on Chinese, and other Countries importing goods. Now this has ended, Chinese automakers can import cheaper cars into ASEAN countries.

3. More Demand for Roads

The more cars on the road, the more the demand for extending, improving, and expanding the existing road system in China. Chinese Towns and Cities are going to be quicker to reach, and more remoter areas accessible.. This could create "mini booms: in tourism to areas now closer to bigger cities, and for Companies involved in road building projects.

4. Suburbanization

Owning a Car, means you can live further away from work, resulting in the suburbanization common in the United States. Chinese cities are set to expand, as the suburbs grow, and strip Malls may start taking over the role of traditional markets, and shops. Good news for Global retailers like Wallmart, Carrefour, and national Chinese retailers.

5. Carbon Emissions

Cars pollute, and China may need to start finding ways to cut carbon emissions as car ownership rises. Many Chinese car manufacturers make cheaper, smaller cars but often they are modeled on the 1990's pre-hybrid cars we used to drive.

China is currently going through the same cycle of development as 1950's America did, where increased car ownership created a new suburban lifestyle. This change is going to see more Chinese made cars on the roads of Asia, and create a new suburbia across the region.

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