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By Kelly Sims Gallagher

Chinese language construction of cars rose from 42,000 autos in line with 12 months in 1990 to 2.3 million in 2004; the variety of passenger autos at the street doubled each and a part years in the course of the Nineteen Nineties and keeps to develop. In China Shifts Gears, Kelly Sims Gallagher identifies an extraordinary chance for China to ''shift gears'' and keep away from the standard difficulties linked to the auto industry—including city pollution attributable to tailpipe emissions, greenhouse fuel emissions, and excessive dependence on oil imports—while spurring monetary improvement. this change will merely happen if the chinese language executive performs a management position in development family technological capability and pushing overseas automakers to move cleanser and extra energy-efficient applied sciences to China. If each new motor vehicle offered in China had the cleanest and so much energy-efficient of the automobile applied sciences already to be had, city pollution will be minimized, emissions of climate-altering greenhouse gases will be below projected, and the chinese language car may proceed to flourish and give a contribution to China's regular fiscal improvement. yet to date, Gallagher reveals, the chance to shift gears has been neglected.

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The European Union also negotiated a concession agreement with specific provisions for the automobile industry, namely, that foreign 26 Chapter 3 investors would be allowed to have a majority share in engine jointventure manufacturing operations, and that joint ventures would be allowed to change the production mix without government approval. In the past, the government restricted the number of models that a given company was allowed to produce (Ali et al. 2005). The Effect of the WTO Most of the Sino-foreign joint ventures frantically spent the early years of the twenty-first century trying to improve the quality and price of their cars while there was still some government protection left.

30 Chapter 3 In conclusion, this chapter provides an overview of China’s historic economic growth in recent decades. The auto industry has played a strong role in this growth, even defying predictions that the sector would lag after China’s entry to the WTO. Foreign direct investment into the auto sector has been tremendous, and growth in passenger-car output and employment has been unprecedented. But despite some creative efforts to exploit the narrow openings in WTO rules to enhance endogenous production capabilities in the domestic auto sector, it is not clear that the Chinese government has managed to find a way to channel FDI so as to produce real learning and improvements in Chinese technological capabilities that will sustain broad-based growth in this sector over the long term.

In fact, it was the very first Chinese manufacturing joint venture signed with any foreign company after China reopened to the West in the late 1970s. The pioneering spirit once associated with Beijing Jeep flagged during the 1990s, and the joint venture continues to be troubled even though DaimlerChrysler AG signed a new thirty-year contract agreement with Beijing Automotive Industry Holding Company Ltd. (BAIC) in September 2003. This chapter evaluates technology transfer within Beijing Jeep from 1984 to 2002.

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