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LinkChina to raise sales tax on small cars Jan. 1
By Keith Richburg and Peter Whoriskey
Washington Post Staff Writers
Tuesday, December 28, 2010; 9:46 PM
China will raise the sales tax on small cars Jan. 1, it was announced Tuesday, ending an economic stimulus that helped the country take the world lead in auto purchases and improved the fuel efficiency of the nation's fleet.
The move follows by just days the announcement of a decision to sharply limit the number of cars allowed in Beijing, a city that has been ensnared in traffic jams.
Exactly how China handles its rapidly growing demand for automobiles and the pollution they cause is of keen interest to environmentalists and automakers across the globe.
Last year, for the first time, there were more cars sold in China than in the United States, and the magnitude of the nation's demand has made it a key point of reference in discussions of greenhouse gas emissions and world economics.
"Whatever happens in China's car market is impacting every automaker on the planet," said Karl Brauer, senior analyst and editor at large at Edmunds.com, an automotive Web site. "Every car company across the globe is looking at China, and if they aren't, they're not going to be in business long."
Combined, the end of the sales tax break and the Beijing limit on autos are expected to put downward pressure on sales in China. But automakers said they expect that the market will nonetheless continue to surge in the rapidly growing country.
"Both of those actions were anticipated, and we still expect to see continued strong demand and growth," said Greg Martin, a spokesman for GM, which has the largest presence in China among U.S. automakers.
China has become a critical market for the automaker, which is partially owned by the U.S. government.
The company expects GM sales in China to increase by 10 percent or more in 2011. This month, the company announced that Shanghai GM, a joint venture between the U.S. automaker and SAIC, had become the first passenger car manufacturer in China to sell 1 million vehicles in a single year. This year, it has sold about 500,000 Buicks, 490,000 Chevrolets and 16,000 Cadillacs, the company said.
Exactly how the new rules will affect automakers depends on the company, analysts said. For example, U.S. automakers may benefit from China removing the sales tax incentive for smaller cars relative to larger cars.
"That may bode well for U.S. automakers because they generally are better equipped to produce medium to large vehicles than smaller, fuel-efficient vehicles, though that is changing," Brauer said.
Last year, China cut in half the sales tax rate on vehicles with engines of 1.6 liters or less. The measure was viewed as a means of stimulating the economy and encouraging smaller, more fuel-efficient engines.
But China will restore the sales tax on small cars to the full 10 percent beginning with the new year, the Ministry of Finance said Tuesday.
The limit on new cars in Beijing arises from a new traffic plan for the city.
The plan involves miles of new underground highways, higher inner-city parking fees, a new bicycle-sharing plan, and, as its most controversial element, a limit of 240,000 license plates next year for the car-congested capital, or about a third of the new vehicles registered for 2010.
Beijing authorities defended their plan, saying Shanghai and Hong Kong have even stricter controls on the number of new vehicles allowed to be registered each year. Shanghai allows 10,000 and Hong Kong 1,000, Li Xiaosong, vice director of the Beijing Municipal Commission of Transport, said on the radio.
Automobile dealers reported that they were unable to sleep in recent days because of the surge in people buying new vehicles hoping to register in time to beat the end-of-year deadline. People lined up outside showrooms.
As of mid-December, Beijing had 4.76 million registered vehicles, an increase of 700,000 in 2010 over the previous year - and a growth rate Beijing traffic authorities said was unsustainable.
So, doesn't it feel like a never ending battle guys? Just as you start convincing some people in Europe and North America to cut their carbon footprint, the Chinese come along and negate it totally?China has seen the future, and it is coal
By George F. Will
Thursday, December 30, 2010;
Cowlitz County in Washington state is across the Columbia River from Portland, Ore., which promotes mass transit and urban density and is a green reproach to the rest of us. Recently, Cowlitz did something that might make Portland wonder whether shrinking its carbon footprint matters. Cowlitz approved construction of a coal export terminal from which millions of tons of U.S. coal could be shipped to Asia annually.
Both Oregon and Washington are curtailing the coal-fired generation of electricity, but the future looks to greens as black as coal. The future looks a lot like the past.
Historian William Rosen (who wrote "The Most Powerful Idea in the World," about the invention of the steam engine) says coal was Europe's answer to the 12th-century "wood crisis," when Christians leveled much forestation to destroy sanctuaries for pagan worship and to open up farmland. Population increase meant more wooden carts, houses and ships, so wood became an expensive way to heat dwellings or cook. By 1230, England had felled so many trees it was importing most of its timber and was turning to coal.
"It was not until the 1600s," Rosen writes, "that English miners found their way down to the level of the water table and started needing a means to get at the coal below it." In time, steam engines were invented to pump out water and lift out coal. The engines were fired by coal.
Today, about half of America's and the world's electricity is generated by coal, the substance that, since it fueled the Industrial Revolution, has been a crucial source of energy. Over the past eight years, it has been the world's fastest-growing source of fuel. The New York Times recently reported ("Booming China Is Buying Up World's Coal," Nov. 22) about China's ravenous appetite for coal, which is one reason coal's price has doubled in five years.
Half of the 6 billion tons of coal burned globally each year is burned in China. A spokesman for the Sierra Club, which in recent years has helped to block construction of 139 proposed coal-fired plants in America, says, "This is undermining everything we've accomplished." America, say environmentalists, is exporting global warming.
Can something really be exported if it supposedly affects the entire planet? Never mind. America has partners in this crime against nature, if such it is. One Australian company proposes to build the Cowlitz facility; another has signed a $60 billion contract to supply Chinese power plants with Australian coal.
The Times says ships - all burning hydrocarbons - hauled about 690 million tons of thermal coal this year, up from 385 million in 2001. China, which imported about 150 million tons this year, was a net exporter of coal until 2009, sending abroad its low-grade coal and importing higher-grade, low-sulfur coal from, for example, the Powder River Basin of Wyoming and Montana. Because much of China's enormous coal reserves is inland, far from coastal factories, it is sometimes more economical to import American and Australian coal.
Writing in the Atlantic on China's appetite for coal and possible aptitude for using the old fuel in new, cleaner ways, James Fallows quotes a Chinese official saying that the country's transportation system is the only serious limit on how fast power companies increase their use of coal. One reason China is building light-rail systems is to get passenger traffic out of the way of coal trains.
Fallows reports that 15 years from now China expects that 350 million people will be living in cities that do not exist yet. This will require adding to China's electrical system a capacity almost as large as America's current capacity. The United States, China, Russia and India have 40 percent of the world's population and 60 percent of its coal.
A climate scientist told Fallows that stabilizing the carbon-dioxide concentration in the atmosphere would require the world to reduce its emissions to Kenya's level - for America, a 96 percent reduction. Nations with hundreds of millions of people in poverty would, Fallows says, have to "forgo the energy-intensive path toward wealth that the United States has traveled for so many years."
In his new political science treatise ("Don't Vote - It Just Encourages the Bastards"), P.J. O'Rourke says, "There are 1.3 billion people in China, and they all want a Buick." So "go tell 1.3 billion Chinese they can never have a Buick." If the future belongs to electric cars, those in China may run on energy currently stored beneath Wyoming and Montana.
