Automotive industry in China

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The automotive industry in mainland China has been the largest in the world measured by automobile unit production since 2008. As of 2024^[update], mainland China is also the world's largest automobile market both in terms of sales and ownership.

The Chinese automotive industry has seen significant developments and transformations over the years. While the period from 1949 to 1980 witnessed slow progress in the industry due to restricted competition and political instability during the Cultural Revolution, the landscape started to shift during the Chinese economic reform period, especially after the government's seventh five-year plan prioritized the domestic automobile manufacturing sector.

Foreign investment and joint ventures played a crucial role in attracting foreign technology and capital into China. American Motors Corporation (AMC) and Volkswagen were among the early entrants, signing long-term contracts to produce vehicles in China. This led to the gradual localization of automotive components, and the strengthening of key local players such as SAIC, FAW, Dongfeng and Changan, collectively known as the "Big Four".

The entry of China into the World Trade Organization (WTO) in 2001 further accelerated the growth of the automotive industry. Tariff reductions and increased competition led to a surge in car sales, with China becoming the largest auto producer globally in 2008.^[1][2]

In the 2020s, the automotive industry in mainland China has experienced a rise in market dominance by domestic manufacturers, with a growing focus on areas such as electric vehicle technology and advanced assisted driving systems. The maturation of technology and supply chains has also led foreign carmakers to seek partnerships with Chinese manufacturers. In 2023, China overtook Japan and became the world largest car exporter.^[3] However, the industry also faced heightened scrutiny, tariffs, and other restrictions from Western countries, especially in the area of EVs due to allegations of Chinese industrial overcapacity.^[4][5]