China has plans to accelerate the roll-out of electric vehicles as the vanguard of its innovation based ‘new normal’ economy to combat the slowdown in its low-tech manufacturing and drop in exports.
China’s State Council or Cabinet wants one million ‘green cars’ to hit the domestic market by 2020. Over the next five years after that, market share should jump to 80 per cent, when three million electric vehicles are produced, according to plans.
The ambitious shift away from conventional fuels follows the ‘Made in China 2025’ campaign. Unveiled in May this year, it aspires to transform the face of the Chinese economy, by moving in the direction of innovation based hi-end production and services, buttressed by a growing appetite for domestic consumption.
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In pursuit of this domestically-driven economy, Beijing has already issued guidelines that would ensure rapid absorption of the new eco-friendly vehicles.
Local governments are being directed to ensure that more than 30 per cent of the vehicles in their order list are fired by new energy. Penalties for non-compliance are painful. Provincial governments, which deviate from the new norms, risk losing subsidies on fuel and operating expenses. Among the new purchases, the share of green-energy vehicles should rise to 30 per cent.
While encouraging usage of electric vehicles, authorities have a formidable task of providing battery-charging posts, which will make the shift from hydrocarbons unproblematic.
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“It’s like with phone chargers, it’s a bit all over the place,” said Zheng Zhajie, Deputy Head of the National Energy Administration. “Everyone has a pile of different chargers and a pile of batteries. Now we’re trying to improve things, moving towards unifying and standardising,” he told the State-run Xinhua news agency.
Apart from electric and hybrid-vehicles, nine other core items feature on the futuristic “Made in China” list. High-speed railways are one among them. If everything goes according to plan, China should capture almost one-third of the global market by 2020 and 50 per cent by 2025. Hong Kong media is reporting that the Chinese are in talks with 30 countries for developing rapid rail systems.
After signing a deal in the U.S. to construct the Los Angeles to the Las Vegas high-speed corridor, the Chinese are now expected to pitch for the London-Birmingham-York line in Britain — a country that President Xi Jinping is expected to visit shortly, following his recent visit to the U.S. Analysts say that Chinese have become frontrunners in the high-speed railway business because they offer quality at a lower price tag. It is estimated that the Chinese charge $17 million per km for a high-speed train running at 350 km per hour. In comparison, European companies’ prices are anywhere between $25 million and $39 million per km.
The Chinese have also identified information technology as another domain for significantly expanding their footprint. The State-run China Daily is reporting that planners want Chinese servers to capture 90 per cent of the domestic market in the finance and telecommunications sectors within a decade. It quotes analysts as saying that this would further squeeze the markets of overseas vendors such as IBM Corp. and Hewlett-Packard Co. The daily pointed out that “IBM, Hewlett-Packard, Cisco Systems Inc. and many other technology giants are feeling the pain from a tightened grip on data security standards and checks”.
Other priority areas, to shift the economy to the next level, include manufacture of computer numeric control (CNC) machines, robots, bio-medicine, aerospace industry, ocean engineering and shipping.
The poor manufacturing numbers along with the turbulence in the stock market have added urgency to the proposed economic reforms. Chinese manufacturing shrank for the second successive month in September. In late August, the stock market had nosedived to record lows, drawing international focus on the future of the Chinese economy.