Fixing China's Flawed New Mileage Standard

The New York Times reported that China laudably plans to increase its average automobile gas mileage by 18% - up to 42 mpg by 2015. This is great news - but without some (simple) fixes, the standard is likely to be ineffective and impractical to enforce. Here’s why.
For a start, China’s standards apply only to domestically produced vehicles - imports are exempt. China’s import tariff on cars is 25%, in line with WTO standards. As the article points out, imports made up only 1.9% of volume in recent recessionary months, however this percentage will go up as manufacturers trade off subsidizing tariffs vs. not meeting their quota of high mpg vehicles. In addition, as China’s population grows wealthier, it will tilt towards paying more for imported vehicles. Double jeopardy.

Second, the standards apply to 16 different classes of automobiles, not manufacturer “fleet” averages (as in the U.S.) which incents car companies to produce only larger vehicles. Unless China somehow forces companies to make small cars, this alone could make China’s rule fail entirely.

Lumping auto makers output into “fleets” as is done in the
U.S. CAFE standards and including imports in the standard could make the new standard easier to enforce and make China’s industry stronger.

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