Xinjiang to become new engine for China's auto biz

URUMQI - China's far west Xinjiang Uygur autonomous region is expected to become another engine for the country's automobile industry as Shanghai Volkswagen, German carmaker Volkswagen AG's joint venture in China, laid the foundation for its new factory here on Monday.

The plant, located in the regional capital Urumqi, is expected to become operational in 2014 with an annual production of 50,000 units. The factory's first phase of construction will cost 2 billion yuan ($316 million), said Hu Maoyuan, chairman of SAIC Motor Corp and Shanghai Volkswagen at the ceremony.

As the first sedan manufacturing program in Xinjiang, the factory provides oppotunities for Shanghai Volkswagen to explore the booming western China and central Asia markets, Hu said.

Xinjiang covers an area of 1.66 million square kilometers, making it China's largest province. The auto market is flourishing as the roads linking Xinjiang to its neighbouring central Asian countries and inland provinces have been completed in recent years.

In the capital Urumqi, the number of cars doulbled from 200,000 in 2009 to 400,000 in 2011.

The factory will promote the development of the auto and equipment manufaturing industries in Xinjiang and western China, said Nur Bekri, government chairman of Xinjiang.

"Xinjiang will fully support Shanghai Volkswagen's development here, and improve the automobile industrial chain," said Bekri.

He said the Urumqi plant will help Volkswagen "gain a strategic advantage" in the northwest China and central Asian markets.

Since 2010, China has been pushing for greater opening-up of the resource-rich and strategically-located Xinjiang, aiming to transform it into a regional economic hub from a relatively underdeveloped desert region.

Auto and equipment manufacturing has become a major industry in Xinjiang. Chinese manufacturing giants, including SANY, Shaanxi Automobile Group, Dongfeng Motor and XCMG, have already set up their plants in Xinjiang.

China-made automobiles exported to central Asian nations from Xinjiang more than doubled last year to 16,000 units, according to local customs data.

The revenue of these auto exports also grew by 120 percent to 680 million U.S. dollars, according to figures released by the Xinjiang customs office. Over 80 percent of auto products exported to the Central Asia market were heavy trucks.

Xinjiang's customs attributed the sharp rise in auto exports to economic recovery in Kazakhstan and Kyrgyzstan and the appeal of low-cost but high-quality China-made automobiles.