Editorials

Green drive

(China Daily)
Updated: 2010-06-03 07:49

The global financial crisis had given China an opportunity to overtake the United States as the world's largest auto market sooner than expected last year.

As the world begins to embrace energy-saving and less-polluting cars, will China be able to repeat this success in the green car race?

A subsidy program for green cars the nation announced Tuesday indicates that it is indeed serious about championing electric vehicles and associated green technology.

Related readings:  Green car subsidy trials start in five pilot areas  China plays crucial role in green tech, says Italian rep  China's chance to lead in 'green cars'

According to the pilot program, subsidies of up to 60,000 yuan ($8,784) and 50,000 yuan ($7,321) will be provided to purchase pure electric vehicles and plug-in hybrids, respectively, in five major cities.

In China, an electric car roughly costs about 200,000 yuan. So, China's green-car subsidy does not seem particularly more generous than those in developed countries, where the dole cushions hefty green car price tags by up to a third.

However, if the past is any guide, one should never underestimate the incentive that such subsidies offer to Chinese consumers. After all, there is still no better explanation than the government's small-sum tax cuts and subsidies adopted last year for unexpectedly triggering a spike in vehicle sales across the country.

If the latest subsidy can work magic in the five chosen cities by boosting electric vehicle sales, it is likely other major cities too will jump on to the bandwagon.

The result: Rapid expansion of domestic demand for green cars will push automakers to further cut costs thanks to economies of scale.

Economically and environmentally, it makes sound sense to encourage Chinese consumers to drive green.

(China Daily 06/03/2010 page8)