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China’s Automotive Industry to Experience Decline in 2015, Says Expert

| Jan 23, 2015 05:40 PM EST

A Chinese economy expert has predicted an upcoming decline in the country's automotive industry.

A Chinese economy expert predicts a decline in China's automotive sector in 2015 as the country's economic growth had been reportedly nailed at only 7.4 percent last year.

Automotive News' managing editor and resident commentator Yang Jian believes that even the country's top automotive manufacturers would definitely feel the negative consequences brought about by China's heightened labor cost, "inefficient" government-owned enterprises and the excess in production capacity.

China's economy rapidly grew for the past three decades, but is now experiencing a sudden decline in almost every industrial sector, Yang explained.

Though Beijing is already working very hard to remedy the looming economic downfall, Yang believes that none of the problems the country is facing can be easily fixed.

Citing China's central bank governor Zhou Ziaochuan during the World Economic Forum held in Switzerland just last week, Yang explained that the country is "willing to trade lower economic growth for deeper economic reforms."

This comes after the World Bank predicts China's economy to decline further from last year's 7.4 to 7.1 percent this 2015.

The economic drop has already taken its toll on the automotive industry, says Yang, noting a significant 6-percent difference in China's light vehicle sales, recording 10 percent last year from 2013's 16 percent.

Though the China Association of Automobile Manufacturers made a conservative estimate of sales growth down to only 8 percent this year, Yang believes otherwise.

"Entering the second half of last year, light vehicle sales in China slowed significantly, with growth falling under 7 percent in September, October and November," he wrote, adding that some automotive companies' scaled back expansion plans further prove that this analysis is "too optimistic."

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