Page last updated at 11:10 GMT, Monday, 7 December 2009

Car sales and output pass the 12 million mark in China

Geely's GE model in Shanghai
The government has a number of measures in place to lift car sales

Chinese car sales and production both exceeded 12 million between January and November, state media has said.

The China Association of Automobile Manufacturers expects car sales and output to top 13 million for the full year, the Xinhua News Agency reported.

China has never produced more than 10 million cars in one year before.

State incentives have boosted car sales, and the government has reiterated its plans to continue economic stimulus measures next year.

World leader

Despite the downturn and falling sales at most global carmakers, demand for cars in China is booming.

ANALYSIS
Jorn Madslien
By Jorn Madslien, Business reporter, BBC News

China's car sales have soared this year, aided by tax cuts and other incentives aimed at promoting low-emission cars.

Sales in China are set to storm ahead next year too - though the growth rate is set to slip back to a more measured 10-15% from 40-50% growth in 2009.

Rapid growth at home has helped create large Chinese companies, which are now eyeing the world.

A notable demonstration of this came late last week when Shanghai General Motors said it is not only expanding into India.

In addition, Shanghai Automotive Industries (SAIC) has taken majority control of the venture, with its partner GM taking a back seat.

For established carmakers in the West, China will not only offer millions of new customers in the years ahead, but also fierce competition both on their home turf and in emerging car markets.

In November alone, sales reached 1.35 million units, according to the preliminary figures.

The country's largest carmaker, Shanghai Automotive Industry, sold 2.44 million cars in the year to the end of November, a rise of more than 50% compared with the same period a year earlier, Xinhua said.

State incentives, such as tax cuts on small cars, have boosted sales in China.

Like many other governments around the world, China has also introduced subsidies to trade in older vehicles.

Previously, only the US and Japan had produced 10 million cars in a single year.

Domestic Chinese car sales overtook those in the US for the first time in December of last year.

Domestic demand

The government said it would continue to stimulate the economy after its annual economic policy meeting on Monday, Xinhua reported.

"We must maintain the continuity and stability of our macro economic policy," said Beijing.

The government also reiterated its plans to introduce measures to persuade Chinese consumers to spend more.

China is an export-led economy and the government wants domestic demand to contribute more to overall economic activity.

"While seeking to expand domestic demand, we must especially lay importance on increasing consumer demand of the people," said the government.

There had been concerns that the government may look to clamp down on rising property and share prices by cutting back on stimulus measures.

Leading Chinese shares rose slightly on the news that the measures would stay in place. The Shanghai Composite index rose by 15 points, or 0.5%, to 3,331.9.

"The outcome of the meeting certainly has bolstered the market. It resolved investors' uncertainties," said Yu Haifeng, at Debon Securities.



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