China has a quota limit of US$8 billion worth of imported cars and parts this year so imports cannot surge rapidly or go out of control, said Chang Xiaocun, director of the Import-Export Department for Mechanical and Electronic Products under the Ministry of Foreign Trade and Economic Co-operation.

Chinese customs statistics show that China imported 1,760 cars from January 1 to 10, with the daily inflow up 37 per cent compared with that of last January.

Queues of foreign cars at customs sparked market talk that imports are going to flood the domestic market and deal a heavy blow to domestic car makers after China cut tariffs in accordance with its commitments to the World Trade Organization.

China has cut customs duties for cars by an average of 37 per cent this year.

But customs and trade officials said car imports increase rapidly at the start of every year.

China's car imports for the whole year are unlikely to damage the domestic industry, they said.

Chang said other factors in the increase in car imports this month were the depreciation of the Japanese yen and China's lifting of a 100 per cent retaliatory tariff on imports of Japanese cars, which took effect on January 1.

Japanese cars made up 57 per cent of car imports, while 12 per cent came from Germany and 6 per cent from Switzerland, according to customs statistics.

The quota on imported cars and parts will rise 15 per cent each year until 2005, so the domestic market is unlikely to be flooded, said Chang.

He said lowered tariffs on car parts and therefore production costs for domestic car makers will also enable them to grow more rapidly and become more competitive in the transition period before 2005.

(China Daily January 21, 2002)