Cars in China - more research

The rapid growth of China and India is already having profound effects on the economies of the west and of course on the environment. This paper presents an interesing insight into mass car ownership in China.

"Mass Car Ownership in the Emerging Market Giants"

Economic Policy, Vol. 23, Issue 54, pp. 243-296, April 2008
MARCOS CHAMON, International Monetary Fund (IMF) - Research Department
Email: mchamon@imf.org
PAOLO MAURO, International Monetary Fund (IMF)
Email: PMAURO@IMF.ORG
YOHEI OKAWA, University of Virginia - Department of Economics
Email: yo3t@virginia.edu

Marcos Chamon, Paolo Mauro and Yohei OkawaThe typical urban household in China owns a TV, a refrigerator, a washing machine, and a computer, but does not yet own a car. In this paper, we draw on data for a panel of countries and detailed household level surveys for the largest emerging markets to document a remarkably stable relationship between GDP per capita and car ownership, highlighting the importance of within-country income distribution factors: we find that car ownership is low up to per capita incomes of about US$5000 and then takes off very rapidly. Several emerging markets, including India and China, the most populous countries in the world, are currently at the stage of development when such takeoff is expected to take place. We project that the number of cars will increase by 2.3 billion between 2005 and 2050, with an increase by 1.9 billion in emerging market and developing countries. We outline a number of possible policy options to deal with the implications for the countries affected and the world as a whole. Marcos Chamon, Paolo Mauro and Yohei Okawa.

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