Car Culture Captivates China

Sales Boom Along With Potential Problems

SHANGHAI -- A decade ago, Chen Haiyan went about the city the same way as most of her compatriots -- on a one-speed bicycle. Today, her mode of transport still keeps with the times, but now it is a $100,000 silver BMW sedan.

She drives her son to school and herself to the high-rise office where she conducts real estate deals. She takes weekend outings to shopping malls on the fringes of town, and meets friends at the Starbucks coffee shop near the villa she is renovating in a gated community in the suburbs. She likes the feel of eyes upon her as she rolls along, past the mélange of images defining China's most cosmopolitan city -- half-built housing developments, boutiques selling European furniture and dumpling stands where construction workers eat for $1.

"It's a very confident feeling," she said. "Of course, I wanted the best type of car. People always want the best."

From foreign luxury cars to the Chinese-made Geely, which retails for about $4,000, the automobile has captivated China, gaining traction among people of increasingly wide incomes and backgrounds, with global implications for industry, the environment and energy.

More than 2 million passenger cars were sold in China last year, an increase of more than 80 percent from the year before, according to the State Information Center. China is now the single fastest-growing auto market in the world, and the second largest in Asia after Japan.

"Every year, we keep saying, 'Well, there's no way we can have a repeat performance of last year,' and every year we're wrong," said Phil Murtagh, who oversees General Motors Corp.'s operations in China. "We're seeing the beginnings of a car culture."

For the world's major carmakers, now suffering something close to stagnation from North America to Europe to Japan, China is that rare haven of swift growth and fat profit. Longer term, however, worries are deepening that over-exuberant investment is building too many car factories, pushing prices down so far that the good times will eventually yield to a more familiar China story -- too much supply chasing too little demand, with low-cost, domestic producers capturing much of the market.

The rise of the auto also threatens to add another major source of greenhouse gas emissions, those believed to underlie the problem of global warming, to a world already struggling to limit the threat. China is now the second-largest source of such pollution after the United States. Over the next three decades, China's increase in gas emissions is expected to nearly equal the total of all industrial countries, according to the International Energy Agency.

The spread of the car in the rest of the world has proven to be a revolutionary force, remaking geography and social reality. So it goes here. Cars are refashioning China's cities, now choked with traffic. Bicycles are being gradually banned from Shanghai's larger streets to make way for the automobile, and old houses torn down to make space for wider roads and parking lots. Cars are changing how people shop, enabling the proliferation of big-box retail stores while expanding the confines of an enduring real estate boom. They are making life more dangerous, generating an alarming spike in fatal traffic accidents.

Above all, the car is intensifying China's search for new sources of energy at a time when the needs of the world's most populous country are outstripping supply. Industry remains the single largest drain on China's energy supply. But the ravenous appetite of the automobile is one reason Beijing has dispatched engineers and dealmakers from Siberia to Angola to Indonesia in search of new oil.