Analysts say the anticipated comeback is mainly based on China's removal of the punitive duty on December 23, last year, in an effort to end a trade row with Japan. China decreased its tariffs on auto imports to 43.8-50.7 percent on January 1 this year, from 70-80 percent, the biggest cut after the nation's entry into the World Trade Organization (WTO).

Ding Hongxiang, deputy general manager of the China Trading center for automobile Imports, said Japanese vehicles would again reign supreme among China's expected robust auto imports this year.

Jia Xinguang, chief analyst of the China National Automotive Industry Development and Consulting Corp, said in an interview with Business Weekly that Japanese vehicles will surely recover to account for more than half of China's total auto imports in 2002, as they did in previous years.

Jia earlier predicted that total imports would exceed 200,000 units this year, up from around 70,000 units from last year.

Ding said in 2001, imported Japanese cars were overshadowed by those from Germany for the first time over the past decade, as a result of China's 100 percent punitive tariff.

According to the center?s statistics, China imported 14,000 Japanese passenger cars during the first 10 months of last year, compared with 15,000 units from Germany.

China imposed the punitive tariff on Japanese vehicles last June as part of its countermeasures against Japan's emergency tariff on Shiitake mushrooms, leeks and rushes imported from China.

Dealers have been preparing to sell Japanese vehicles on the domestic market to cash in.

"We believe the trade row between China and Japan is temporary, so we have been preparing to import Japanese vehicles since last September and some have already come in," said an auto dealer in the Tianjin Bonded Area, which covers half of China's total vehicle imports.

A source from the bonded area said sales of around 4,000 Japanese vehicles, which were kept in stock in the area because of China's punitive tariffs, are expected to be revived soon this year.

"But their prices will have to be depreciated to compete with new models to be imported to China this year," the source said.

Japanese vehicle imports would also be powered by the falling exchange rate of the nation's currency against the US dollar this year, Jia said.

"Prices of vehicles imported from Japan will further decline with the falling rate," Jia said.

The Japanese Yen's exchange rate against the US dollar has decreased by 15 percent since last September. Currently, the rate stands at around 131:1.

During the first half of 2001, changes in the Yen's exchange rate against the US dollar lowered the prices of imported Japanese vehicles by 16 percent.

However, Jia said there would also be "uncertainties" over the volume of Japanese vehicle imports.

"It is hard to say how the Chinese Government will distribute its auto import quotas this year, although the total quotas this year will reach US$8 billion," he said.

According to WTO requirements, China will increase its auto import quotas by 15 percent a year by the end of 2004.

European and American automakers are also taking advantage of China's tariff cuts to expand their exports to the nation.

On January 4, 46 German-made Opel cars from General Motors (GM), the first batch of imported vehicles since the Tianjin customs opened after the New Year holiday, landed on the Chinese mainland.

GM said prices of these Opel cars would decrease by 8-12 percent on the China market.

German carmaker Audi AG has announced it will begin to export its TT Coupe and All-Road Quattro to China this year.

China will cut its tariffs on auto imports by 25 percent by mid-2006.

(China Daily January 12, 2002)