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Gridlock on the road to prosperity

Auto sales revving up in country of mostly first-time drivers with cash to spare

Globe and Mail Update

BEIJING — Beijing businesswoman Feng Zhaoyan is the proud owner of her very first car, a silver-coloured Bora made in China by Volkswagen. She bought it so that she can drive her daughter to a better kindergarten.

"It takes 20 minutes -- if the traffic isn't too bad," she says.

That's a big if.

Mrs. Feng's lack of experience behind the wheel -- at 36, she's only been driving for a year -- unites her with the majority of car owners in China. Imagine that everybody behind the wheel is an excited 17-year-old, and you get the flavour of driving in Beijing. China has more than a hundred thousand traffic fatalities a year, and it has the highest per-car fatality rate of any nation in the world.

Getting a licence is not hard, new drivers say. It doesn't even have to be done in real traffic. "Turn left, turn right, park, and that's it," says a young woman with a brand new licence, who confesses she's terrified of driving on the streets.

China even has its own Lizzie Grubman -- a notorious case of a woman in a BMW who mowed down a hapless farmer in a tractor, killing his wife and injuring 12 others. In court, she argued in her defence that she had obtained her licence illegally and had very little idea how to drive. The court let her off with a suspended sentence.

Fines for careless driving have gone way up, and the authorities plan to make driving schools accountable for the accident records of their graduates. But it can't make much difference, with about a thousand new cars and drivers taking to the road every day. However bad the traffic is now, these are the good old days.

China is now the fourth-largest car market in the world, and the new middle class has skipped entry-level cars entirely. Mrs. Feng's Bora cost her 190,000 yuan (around $28,500), and, like many car buyers here, she paid cash. High-ticket imported SUVs are a common sight, although you can buy a decent local knockoff for much less. (Design theft is rampant, and has become a major issue for Western auto makers here.)

Car culture is also sparking a new cultural revolution: SUV drivers are forming clubs for off-road excursions to the Great Wall. And people are choosing the commuter life.

"My brother bought a townhouse in the suburbs where there's better air quality," Mrs. Feng says. "Before, we all liked living downtown, but now you have more choice."

China imports most of its oil, and is now the second largest oil consumer in the world. Its growing lust for fuel will have as much impact on prices as anything that happens in the Middle East. The car boom also contributes to China's gigantic production of smog and pollution.

Cleaner engines, says the government, are on the way -- but gas is cheaper than it is in Canada, and the government figures that what's good for the auto industry is good for China. China has even introduced Western-style car loans, so that drivers can get behind the wheel for only 20 per cent down.

But Mrs. Feng is not concerned with global warming. She's concerned with the traffic -- now, it often takes half an hour to drive her daughter to kindergarten.

She likes her new car. But next time, she thinks she'll buy a bigger one.

DRIVING MISS CHU JU

For the past decade, China's auto industry has been expanding at top speed:

1.82 million units: total vehicle production in 1999, ranking ninth in the world.

4.44 million: China's production in 2003, more than a 35% annual increase over 2002, ranking it fourth in the world.

United States: 12.12 million vehicles

Japan: 10.29 million

Germany: 5.51 million

China: 4.44 million

Canada: 2.55 million

Over 5 million: China's expected unit output in 2004, which would make it the third-largest auto manufacturer, behind Japan and the United States.

10 million: China's vehicle production forecast for 2010.

17 million: by 2020.

In China, there are 15,000 highway projects in the works, which will add 162,000 kilometres of roads to the country - enough to circle the Earth at the equator four times.

The number of vehicles per 1,000 Chinese people has more than quadrupled in the past 14 years.

SOURCES: JUST-AUTO.COM, TDCTRADE.COM, PEOPLE'S DAILY, CHINA DAILY, WORLD BANK, WARDSAUTO.COM

COMPILED BY RICK CASH

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