China Shifts Gears: Automakers, Oil, Pollution, and Development (review)

The view of a Beijing Jeep Chinese employee—"The top executives in the big companies only see China as a market to sell automobiles [not] as a place to develop automobiles"(p. 60, emphasis in original)—aptly sums up the depiction of China's automobile industry in China Shifts Gears. Although diversity in plans, performance, and outcomes related to production and marketing obviously exists among the big three American auto companies (Beijing Jeep, Shanghai GM, and Chang'An Ford) in the People's Republic of China (PRC), on many different levels the transfer of auto-related technology from the United States to China is highly problematic. Three case studies, based on each of these three American companies, form the core of this concise book's investigation into the merits and disadvantages of technology transfer via foreign direct investment (FDI) in the PRC. Framed by a clear introduction and substantive conclusion, the remaining eight chapters delineate historical background, contemporary practices, and future prospects as concerns the complex linkages between energy needs, environmental impact, economic development, and the auto industry. This volume places its study of China in comparative perspective through the structuring of its central research topic: "[T]he extent to which technology transfer through foreign direct investment is an effective mechanism for the deployment of cleaner and more energy-efficient technologies in developing countries" (p. 1). By making its findings more broadly applicable internationally, as well as by utilizing interdisciplinary analytical frameworks, this study offers a significant contribution to the fields of China studies, comparative politics and economics, public policy, and international development.

Effectively balancing the rise in private vehicle ownership, oil consumption, environmental pollution, and health risks will not be an easy task for leaders in China. According to chapter 2, the increasing desire of most urban Chinese people for a car, as a partial result of emerging pandemic diseases, air pollution, and the physical danger to bike riders and pedestrians, has fueled the PRC's growth as a net importer of oil. With a low percentage of world oil resources and a greater dependence on Persian Gulf oil than the United States, China's oil imports add significant security concerns to the country's future relations with major regional political actors such as Russia, Japan, the United States, and the European Union. Determination of plausible scenarios for China's future oil consumption relies heavily on degree of growth in the auto industry, vehicle fuel efficiency, and yearly mileage for each car. Current, intertwined concerns about health and environmental pollution relate to inadequate fuel emissions regulations and poor fuel quality. Clearly, solutions depend not only on government action, such as the "first fuel-efficiency standards for passenger cars" (p. 16) in 2004, but also on international politics, societal norms, and individual choices.

Against potential goals of energy efficiency and environmental protection, China's policymakers have to weigh the benefits of economic development. While China will have to "shift gears" to find viable strategies for achieving sustainability in its resources, its growth, and the health of its environment and its people, chapter 3 shows both the dynamism and limitations of the auto industry as a vehicle for such dramatic changes. Manufacturing, the major catalyst of China's phenomenal economic performance over the last decade, includes the production of automobiles. Foreign direct investment associated with the auto industry has resulted in stable jobs and localization in "backward linkages" such as automotive parts and components; yet, decentralization of economic decision-making to local governments, inconsistent central Chinese government policies, U.S. trade demands, and rules for accession to the World Trade Organization (WTO) basically have helped prevent the development of endogenous design skills and knowledge for future technological innovation in auto manufacturing. Moreover, the real annual GDP costs of environmental pollution and imported oil dependency leave it unclear whether the Chinese government can "find a way to channel FDI so as to produce real learning and improvements in Chinese...