Chinese automaker Guangzhou Automobile Group Corp (GAC) plans to invest CNY1.6 billion (USD243.74 million) in a new production base in Xinjiang region, northwestern China, reports Reuters. The new facility will be located in Urumqi and will have a production capacity of 50,000 units per annum. The plant will be constructed in two phases, initially with a capacity of 50,000 units per annum (upa), which will then be expanded to 100,000 upa. Details of when construction of the plant will begin or when production is scheduled to commence have yet to be released.
Significance: The Chinese government is pushing automakers to commit to developments in the northwestern region of China, which remains less developed than the coastal regions of China. In a drive to boost growth, the government aims for these less developed areas to become hubs of economic growth, driving up local consumption rates. Automakers have begun to invest in the region with production bases now under construction. Volkswagen (VW) and partner Shanghai Automotive Industry Corp (SAIC) have invested in a plant in Urumqi, Xinjiang. In August 2013, the joint venture SVW began production of the Santana passenger sedan at the new plant in Xinjiang, the western frontier region of China. The Urumqi plant has started production with the semi-knocked down (SKD) assembly of the VW Santana. China's coastal region includes the provinces and large cities from Hainan and Guangdong in the south, Shanghai, and Tianjin and Shandong. This coastal region has been a major contributor to China's GDP growth; in 2005, the coastal region contributed 56% of China's GDP, according to our data. The western region, which includes the Xinjiang and Inner Mongolia regions and provinces such as Yunnan, Sichuan, and Shaanxi, contributed 17% of China's GDP in 2005. However, in 2020, the western region is expected to contribute 21% of China's GDP and the coastal region around 50%.
