China’s economic development continues to decline throughout the last quarter of 2008, dropping from 9 percent to 6.8 percent in the past few months, making it one of the worst quarters since 2001.

Bloomberg.com quoted Timothy Geithner, President Obama’s nominee for Treasury secretary, saying, “the new U.S. administration believes China is “manipulating” its currency.” The auto sector is one of the many industries affected by China’s larger economic stimulus plan.

“China has pressured state-owned banks to increase lending, unveiled a 4 trillion yuan ($585 billion) stimulus package, reduced export taxes and is adding support for 10 key industries, including tax cuts and subsidies for steel and autos.”

Reuters UK focused on a potential unfair advantage that this plan would give to Chinese auto makers.

“But officials have called for further steps that would favor domestic manufacturers over foreign ones, including requiring government agencies to buy China-made cars and measures to boost sectors such as steel and autos, potentially leading to future complaints from trade partners.”

From the StraitsTimes, the Chinese State Council is defending their plan, claiming it is to stabilize and boost auto demand. However, not all those involved in the auto industry are backing the plan whole-heartedly.

“‘Even with the government's auto industry-boosting policies, it is hard for sales to pick up the pace seen over the last few years,' said Mr. Yang Jian, managing editor of Automotive News China.”

Critics of the plan should be aware that this isn’t the only sector expected to have governmental assistance; others are likely to develop in the near future.

“The government is expected to release supportive policies for eight other industries, including shipbuilding, petrochemicals and textiles, in the next few days, according to the paper.”