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China to overtake German vehicle output

China's vehicle manufacturers are likely to produce 6.4m passenger cars, vans, buses and trucks in 2006, making the country the world's third-largest vehicle maker and overtaking Germany, according to Chinese government research.

Domestic Chinese vehicle sales may rise by up to 13 per cent this year to 5.6m units following a recovery in consumer spending and 9.4 per cent expansion of the Chinese economy in the third quarter, according to research presented at a National Development and Reform Commission conference in Beijing.

Sales of passenger cars alone may rise by about 12 per cent to 3m units in 2006 if the government holds back on a plan to impose a tax penalty on larger-capacity cars, according to a Chinese newspaper.

"The underlying sales growth in the vehicle industry is still strong after months of pent-up demand," said Ma Liqiang, the deputy secretary general of the National Development and Reform Commission at the conference. "Rising gasoline prices merely push buyers to choose smaller cars and won't hurt overall sales."

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