The Diaoyu Island incident has not only affected Japanese automobile manufacturers' Chinese sales, but also harmed the domestic enterprises in partnership with them.

A local news daily report appearing on 23rd January cited statements regarding the state of Guangzhou's automobile industry made by Wang Xudong, director of the city's economic and trade commission, at the third press conference of the Guangzhou Municipal People's Congress.

According to Mr. Wang, the output value of Guangzhou's automobile industry fell 6.3 percent last year, due to the backlash against Japanese products following the Diaoyu Island dispute. The automobile manufacturing field lost 30 billion yuan (US$ 4.78 billion), while output value across the whole automobile industry supply chain declined by 45 billion yuan.

The city's revenues from industrial taxes fell approximately three percent due to the disruption, while its overall tax revenues decreased by one percent. Guangzhou's automobile industry is dominated by Sino-Japanese joint ventures, most notably Guangqi Honda, Guangqi Toyota and Dongfeng Nissan, all of whose sales suffered from anti-Japanese backlash following the Diaoyu Island incident.

However, Mr. Wang confirmed that the situation is beginning to improve. He predicts that the output value of the city's automobile industry will grow over ten percent this year, with total production volume looking set to exceed 1.6 million vehicles.

He added that Guangzhou will take steps to encourage the further development of own brands as well as increase the proportion of JV vehicles produced regionally. The city will also consider attracting investment from other foreign enterprises, in order to further diversify its automobile industry.