Abstract:Over 3 million Chinese Rural Vehicles (CRVs) were produced in China in 2002, triple that of conventional cars and trucks. Yet these smaller, simpler, indigenous vehicles are virtually unknown outside China. The CRV industry is unusual in that it evolved largely outside the control of government regulation and policy, using local technology and resources. CRVs now consume one fourth of the diesel fuel in China and play an important role in rural development. This report is the first comprehensive assessment (in English or Chinese) of these vehicles and this remarkable industry. We document and analyze vehicle technology, government policy, environmental impacts, market demand, and industry dynamics. We find that increasing government regulation (mostly for emissions and safety) is having profound effects on the industry, with uncertain implications for the growth and globalization of CRV technology.