China's auto industry has been developing vigorously to withstand challenges posed by the country's entry into the World Trade Organization (WTO), said an official of China's top economic planner on Sunday.

Zhang Guobao, vice minister of the National Development and Reform Commission, attributed the good performance of China's auto industry to three factors: the country's sound economic environment, its solid industrial foundation and sharpened competitive edge in the global market for improved product quality.

Statistics show the nation's auto output have maintained fast growth for six consecutive years. From 2001 to 2006, the average annual growth rate of the auto sector reached 26 percent. In 2006,the country's auto output and sales increased by 22 percent and 23percent to 4.5 million and 4.4 million units respectively.

China's auto industry, however, is still obsessed with three problems including overcapacity, underdeveloped auto part industries and unsatisfactory services, said the vice minister at an international forum on China's auto industry held in north China's Tianjin Municipality.

He estimated the nation's overall auto production capacity has exceeded 10 million units. Although at present every 1,000 people in China have only 27 units, less than the world's average level of 150 units, many people actually cannot afford an automobile, he said.

Last year China overtook Japan to become the world's No. 2 auto market after the United States, with total sales of 7.2 million vehicles and output of 7.3 million.

The country produced 4.5 million vehicles in the first half of 2007, up 22.4 percent on the same period of last year, while sales rose 23.3 percent to 4.4 million, according to the China Association of Automobile Manufacturers (CAAM).