Will market or gov't set M&A pace?

The acquisition of the automotive assets of Aviation Industry Corp of China (AVIC) by Chang'an Automotive Group earlier this month is a significant development in China's automotive industry.

The move creates the third-largest automotive conglomerate in China with capacity of more than 2 million units, strengthens the number-two player in the light commercial vehicle segment and expands the reach of Chang'an Auto Group in passenger cars through its joint ventures with Ford, Mazda and Suzuki.

It might also signal a quickening in the pace of consolidation the nation's highly fragmented automotive industry. While that conclusion would be welcome in Beijing, where policymakers believe global competitiveness depends on a more rational industry structure, it would also be premature.