The Chinese automotive industry has evolved substantially over the last 55 years, in spite of multiple historical and economic hurdles. The change in the governmental policy during 1980s regarding ownership of private automobiles, from prohibition to encouragement, initiated rapid growth in the Chinese automobile industry. In the last two decades, China progressed from being nearly a truck-only producer to becoming a major producer of passenger and commercial cars. Economists consider the time between 2001 and 2007 to be a period of ‘blowout’ in the Chinese automobile industry. To date, little is known regarding this emerging automobile industry: What are the features of Chinese automobile industry? Has the Chinese automobile industry become a global player in its industry and reached economy of scale? How is the indigenous automobile sector different from international joint ventures in China? Have Chinese companies gained full transfer of technology and come to possess the capacity to develop their own designs? The subject is complicated, with many contradictory facts and interpretations. This thesis intends to address these questions by focusing on the Chinese indigenous automobile sector, through its three stages of development, using it as a model to examine the validity of various interpretations. I hope the historical appraisal of the industry’s initial development, its difficulty in transition and the internal-external factors affecting the later growth will help us understand the industrial and technological development of China’s emerging economy.