The China National Coatings Industry Association has released a report on its marketplace. China, it states, is the largest national market for paints and coatings in the Asia-Pacific region, followed at some considerable distance by India and Japan. It is also the leading Asian country in consumption of waterborne coatings, primarily from increased demand from the furniture trade. After four years of rapid growth, the Chinese paint market, which has a total coatings production exceeding 10-million metric tons, started slowing down in 2013 due to a difficult global economic situation and slowdown of certain industries resulting from rising costs of labour, land and raw materials, and increasing taxes. However, demand for paints and coatings in the construction, automotive, appliance and infrastructural sectors continued to grow, and the coatings market in 2014 grew by eight percent over 2013. Since 2009, the auto industry has surpassed that of America to become the largest in the world, in 2013 producing 22.1-million automobiles, 12.1-million of which were passenger cars. This continuous growth also brought momentum to the automotive coatings industry in China, although the pace is expected to slow down in 2015. CNCIA estimates the current market of OEM coatings for passenger vehicles (including cars, SUVs and MPVs) was about 360,000 metric tons in 2013. This was 15 per cent over 2012, and represented roughly half the whole Chinese passenger vehicle coatings market. The OEM coatings market should grow by seven to eight percent annually in the future. Fierce competition in the local automobile market is another reason why Chinese automobile producers speed up their outbound investments. The ‘walking out’ policy of the Chinese central government encourages domestic car producers to invest in other developing countries such as Brazil and Russia to build overseas manufacturing bases. By the end of 2013, China had 110-million passenger vehicles. The large size of the existing car market will lead to fast growth of market demand for car refinishes in the coming years. Some foreign companies such as AkzoNobel and PPG have already invested in new operations for this segment. The central government required waterborne materials to be used in new production lines after 2012. Growth in China’s real estate market slowed in recent years and the market potential in architectural paint is not large enough to absorb the growing paint production capacities in China. Because China’s architectural coatings market is entering an era of single digit growth, some coatings producers have already begun to adjust their business strategies to meet this new challenge. Competition for the real estate market between architectural paint companies is expected to be fierce in the coming years. Although market demand for painting new apartments will not grow as fast as before, demand stemming from repainting old apartments is catching up rapidly and this market sector will grow by 50 percent annually. Construction of public infrastructure such as highways and railways still attracts huge investments. In 2014 the investment in the public infrastructure sector grew by double digits, apparently outperforming the real estate sector.