The main way to reduce vehicle emissions is to reduce fuel consumption. Typically, reducing fuel consumption requires reducing engine size and power, which isn’t very attractive to buyers.
Admittedly, it is difficult to reduce engine size without impacting power too much. China needs to reduce vehicle emissions in a big way however, and automakers are working to find solutions that reduce fuel consumption but are still capable vehicles. Recent changes in regulation, similar to CAFE regulations here in the US, will require that Chinese automakers produce vehicles averaging 34mpg by 2015 and 47mpg by 2020.
Zero-emissions electric vehicles are being developed, which have excellent torque characteristics, but suffer from the same lack of infrastructure we have here. On the other hand, there is still plenty of innovation left to discover in the internal combustion engine, such as turbocharging smaller engines like Ford has done with their EcoBoost engine series. The 1.0ℓ i3 EcoBoost engine produces the same amount of power as the 1.6ℓ i4 engine, but is up to 30% more efficient, translating to a 30% drop in emissions.
According to automotive supplier BorgWarner, Chinese turbocharger sales are already ramping up, doubling in the last three years, and expects sales to continue rising. About 80% of turbochargers will be installed on engines between 1.4ℓ and 2.0ℓ. The 2.0ℓ cutoff is interesting, because by turbocharging a 2.0ℓ i4 engine, Chinese automakers can boost power to that of perhaps a 2.6ℓ engine, reduce vehicle emissions by about 25%, and avoid the tax that jumps higher on engines over 2.0ℓ.