The output of Guangzhou's auto industry dropped 6.3 percent last year, which officials have blamed on the tension between China and Japan over the Diaoyu Islands.

Wang Xudong, director of the economic and trade commission of Guangzhou, said joint ventures with Japanese auto players represent the mainstay of the city's auto sector.

At a news conference during the annual session of the city's people's congress on Jan 22, he revealed the output of the car manufacturing sector declined by 30 billion yuan ($4.83 billion) and that from the entire auto industrial chain was down by 45 billion yuan.

On a more positive note, Wang added that based on January's output so far, the industry is expected to rise by more than 10 percent to exceed 300 billion yuan this year, and see the building of 1.6 million units of automobiles.