Yet, while that sounds sinister, there is no real way to be cynical about this move. Even though China did not come up with this idea with the environment in mind, it nonetheless shows how the WTO can help promote a more efficient marketplace. After the WTO Court ruled that China’s import tariffs were in violation of their committments to free trade last month, the government came up with a creative way to continue to protect its local auto industry.

One might argue that this is protectionism, and it is. But the Chinese have managed to create a genius and positive form of it. They were only able to implement this policy because the local car industry has a natural advantage over foreign competition: its fleet is more fuel efficient. If, for example, things were reversed and domestic industry was producing gas guzzlers, the Chinese never could have gotten away with taxing smaller engines. Instead, China can promote this policy because it is in the interest of the enviornment, an area that the free market typically ignores (free market economics never work well with externalities).

So I say kudos to an increasingly sophisticated group of Chinese lawmakers. Regardless of the motives behind the move, the results will be positive. Not only will more of the cars on the road be of the Chinese small-engine variety, which use less gas, but you should also expect to see foreign competitors building more models that fit the mold. And don’t be surprised if many of them end up in markets outside of China, cleaning the air for those in the rest of the world as well.

G.M. neither promoted nor hid the fact that the Equinox engine (and that of its twin, the Pontiac Torrent) is made in China. The car’s sticker notes 55 percent of its content is [made] in the United States and Canada, 20 percent in Japan, 15 percent in China and the rest from elsewhere. But no sticker tells consumers the engine is built at Shanghai General Motors, a joint venture of G.M. and the Shanghai Automotive Industry Corporation, a Chinese company.

If the company had not built the engines in China, they would not be able to compete with companies like Toyota and Honda on price, and thus some of the jobs that compose the “55  percent” of US production would disappear with lower sales. Or so the argument goes. Of course the irony is that Toyota and Honda both plants in the US (although primarily for US market sales rather than re-importing to Japan).

Of course, the unions see it differently as their jobs go abroad.

The idea of using the Chinese engine did not sit well with the Canadian Auto Workers, the union that represents workers at the Equinox factory. Because of its complexity, engine assembly uses a higher proportion of skilled, well-paid workers.

And Basil E. Hargrove, the union’s president, blames what he calls unfair trading practices by Asian manufacturers for much of the North American industry’s problems.

“Today it’s South Korea and Japan, and tomorrow it’s going to be China,” he said. “It’s only a matter of time before G.M., Ford and Chrysler are going to deal with the crisis they face by going into these countries and shipping into here. Very few consumers ask: where is the engine built or where is the transmission made?”

 So the question is, how big a problem is this?