Near the entrance of the Beijing Auto Show, which opened on Friday, stands a replica of the 1958 “Red Flag” limousine, built by China's First Auto Works because Mao Zedong insisted that China needed its own luxury brand. Now, 52 years later, the Communist leader's dream is finally being fulfilled – in ways he could never have imagined.

Everywhere in the show, which runs through next week, is evidence of the ways in which Chinese carmakers are trying to climb the ladder of luxury up to the premium levels previously dominated by companies like Audi and Mercedes. The most striking example of this, of course, was the recent purchase of Volvo of Sweden by Geely, the private Chinese carmaker, for $1.8bn. Beijing Automotive (BAIC) also recently bought Saab technology from GM.

But the Chinese original equipment manufacturers are not just buying in their premium models from overseas, they are also creating luxury at home. Virtually every Chinese company at the show is showing a wide range of own-branded products, from the tiniest urban runabout to sport utility vehicles that are catching on in China at exactly the moment they have fallen out of favour in the west.