New Policies for China's Auto Industry to be Launched

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Last updated at: (Beijing Time) Friday, November 29, 2002

New Policies for China's Auto Industry to be Launched

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A package of long-awaited new policies for China's automobile industry and market will be launched at the end of this year or the beginning of next year, a senior government official announced Thursday.

Zhang Guobao, vice-minister of the State Development Planning Commission, said the new policies will include a programme to accelerate the industry's development and others concerning vehicle consumption, fund management and financing.

Zhang unveiled the plan Thursday in Beijing at an international automobile forum organized by the Chinese Academy of Social Sciences (CASS).

The plan comes as China's auto market has surged during the year since the nation joined the World Trade Organization.

Zhang forecast that demand for vehicles would increase to 6 million units a year by 2005 from the expected 3.2 million units this year.

Yu Jianhua, deputy director of the WTO affairs division of the Ministry of Foreign Trade and Economic Co-operation, said: "The new policies to be launched are in line with China's WTO commitments.''

China has promised to revise its existing regulations on the auto industry and to form policies on the issue according to WTO requirements.

Zhang said: "The programme to speed up the auto industry's development is now undergoing the final process of examination and approval by the central government.'' It will replace the current policy formed in 1994, he added.

However, Zhang did not reveal further details of the programme.

Jiang Xiaojuan, a researcher at the CASS, told the Beijing forum that the auto industry will play a leading role among China's industrial sectors to help China realize its target of quadrupling the level of its gross domestic product in 2000 by 2020.

The target was announced by President Jiang Zemin during the 16th National Congress of the Chinese Communist Party earlier this month.

Zhang said another policy to be launched will remove irrational curbs on individual ownership of vehicles. It will protect consumers' rights and interests in areas ranging from auto purchasing, registration, use and maintenance to the selling of used vehicles, he said.

For many years, Chinese consumers have been plagued by such vehicle consumption policies as high purchasing tax and arbitrary charges and fees imposed by local governments.

The government's macro-control measures and market rules will play a "synergetic role'' in how the industry raises funding under the new policy in this regard, according to Zhang.

"Those fields in the industry, which is experiencing full market competition, will be opened wider,'' he added.

The central government last year gave the green light to two Chinese privately owned car makers -- the Geely Group in East China's Zhejiang Province and the Shanghai-based China Brilliance Auto -- to produce and market passenger cars.

China has permitted foreign car makers to set up joint ventures with Chinese State-owned companies for the past two decades.

Zhang also said his commission Thursday approved regulations for the management of auto financing institutions in China.

Eyeing huge potential in the business in China, many financing arms of foreign auto giants, such as the General Motors Acceptance Co and Ford Motor Credit Co, have applied to the government to set up car-financing branches in the nation.

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