Daily Management Review

China to lift restrictions for investors in the automotive industry


04/17/2018


In five years, China will remove all restrictions on participation of foreign capital in enterprises of the country's automobile industry, the State Committee for Development and Reform of China reported.



Mstyslav Chernov
Mstyslav Chernov
"In 2022, all limits on the share of foreign share capital in passenger car manufacturing enterprises will be lifted, and the rule will be repealed that companies with joint capital can be created with participation of no more than two parties," the State Committee said.

Now foreigners must necessarily create a joint venture with a Chinese partner with a share of no more than 50%.

"All restrictions in the automotive industry of China will be completely removed in the next 5 years," - the report says.

The Chinese car market is the largest in the world. The leaders of the world car industry In China are companies from the US and the EU.

Car sales in China in 2017 grew at the slowest pace, which signaled the end of the boom in the world's largest and fastest growing automobile market.

Last year, sales amounted to 28.88 million vehicles, which is 3% more than in 2016, said the Chinese Association of Automobile Manufacturers on Thursday.

Sales of cars rose 1.4% to 24.72 million, which is significantly lower than the 15% growth in 2016, although sales of electric vehicles that the Chinese government is actively promoting have grown by 53% and reached 777 thousand. 

The volume of sales of commercial vehicles increased by 14% to 4.16 million.

After a decade of sharp growth, China accounts for 30% of global car sales compared to about 10% in 2007. However, market saturation in major cities, including Beijing and Shanghai, and other factors such as fast-growing sales of used cars, led to insignificant growth.

The increase in vehicle sales tax in China from 5% to 7.5% in early 2017 affected sales at the beginning of the year, and a further increase to 10% this month is likely to have the same effect in Q1 2018. A research of Bernstein Research predicts market growth in 2018 by 2.5%. 

However, the sales tax on electric cars will continue to be abolished until 2020, as the Chinese Ministry of Finance noted in December, since the government intends to promote sales of such cars. Of the electric vehicles sold in China last year, 578 thousand were passenger cars, whose sales grew by 72%.

source: reuters.com






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