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New policy on auto sector 'ready in 3 months'
By Gong Zhengzheng (China Daily)
Updated: 2004-03-31 08:33
A much-delayed new policy for China's fast-growing auto industry is expected
within the next three months, according to a senior government official.
"The new auto policy will surely be launched during the first half of this
year," said Zhang Guobao, vice-minister of the National Development and Reform
Commission (NDRC).
Zhang's confirmation refuted recent rumours about top industry
decision-makers failing to agree on many issues.
The NDRC, the main watchdog for China's auto industry, brought forth a draft
of the new policy to solicit public opinion during the first half of last year.
However, the new policy, slated to replace the 1994 legislation, is still
trapped in bureaucratic red tape.
Industry sources say decision makers are revising important sections of the
draft to pave the way for a new policy.
The portion of the draft relating to vehicles made by domestic producers with
own intellectual property on designs and production should account for more than
50 per cent of total auto sales in China will be cancelled, according to
sources.
"It is meaningless for the government to jell such a target under the
market-driven economy," said Jia Xinguang, chief analyst with the China National
Automotive Industry Consulting and Development Corp.
"The target is very ambiguous. It has already been fulfilled if it refers to
all types of vehicles made in China, including those used in the agricultural
sector," Jia said.
"If it only refers to passenger cars, it is impossible to achieve the target
by 2010," he added.
Foreign brands now account for 90 per cent of total passenger car sales in
China.
Almost all of the world's major automakers, such as Volkswagen, General
Motors, Ford, Toyota, Honda, PSA Peugeot Citroen, DaimlerChrysler, Nissan and
BMW, have built car manufacturing plants in China, which has the potential of
becoming the world's biggest auto market.
The government will also amend the new policy to allow foreign automakers to
market their vehicles made in and exported to China in the same channels,
sources said.
Foreign automakers loudly complained last year about the policy draft's
stipulation that they would have to separate vehicle sales channels.
The stipulation attempted to increase foreign automakers' costs in China and
protect local manufacturers as overseas-made vehicles would flood in thanks to
the nation's tariff cuts on imports and the expected removal of import quotas.
China will remove vehicle import quotas next year and slash its tariffs to 25
per cent in 2006 from about 34-37 per cent at present according to its
commitments to the WTO.
"But the stipulation violates market rules and also cannot shelter domestic
manufacturers in real terms because their fundamental weakness is a lack of
strong development capabilities and brands," Jia said.
Most Chinese automakers, including the nation's top three - First Automotive
Works Corp, Dongfeng Motor Corp and Shanghai Automotive Industry Corp - are
assembling foreign models because of this weakness.
However, the requirements regarding the equity structure of Sino-foreign car
joint ventures - the most sensitive issue in the industry - will remain
unchanged.
The Chinese side must control a stake of at least 50 per cent in joint
ventures with foreign partners.
Jia called on the government to take a step back from regulating the auto
industry too much, with rules such as what new model manufacturers should
introduce and how much they should invest.
"What the government should do is create equal conditions for players in all
forms of ownership in the auto industry, to make unified rules about vehicle
safety and emissions, and to protect consumers' interests," he said.
Sales of new vehicles made in China shot up by 34 per cent year-on-year to
4.39 million units last year, including almost 2 million passenger
cars.
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