Starting from June 1, local governments are prohibited from implementing discriminatory policies against non-local automotive products or policies that could lead to discriminatory outcomes. According to the newly issued "Auto Industry Development Policy," China aims to establish a unified and open automobile market and management system. Local governments should encourage vehicles produced in different regions to compete fairly within their markets. Any restrictions or additional conditions that do not conform to national laws and regulations, or the requirements of this policy, related to the purchase, use, and disposal of vehicle ownership must be revised or abolished.
The state will uniformly set and publish automobile emission standards, dividing them into current and expected standards based on national conditions. Provincial governments can choose to implement either the current or expected standards according to local circumstances. If they opt for the expected standard instead of the current one, they must announce the implementation date at least one year in advance.
A unified national motor vehicle registration, inspection, and management system will be implemented, and local governments are not allowed to create their own rules. When applying for vehicle registration and annual inspections, only the certificates required by national laws, State Council regulations, or authorized requirements (such as the owner's identification, vehicle history certificate, domestic manufacturing certificate, import certificate, tax certificate, insurance payment certificate, and annual inspection certificate) should be provided. The public security traffic management department cannot require any additional documents. Local governments and relevant departments may not ask the traffic management department to conduct extra checks during registration or annual inspections.
If the procedures provided by the consumer comply with national regulations, the public security traffic management department must not refuse registration or inspection. The new "Auto Industry Development Policy" follows several key principles: combining openness with independent development, expanding enterprise decision-making autonomy, strengthening macro-control, integrating domestic and foreign markets, and promoting comprehensive, coordinated, and sustainable development.
By improving access rules and taxation measures, the policy encourages the development of the auto industry, promotes local production, honors China’s WTO commitments, creates a fair competitive environment, and strives for an open and transparent management system. Four major hotspots were addressed in the new policy, which has received significant attention. Although there was controversy over whether the policy would be introduced last year, it was ultimately approved by the State Council and issued by the National Development and Reform Commission.
Domestic calls for independent development have grown louder, and discussions about whether other industries entered the auto sector or merged imported and domestic car sales networks have been ongoing. The new policy provides more detailed regulations on these issues. One of the key changes is the increase in investment thresholds for entering the automotive industry. Previously, many outsiders entered the industry by acquiring underperforming companies with production qualifications. The new policy blocks this path and raises the entry barrier.
In addition to mergers, direct applications for investment are also affected. The policy requires that investment projects for new automobile manufacturers must have a total investment of no less than 2 billion yuan, with self-owned funds of at least 800 million yuan. Research and development investments must be no less than 500 million yuan. Projects for new passenger car and heavy-duty truck manufacturers must include engine production for the entire vehicle.
This policy is seen as a high threshold for those wishing to enter the automotive industry. Compared to the 1994 policy, the entry barriers have significantly increased. At the same time, foreign companies' desire to increase their share in joint ventures has also decreased. The new policy clearly states that Chinese-foreign joint venture production companies must have a Chinese equity stake of at least 50%. For stock-listed cars, special-purpose vehicles, agricultural vehicles, and motorcycles, when selling legal person shares externally, one Chinese legal person must be relatively controlled and larger than the sum of foreign-funded legal person shares.
Another concern is the normative sales system. Previous regulations required that imported and domestic cars be sold separately. Many international giants had to build separate domestic sales networks, which caused dissatisfaction. The new policy now allows domestic and foreign automakers to establish their own brand sales and service systems, which can be operated through investments or authorizations.
The policy does not directly address the merger of the two networks but implies that with proper authorization, both domestic and imported cars can be sold together. This aligns with recent practices where companies used separate entities to achieve combined sales. The new policy includes seven specific regulations on the car marketing network, showing a stronger emphasis on brand sales and services compared to the 1994 version.
To strengthen independent R&D, the policy encourages the development of products with independent intellectual property rights and implements brand management strategies. It also sets a goal of building well-known brands by 2010. Tax incentives are provided for research and development facilities that meet technological advancement criteria.
The policy also emphasizes trademark registration, requiring all domestic automobiles and parts to mark the manufacturer's registered trademark prominently. This reflects the government's focus on protecting intellectual property.
Finally, the policy promotes personal consumption as the main driver of the automotive market. While energy concerns remain, the policy encourages the purchase of low-energy, low-pollution, small-displacement, and new energy vehicles. It also calls for the revision or cancellation of local regulations that restrict private car ownership.
Overall, the new policy introduces seven key features, including aligning with WTO commitments, reducing administrative approvals, promoting brand strategies, guiding industry restructuring, establishing sales systems, encouraging green vehicles, and creating a better consumer environment. It also updates policies on bonded imports, second-hand car circulation, and energy-saving vehicles, aiming to foster a fair, open, and sustainable automotive industry.
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