China to tighten standards for carmakers’ subsidy scheme

The China Securities Journal reported that China will likely raise the threshold for carmakers who want to qualify for incentives for the production of fuel-efficient vehicles. This is in line with the government’s efforts to encourage car manufacturers to produce more fuel-efficient cars. But the newspaper said that this will make it more difficult for manufacturers to receive subsidies. An incentive scheme introduced in June 2010 allocates a sales subsidy of RMB3,000 (US$468.82) for vehicles that are fitted with engines of 1.6 liters or smaller which consume no more than 6.0 liters of fuel per 100 kilometers (km). The government’s incentive funds were quickly used by the end of June due to the increasing number of models that fall under the subsidy scheme. Analysts say that the Chinese government will continue to allocate money, but the qualifying standards for carmakers will be tightened. (August 4, 2011)