China withdraws support to foreign investment in automobile sector

China withdrew its support for foreign capital in the automobile industry to boost the development of domestic vehicle manufacturers, according to the Xinhua News Agency. It quoted a guideline issued recently by the National Development and Reform Commission (NDRC) and the Ministry of Commerce. China’s car industry has been growing vigorously since the 1990s, and the country surpassed the U.S. as the world’s largest market in 2009. The Chinese government has mandated that foreign car makers enter into 50-50 joint ventures with Chinese auto makers, which helped local auto makers learn from foreign car manufacturers. Majority of the top 10 car brands in China are joint ventures with foreign companies. The new regulation, however, will still encourage foreign companies to invest in R&D and production of energy-saving vehicles, Xinhua said. China has encouraged the use of “green” vehicles, including a “green-car” subsidy program. In 2011, foreign automakers received more than half of the subsidies for promoting fuel efficient cars in China. (December 30, 2011)