China Strives to Improve Conditions for Foreign Automakers

Forex News

China plans to lift restrictions on the ownership of foreign owners of companies producing fully electric and plug-ins for hybrid cars in 2018, for manufacturers of commercial vehicles in 2020 and a wider market for cars by 2022. It signals the end of a rule put in place in 1994, in which the world's largest auto market limited foreign carmakers to owning no more than a 50% share of any local venture.

The National Development and Reform Commission (NDRC) said, China will also scrap limits on foreign ownership in the shipbuilding and aircraft industries in 2018. The policy was implemented to help domestic carmakers to compete against more advanced international rivals.

Analysts warn, that the looser rules are likely to raise pressure on domestic carmakers, and the main beneficiaries, at least in the short term, would be manufacturers focused on new-energy vehicles, including US electric carmaker Tesla.

China said the easing of autos rules is unrelated to its trade dispute with the United States, is keen to portray itself as open for business. Its ties with the world's largest economy, though, are becoming increasingly fraught. These moves in autos come after President Xi Jinping said last week that the country would scrap ownership limits "as soon as possible", exciting global auto brands even as China and the United States spar over trade tariffs.