Government mulling on new policies to aid automobile industry in China

The Chinese government is currently working on introducing new policies aimed at stimulating growth in the automobile industry. According to a report appearing on Gasgoo.com (Chinese) today, these include new 'old for new' and 'down to the countryside' policies.

The government has taken particular notice of the worsening state of the economy, and particularly the automobile industry, over the last year. In order to prevent actual decline from occuring, it is currently considering introducing policies to encourage long-term growth. According to informed sources, the 'old for new' and 'down to the countryside' policies will primarily target low emission vehicles, with the goal of improving environmental consciousness in the country. They will both adhere to their respective 2009 standards. The latter policy, which was drawn up to improve traffic conditions in villages, will give farmers a ten percent economy subsidy, allowing them to save up to 5,000 yuan ($790.47) on new purchases.

Other policies to increase production and consumption of new energy vehicles have also been drawn up. The government hopes to use them to promote further developments in technology research and development, as well as make new energy vehicles more attractive to consumers. The government has already set aside 36.3 billion yuan ($5.74b) in subsidies for energy-saving electronic products, which includes new energy vehicles. The investment is hoped to increase consumer demand by up to 450 billion yuan ($71.14b).

Following the announcement, stock prices for Changan, Sinotruck and other domestic manufacturers all rose rapidly.