China to ease control on foreign automakers’ ownership and to cut vehicle import tariff

China will start a pilot program before the end of June, 2018 to loosen the restrictions on foreign firms’ investment ratio in special use and new energy vehicles businesses established in our free trade zones, according to a statement of the foreign ministry issued after the meeting between U.S. President Donald Trump and China President Xi Jinping.

According to the existing rules, foreign automakers should set up joint ventures with local counterparts if they want to produce locally. The foreign companies can have up to 50 percent stake of the joint ventures in China. If the cap can be lifted, it would be landmark departure from the current policy.

What’s more, our government will cut vehicle tariffs on vehicles step by step. Currently, the imported vehicles to China will be levied 25 percent duty.

In October, Wall Street Journal reported that Tesla has reached an agreement with Shanghai to set up a wholly owned factory in the city’s free-trade zone and that the automaker still needs to pay for 25 percent import tariff. Days later, the spokesman of the Commerce Department confirmed the American automaker’s discussion with Shanghai government.

The ease on the control will help the American electric car maker to expand its market share in the biggest auto market across the world. And also its factory in China will slash its manufacturing and transportation cost.

During U.S. President Donald Trump’s three-day visit to China, companies on both sides announced many deals, approximately 250 billion dollars in value.