China Said It Is Encouraging Foreign Tie-Ups With Auto Parts Companies

Autoparts Report,  Sept 25, 2001  

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The Chinese government is encouraging foreign companies to invest in car parts industries, an official source said recently at an international seminar. The government encourages multinationals to set up in China their global-oriented production bases and technology development centers, according Bai Rongchun, a senior economic official.

Rongchun pointed out that China's car parts industry is still largely lagging behind their counterparts in developed countries. He noted the industry should try to make breakthroughs in the next five years in its ability to develop its own new products, so as to keep the car parts industry in line with the development of the car manufacturing industry itself.

China has agreed that restrictions regarding the category, type and models of vehicle produced will be lifted, the financial ceiling beyond which investments have to be approved by both central and provincial authorities will rise from $30 million to $150 million, and also the requirement for foreign engine manufacturers to have a local joint-venture partner is to be scrapped.

Government statistics indicate that by the end of 1999, China had 1,591 car parts enterprises with total assets of 140 billion yuan ($16.9 billion), including 500 foreign-funded enterprises with total investment of $10 billion.

China has made significant steps to liberalize its auto trade. China's tariff on imported cars will fall from 80-100 percent today to 25 percent by July 1, 2006, with the greatest reductions in the first years, as a result of its entry into the World Trade Organization. Also, regarding vehicle production in China by foreign-owned companies,

COPYRIGHT 2001 Ron DeMarines
COPYRIGHT 2008 Gale, Cengage Learning