China's policy change of its automotive industry - Mark Schaub

Mark Schaub

China has not only been leading the way to develop self-driving cars, it has also been are the forefront of legal changes needed to allow those cars into society. The Shanghai-based lawyer Mark Schaub gives an overview of the new regulations the government has been introducing at the China Law Insight.

Mark Schaub:

China is embarking on bold moves to re-shaping its auto industry policy. This follows recent announcements in relaxation of key restrictions on foreign investment in the auto sector. 

The National Development and Reform Commission (NDRC) is the body tasked in China with laying the direction for industrial policy. On May 17, 2018 the NDRC circulated the draft Administrative Rules on Auto Industry Investment (“Draft Rules”) to local governments and industry stakeholders for comment. The Draft Rules when passed will replace the current car industry development policy that has been in place since 2004. 

In short the Draft Rules reform the China approval system for auto investment projects by delegating more authority to local governments, expressly prohibit any new production capacity for fossil-fuelled vehicles and raise the threshold for establishing electric vehicle manufacturing companies. 

The Draft Rules set 25 May 2018 as the deadline for feedback from local governments and industry participants.   Accordingly a tight timeline and sorry if you missed it! This does, however, hint that feedback will be limited and that NDRC has clear ideas as to the direction it intends to take. Generally, longer feedback periods are granted... 

The Draft Rules continue and extend existing policies in place. 

On the one hand China has announced relaxation of restrictions on foreign investment in auto sector with a 5-year transition plan and also reducing import tariffs on autos to 15% from 25% and on auto parts to 6%. 

On the other hand China is clearly putting in place policies to allow it to have a strong domestic auto market in which it will compete head to head with international competitors. This future competition will be in respect of NEVs and autonomous cars. 

The Draft Rules are expected to be officially issued within 2018 but their impact on the China’s auto industry will reach into the next decade.

More at the China Law Insight.

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