China no longer encourages investment in car assembly
January 26, 2012 Category Automotive, Automotive Metals & Minerals
The National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) jointly issued a new guideline for foreign investment, moving “finished car manufacturing” from the “encouraged” list to the “approved” list, but the move will not affect existing Sino-foreign joint ventures in China’s auto sector. An NDRC official explained that the move was the result of excesses in both production capacity and finished automobile companies in China. “It was a normal adjustment in light of the development of China’s auto industry,” said the official with the NDRC’s Department in charge of foreign investment, who declined to be named. “There is no issue of tightening up, nor will it affect the operations of existing joint ventures in China,” added the official. China has been the world’s largest auto producer and market by volume since 2009. Sales hit 18.06 million units in 2010, while output rose to 18.26 million units. The country has more than 130 finished automobile producers, more than any other country, but the companies are scattered and not strong enough, as mergers and acquisitions (M&As) have been slow. The government has controlled approvals of new finished auto projects more rigorously in the past two years to curb overcapacity. About 70% of domestically made cars are produced by Sino-foreign joint ventures in China.
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