"China has cut taxes on fuel-efficient vehicles"
Any details on that? The last I heard, China had based sales tax on engine size, not fuel efficiency.

In March 2008, China started to vary car sales tax by engine size from 3% to 20% (later raised to 40%).
A step in the right direction, but not as effective as sales tax based on emissions and tax on fuel.

Quote from Energy Foundation Transportation NGO in Beijing:
"China is the world's second-largest oil consumer and has made improved energy efficiency a key goal in its latest five-year economic plan. The government says it wants to cut energy consumption per unit of economic output by 20 percent. But the car tax is unlikely to affect energy efficiency if it doesn't change buying patterns.
A more effective way to cut emissions would be to link the tax rate to a car's fuel efficiency, said Dongquan He, a Beijing-based program officer of the Energy Foundation Transportation Program Office, a non-governmental organization. He said a planned fuel tax would do more to trim energy use. Xie Xuren, director of the State Administration of Taxation, said this month that China hasn't decided on when to roll out the fuel tax, mainly due to high global oil prices. "

Yesterday, China Daily reported that Chinese policy makers are considering introducing a gasoline tax 'soon':
"The government is likely to levy fuel tax soon while rolling back road tolls and maintenance taxes, a senior researcher close to energy policy makers said Tuesday.
'The government has repeatedly said that it is looking for an appropriate time to start levying fuel tax, and now, with the global oil prices going down so much over the past few months, I think this is a great time to impose the tax,' Han Wenke, director-general of the Energy Research Institute of the National Development and Reform Commission, told China Daily.
Zheng said the government, while likely charging 30 percent as fuel tax, will lower retail gasoline prices by 20 percent and abolish road tolls.
Beijing motorists pay about 30 percent more at the pump for gasoline than their US counterparts."

"China has cut taxes on fuel-efficient vehicles"
I suppose they are referring to the September change which reduced sales tax on cars with engines under 1 litre to 1%. I wonder if China will continue this trend and introduce a rebate for EVs?

Quote from China Daily:
"Taxes will be raised on big cars and reduced on smaller ones from Sept 1 to save energy and reduce pollution.

Owners of cars with engines above 4-liter capacity will have to pay 40 percent tax, double the existing rate, the Ministry of Finance said yesterday. The tax for vehicles with engines between 3 and 4 liters will be up from 15 to 25 percent.

And the tax on cars with engines below 1-liter capacity will be reduced from 3 to 1 percent.

China is one of the biggest and fastest growing auto markets, with vehicles accounting for the lion's share of its gasoline.

The proportion of imported oil to total consumption in the country has risen to about 50 percent, prompting it to adopt policies to improve energy efficiency, analysts said.

The country has pledged to lower energy consumption per unit of GDP by 20 percent and cut emission of major pollutants by 10 percent during the 11th Five-Year Plan (2006-10).

Last year, however, it could not meet its annual target of 4 percent reduction, falling short by 0.34 percentage points.

Cars with engines between 3 and 4 liters sold the most last year. The increase in their sales was phenomenal: six-fold to 12,100 units, the China Association of Automobile Manufacturers has said.

In contrast, the sale of cars with engines below 1 liter fell 31 percent to 251,700 units.

In another vital step to reduce the use of energy, the government increased gasoline and diesel prices in late June."

Kristoff:

What you're saying justifies much higher sales tax based on engine size. We could assume that the same may apply to annual registration fees.

This is not so different than a system based on CO2 emissions. Large (heavier) V-6 and V8 vehicles normally emit more CO2 than smaller (lighter) 3 or 4 cyls.

Malus based on engines size instead of gas tax may be more politically acceptable.