Xinhua. China’s State Council introduced a government support plan for the auto industry, one of its “pillar industries”. Elements of the plan for the auto industry include:
Lowering the purchase tax on cars of less than 1.6 liters displacement from 10% to 5% from 20 January through the end of 2009 to stimulate sales.
Allocating 5 billion yuan (US$731 million) to provide one-off allowances to farmers to upgrade their three-wheeled vehicles and low-speed trucks to mini-trucks or to purchase new mini-vans of less than 1.3 liters displacement from 1 March through the end of the year.
Increasing subsidies for people to scrap their old cars.
Eliminating regulations that restrict car purchase.
Encourage large auto companies, as well as major auto-parts makers, to expand through mergers and acquisitions so as to optimize resources and improve their competitiveness on the international market.
Over the next three years, providing a 10 billion yuan (US$1.46 billion) as a special fund to support auto companies to upgrade technologies, and develop new engines that use alternative energies.
Offering financial support to promote the use of energy-saving autos and those fueled by new energies.
Support automakers to develop independent brands and build auto and parts export bases.
Urge improvements in the credit system for car purchase loans. More than 93% of Chinese vehicles are sold in the domestic market, but less than 10% are purchased on credit.