China promotes new energy vehicles

Driving the industry: An employee works on a car assembly line at a factory in Wuhan. To help revitalise the car market, the government has loosened purchase restrictions in several major cities and introduced a number of preferential tax policies. — AFP

BEIJING: China has released details of a development plan for the new-energy vehicle industry as it seeks to shore up the world’s largest car market and revitalise an economy hard hit by the coronavirus pandemic.

In a statement, the government said the focus of the plan was to unify the domestic market, improve industrial concentration and sharpen market competitiveness.

That would include the construction of more charging facilities and filling stations for electricity- and hydrogen-powered cars, as well as the wider use of new-energy vehicles by government agencies, it said.

Also, by next year, at least 80% of all public sector vehicles – including buses, taxis and municipal trucks – operating in ecological pilot zones and areas with high levels of air pollution would be driven by clean energy, it said.

Beijing has promised to build more charging facilities and filling stations for electricity- and hydrogen-powered cars.

While China’s economy as a whole is showing signs of bouncing back after the coronavirus epidemic – recent figures were bolstered by high levels of consumption during the recent National Day holiday – its car sector remains in the doldrums.

One of the major drivers of China’s economic recovery after the 2008 global financial crisis, the industry has struggled in recent years, with sales by volume falling 8.2% in 2019 and 2.8% the year before.

In February of this year, with much of the country in lockdown, car sales fell by more than 79% year-on-year.

Official figures show August sales grew 11.6% year-on-year to 2.2 million units, but for the first eight months of 2020 dropped by 9.7% to 14.6 million.

As a whole, China’s economy fell by 1.2% in the first half of the year, though Morgan Stanley has forecast a 5% rise in gross domestic product for the third quarter on the back of strong exports and improving consumer spending at home. Standard Chartered Bank was even more optimistic, forecasting 5.5% growth for the period.

To help revitalise the car market, the government has loosened purchase restrictions in several major cities and introduced a number of preferential tax policies.

Shanghai and Tianjin have both increased their annual licence plate quotas, by 40,000 and 35,000 respectively, while Beijing has allocated an extra 20,000 plates for new-energy vehicles.

In Hubei, the central China province where the coronavirus was first identified, the government said earlier this month that all buyers of new cars between October and March 2021 would be entitled to a subsidy equivalent to 3% of the sales price.

Beijing securities firm Essence Securities said in a note that government stimulus policies had “turned auto sales to positive growth from April” and that it “expected a continued strong recovery in the near future”. — China Daily