China is Re-shaping its Auto Industry
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. This article will introduce the key points of the Draft Rules.