China said on Thursday it will ‘‘withdraw support’’ for foreign investment in car manufacturing to encourage the domestic industry in the world’s largest car market. The Xinhua news agency cited a joint announcement from the Ministry of Commerce and the National Reform and Development Commission.
The new year will bring some significant changes for carmakers that had plans to invest in China as the world's most populous country will stop encouraging foreign investment in the auto industry putting an end to seven years of benefits that included reduced tariffs on imported equipment. The new obstacles to foreign car makers, due to go into effect on 30th January, comes ‘‘because of the need of the healthy development of domestic auto making,’’ the NDRC and commerce ministry said, according to Xinhua.
Some of the world's largest carmakers, including America's General Motors and Germany's Volkswagen, operate in China, the world's largest car market. A number of the world's leading carmakers, particularly luxury brands, are focusing on boosting sales in China to compensate for weak demand caused by slow economic growth and the eurozone debt crisis.
The measure comes just 10 days after Saab was forced into bankruptcy following successful efforts by GM to block Chinese companies from acquiring the Swedish car maker. The moves against the international car sector come fast on the heels of Beijing’s decision earlier this month to slapnew duties on U.S. made cars that are imported into the country.
However, even though China is lifting its support to foreign investments in the auto industry, according to Xinhua, the government will "open more sectors to foreign investors and encourage investment into energy-saving and environmentally-friendly technologies, new-generation information technology, biotechnology, high-end equipment manufacturing, alternative energy, advanced materials, and alternative-fuel cars."
BBC News - China 'to withdraw' foreign car investment support
China limits foreign car investment
China to Withdraw Support for Foreign Investments in the Auto Industry in 2012 - Carscoop