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Order No. 8 of the National Development and Reform Commission Auto Industry Development Policy

Automobile Policy

中华人民共和国国家发展和改革委员会令

第8号《汽车产业发展政策》

Order No. 8 of the National Development and Reform Commission Auto Industry Development Policy

Issued: June 1, 2004

Effective: June 1, 2004

Issuing Authority: National Development and Reform Commission

Main Contents: Notable differences with the 1994 Auto Industry Development Policy, which is now superseded, include: (i) eliminating the requirements on auto enterprises with respect to foreign exchange balance, localization rate and export performance; (ii) lifting of many administrative approvals; (iii) encouraging the development of automobiles with self-owned intellectual property; (iv) encouraging the merger and acquisition of current auto manufacturers; (v) requiring auto manufacturers to concentrate on establishing branded sales and service networks; (vi) encouraging the development of environmentally friendly and low-emission autos; and (vii) providing various directive opinions on creating a better auto consumption environment.

Additionally, points worth noting are: (1) Auto manufacturers and motorcycle manufacturers are not allowed to transfer their manufacturing licenses to non-auto/motorcycle manufacturers or individuals. (2) The investment threshold requirement is raised: the total investment in any new auto project should be no less than 2 billion yuan (of which, 800 million yuan must be self-owned), including a new research and development organization with a minimum investment of 500 million yuan.  (3) Subject to the State Council's approval, foreign investors are allowed to take stakes exceeding 50 percent in export-oriented joint ventures ("JV"), though the 50 percent ceiling on foreign investment in auto manufacturing JVs remains principally in place.  (4) Foreign investors are allowed to set up more JVs (normally they are restricted to two JVs for the same product portfolio) if they team up with existing Chinese partners to take over Chinese auto manufacturers.  (5) The Policy does not explicitly provide whether foreign automakers shall separate sales channels for imported and locally produced vehicles, but rather simply states that overseas investors can conduct sales of locally produced and imported vehicles in China with the authorization of manufacturers.  (6) For environmental and safety reasons, auto products sold in China are required to conform to the standards of China Compulsory Certificate (CCC) certification.  (7) To ensure that appropriate import tariffs are applied, differentiation is made between imported completely knocked-down autos and normal auto parts.  (8) There are provisions reinforcing the government's supportive attitude towards the cultivation of auto markets focusing on individual consumers.

The Policy also covers policy goals, development plans, technical policies, structural adjustment, market access management, trademarks and brands, product development, auto parts and related industries, marketing networks, investment management, import management, and auto consumption.