More foreign investors expected to eye China's auto industry amid further opening-up

BEIJING, July 13 (Xinhua) -- More foreign enterprises are expected to invest in China's automobile industry as the country has increased efforts to further open up the industry.

--- Cut in tariffs on imported automobiles and parts

Since July 1, the tariffs on imported automobiles and parts have been officially lowered, with the vehicle tax rate reduced to 15 percent and the auto parts tax rate cut to 6 percent.

Industry insiders believe that the cut in tariffs will directly benefit the domestic automobile consumers.

After import tariff cuts, the domestic consumers will reduce the cost of buying imported cars which have not yet been produced domestically. At the same time, some consumers will turn to imported cars which will change the consumption status in the domestic automobile market and make competition between home-grown and imported cars more complete, said Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), in an interview with China Securities Journal.

It is worth noting that the reduction of import tariffs on automobiles and parts is an inevitable result of the development of the Chinese automotive industry.

After years of development, China's automobile industry has achieved good results. Sales volume of the self-owned brand passenger cars has accounted for more than 40 percent of the total sales of the passenger cars in the domestic market. Some auto enterprises with self-owned brands have begun to launch high-end products to have competitions with the joint venture brands, said analysts.

--- Further opening-up to foreign investors in automobile industry

From July 28, in the domestic new energy vehicle field, restrictions on foreign share holding and the number of joint ventures set up by the foreign investors will be officially cancelled.

Earlier, in April, the National Development and Reform Commission (NDRC), China's top economic planner, pointed out that the domestic automobile industry will implement the transitional opening-up by type.

In 2018, restrictions on foreign share holding of special vehicles and new energy vehicles will be lifted. In 2020, the restrictions on the foreign share holding of the commercial vehicles will be abolished. In 2022, the restrictions on the foreign share holding of passenger vehicles will be lifted and restrictions that the same foreign company can establish two or less joint ventures producing similar vehicle products in China will be cancelled.

It is reported that U.S. carmaker Tesla, Inc. will open its first overseas plant in Shanghai, according to a MOU signed between Tesla and Shanghai municipal government on July 10.

The factory, with a planned annual capacity of 500,000 electric cars, will be located in the Lingang Area, along with an electric vehicle R&D center, according to an agreement signed between Tesla and the Chinese partners.

Industry insiders believe that Tesla will become a "catfish" to further activate the domestic new energy automobile industry. The full competition will drive development of the industrial chain.

The opening-up of the domestic auto industry will, on the one hand, make competition much fiercer; and prompt the domestic manufacturers to speed up upgrade their products and technologies on the other hand, said analysts.