SHANGHAI -- A revised, softer version of China's controversial automotive policy has been sent to the country's State Council for approval.
Most importantly, the new version drops a proposed requirement that 50 percent of the market be held by local automakers that own their own intellectual property rights.
With no guidance as to whether "local" included joint-venture manufacturers, foreign automakers worried that they might be required to transfer intellectual property rights to their Chinese partners.
Now, such hard and fast numbers have been replaced by softer language calling for "environmentally harmonious" development of the automotive sector; fostering a "healthy consumer market;" and promoting private car ownership.
"The government realized they couldn't have such specific targets," says a researcher at a government think tank involved in drafting the policy. "But China has to do something to make the industry more competitive now that it has entered the WTO."
Also missing from the latest version is a goal that 40 percent or more of sales for component makers come from exports.
Now, components makers are urged to "satisfy the needs of the domestic market and industriously enter" the international market.
But some protectionist provisions remain in the latest version of the policy.
The new policy still limits foreign automakers to 50 percent ownership of ventures they set up, and decrees that new automaking or engine ventures be capitalized at a minimum of $181 million at current exchange rates.
China's planners have the goal of making the country's domestic automakers internationally competitive, something that won't happen as long as more than 100 companies are competing for resources. The new policy bans investment in loss-making automakers by non-automotive companies and private individuals.
Meanwhile, the policy encourages the development of large automotive groups and suggests they will be able to operate with less government interference.
Just when the new policy will be issued and implemented remains in question. Originally, Beijing indicated the policy would be out at the end of 2003, but ministry infighting apparently delayed the release.