SHANGHAI -- For decades, foreign automakers in China have dreamed of freeing themselves from the joint ventures the Chinese government has imposed on them.
Last week, a document released by China's central planning agency appeared to signal this dream would soon come true. The report, by the National Development and Reform Commission, focused mostly on development of electric cars.
But its last section contained a sentence -- seemingly an afterthought -- that pledged "to open up the restrictions on joint venture ownership in an orderly manner."
Foreign automakers would be thrilled to control these ventures, which siphon lucrative profits to their Chinese partners. If the government genuinely wants to loosen its rules -- a reform it has long resisted -- that would be a very big deal indeed.
But the fine print suggests it may be a long time before this happens since any relaxation of the rules will be carried out in an "orderly" way.
What does this mean? Given the shaky financial status of state-owned automakers, an orderly transition is likely to take a long, long time.
The loss of revenue could trigger the collapse of some automakers. Beijing, which prizes stability, isn't likely to let that happen.
Ever since China opened its auto industry to foreign investment in the mid-1980s, foreign companies that want to produce vehicles in China have been required to enter joint ventures with state-owned partners.
The government capped foreign stakes in those ventures at 50 percent.
These joint ventures were supposed to help domestic automakers stay afloat, acquire technology and learn to compete. But the ventures have done more harm than good.
Take two large state-owned players, FAW Group and Dongfeng Motor Group.
These companies, which are controlled by the central government, receive massive profits from their partnerships with Volkswagen, Toyota, Honda and Nissan.
But decades after the partnerships were launched, neither FAW nor Dongfeng is competitive, and there are two reasons why.
First, as long as they can count on fat profits from their ventures, the companies have no incentive to invest in their own brands. Second, management listens to the government, not to consumers.
That, in turn, has limited their willingness to trim bloated operations and adapt to fast-changing market conditions.
FAW, for example, has two subsidiaries that produce passenger vehicles.
Saddled with aging lineups, both have suffered huge losses. Other state-owned automakers have done slightly better, but only a few could survive after losing their joint-venture profits.
At an industry conference last year, NDRC chief Xu Shaoshi predicted it would be only a matter of time before the government lifts its cap on foreign ownership.
But after hearing Xu's remarks, FAW, Dongfeng and two other state-owned companies -- Changan Automobile Co. and Beijing Automotive -- jointly issued a statement opposing any move to ease restrictions. The companies said they could not fund their own r&d without profits from their joint ventures.
So how soon will the government relax its ownership rules? To answer that, you have to know how the government would bail out state-owned automakers after they lose those profits.
Until Beijing has a contingency plan, there is little chance it will allow foreign automakers to control their joint ventures.