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Foreign auto shareholding limits to be phased out

China will phase out shareholding limits for foreign investors in the automobile industry as part of its efforts to further expand opening-up.

China will phase out shareholding limits for foreign investors in the automobile industry as part of its efforts to further expand opening-up.

The National Development and Reform Commission yesterday announced specific timeline and measures. According to the plan, the sector will ease all restrictions through a five-year transition period starting this year.

In 2018, China will ease restrictions on stakes foreign automakers can own in joint ventures concerning new-energy and special-purpose vehicles.

In 2020, the country will relax foreign ownership limits in joint ventures that produce commercial vehicles.

In 2022, China will relax foreign ownership restrictions in joint car ventures as well as scrapping rules that limit foreign automakers to no more than two joint ventures with Chinese partners. Currently, foreign carmakers can own up to 50 percent in joint ventures with local partners.

“Through the opening-up of the manufacturing industry, we hope Chinese and foreign companies can achieve development in a fair competition environment. We encourage Chinese and foreign firms to carry out more extensive and diverse cooperation in the field of capital, technology, management and talent training,” the commission said.

President Xi Jinping said at the Boao Forum for Asia annual conference this month that China will launch a number of landmark measures this year to significantly broaden its market access and accelerate the opening-up process. 

“On manufacturing, China has basically opened up this sector with a small number of exceptions on automobiles, ships and aircraft. Now these industries are also in a position to open up,” Xi said. “We will ease as soon as possible foreign equity restrictions in these industries, automobile in particular.”

The commission said the opening-up of the manufacturing sector “will stimulate market vitality and encourage innovation, as well as gather resources at home and abroad.”

The commission also said yesterday that China will phase out shareholding limits for foreign investors in shipbuilding and aircraft manufacturing from this year.

“The limits will be lifted on shipbuilding processes including design, manufacturing and repair, and on production of airplanes, including trunk and regional airliners, general-purpose airplanes, helicopters, drones and aerostats.”

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