Finally China removes ownership limits of foreign carmakers

In a move to open their shores to foreign car manufacturers like Nissan and Tesla, the Chinese government plans to do away with ownership limits over the next five years. Currently, foreign carmakers are allowed a maximum of 50 per cent ownership when they set up companies in China with the partnership of a local company.

Implemented in 1994, the ownership rules were set up in favour of domestic auto companies to help them compete with the technologically advanced foreign companies. Today, the Chinese auto market is the largest in the world in terms of volume. There has also been a push from the government for electrified technologies. According to a media report, by 2018, limits on fully electric and plug-in hybrid car manufacturers will be removed in 2018, followed by commercial vehicle companies in 2020 and lastly the passenger vehicle segment by 2022.

There has been a standoff between China and US over trade tariffs. Tesla had expressed interest to set up a manufacturing unit in China, but claimed that the restrictive rules were creating obstacles. Tesla and other carmakers manufacturing electric cars are expected to benefit from the new rules. China's National Development and Reform Commission is reported to have said that it plans to scrap foreign ownership limits in the ship and aircraft manufacturing industries in 2018 as well.

Source - Automotive News

Image Source - Tesla Motor Club