China is mulling loosening regulations to allow ‘green’ manufacturers to dispense with Joint Ventures in proposed free trade regions. The authorities are looking at regulations as early as 2018.
China is now discussing a plan to allow foreign carmakers to set up wholly owned electric-vehicle businesses in its free-trade zones in a major revision of a fundamental principle governing the country’s auto industry policy since the 1990s, according to company spokesman.
At present, foreign automakers must form a joint venture with a Chinese partner to enter the country. The authorities are considering relaxing this rule, paving the way for the likes of Tesla, the major U.S. electric vehicle maker, which has no production base in China, to come in on its own.
Still, with any easing restricted to pilot free trade zones, the practical implications remain unclear. Automakers would face many challenges, including building a new supply chain, as producing electric vehicles requires many specialized parts such as batteries.
But the potential softening shows that China — which shackles foreign entrants with many regulations – aims to draw companies in with a show of market liberalization. Will it then grow its own electric vehicle market and seize the majority in that industry.
“China’s government has become more open with its policies around green cars,” Wang Chuanfu, CEO of Chinese electric vehicle maker BYD, said. “More foreign companies will probably come in solo from now on.”
What is not being voiced, is “why”. China has its own battery manufacturers and the capacity to grow the market without foreign assistance.
