New Automotive Industry Policy Promises Rosy Prospects

By David Yu and Grant Chen, Llinks Law Office, Shanghai

China has seen rapid and sustained growth in the automotive sales market in recent years. Prior to June 1 2004, the previous automobile industry policy was issued in 1994 (the 1994 Policy). In the intervening ten years, this policy came to be out of step with the changing times, and could no longer accommodate the rapid development of the PRC auto industry. The new Automotive Industry Development Policy (the New Policy) has been formulated to explain China's WTO commitments, the development of China's economy and aims to turn the auto industry into one of China's pillar industries. The New Policy's scope has been expanded when compared with the 1994 Policy, e.g., it includes affiliated or fringe industries. The New Policy includes both more restrictive and more liberal clauses, such as stipulating an automaker's aggravated liability in disclosing exhaust discharge standards to the public and, on the other hand, removing the special approval procedures for car sellers.