28 Jun 2004

Development and Reform Commission: Ma Kai

May 21, 2001

Automobile Industry Development Policy

The Automobile Industry Development Policy is drafted in order to meet the requirements of the improving socialist market economic system and the new situation facing the development of China's automobile industry after the entry into the World Trade Organisation (WTO), promote readjustment and upgrading of automobile industrial structure, sharpen the edge of competition of the automobile industry in an all-round way, satisfy the rising demand for automobile products by consumers, and boost a healthy development of the automobile industry. The implementation of the policy is aimed at making the automobile industry a pillar industry in the national economy by the year 2010, making a great contribution to realization of an all-round "xiaokang" (well-off) society in China.

Chapter 1.   Policy objectives

Article 1. To create a unified market environment with fair competition by persisting in the principle of displaying the basic role of the market in resources allocation in integration with the government macro control, and improve the legally-based management system for the automobile industry. Government functional departments are required to exercise management of motor vehicles, farm transport vehicles (low-speed truck and three-wheel vehicle, the same below), motorcycles and parts and accessories, and standardize market behaviour of all players of the automobile industry according to the compulsory requirements of administrative decrees and technical standards. 

Article 2.  To develop the automobile industry in keeping with associated industries, urban transportation infrastructure and environmental protection, create a good environment for the use of vehicles, cultivate a healthy automobile market, protect the rights and interests of consumers and stimulate private spending on automobiles and to make China a principal car manufacturer globally by 2010, able to satisfy most of the domestic demand and export some products in batches.

Article 3. To encourage automobile enterprises to enhance research and development (R&D) and technical innovation capability, and actively develop products with China's own IPR (intellectual property right), and implement a famous brand strategy, striving to produce a number of name-brand motor vehicles, motorcycles and vehicle parts and accessories by 2010.

Article 4. To promote readjustment and restructuring of the automobile industry, expand efficiency of economies of scale, and raise concentration and avoid scattered, disorderly and low-level duplicated construction.

The country will strive to form a number of large competitive automobile groups and bring them in the ranks of the world's top 500 by 2010 by market competition.

It encourages automobile producers to form enterprises alliances as demanded by the market to realize complementation of advantages, resources sharing and expansion of scale operation.

It will develop a number of vehicle parts enterprises that will realize scale production and edge into the international automobile parts procurement system, and take an active part in international competition.   

Chapter 2.   Development plan

Article 5. The state directs drafting of the industrial development plan on the basis of the Automobile Industry Development Policy. The development plan covers long and medium-term development plans and a development plan for large automobile enterprises groups. The State Development and Reform Commission works jointly with relevant departments in drafting the long and medium-term development plan on the basis of soliciting opinions from all sides, and then reports to the State Council for approval and implementation. Large automobile enterprises groups draft their respective development plans in accordance with the long and medium-term plan.

Article 6. Large automobile enterprises groups refer to those having a unified plan, independent development of products, own product trademark and brands, and integrated system of sales, service and management, and market shares of automobile products made by their core enterprises, wholly-owned subsidiaries, enterprises with a controlling share and Sino-foreign joint ventures exceeding 15 percent, or annual sales revenue of complete vehicles exceeding 15 percent of the total of the sector. They can draft their own development plan as large automobile enterprises groups, which shall be examined by the State Development and Reform Commission for implementation.

Chapter 3.   Technological Policy

Article 7. Persisting in a combination of technology import with independent development. Following and studying the world advanced technology and making active efforts in international co-operation and developing advanced and suitable technology with China's own intellectual property right (IPR). Products with imported technology should be competitive globally and be in keeping with the need of the development of compulsory requirements of international automobile technological standards. Products based on independent development shall be close to the international technological level and participate in international competition. The State supports R&D activities in conformity with the technological policy in term of taxation policy.

Article 8. The State directs and encourages development of energy-saving and environmentally-friendly vehicles with small displacement. The automobile industry should actively carry out research and industrialization activities in electric power and new power such as vehicle-used battery in accordance with the State energy structure readjustment strategy and requirements on displacement standards, with focus on mixed power automobile technology and diesel engine technology for passenger cars. The State shall take measures in terms of scientific and technological research, technical innovation, industrialization of new technology and policy environment to promote production and use of mixed-power vehicles.

Article 9. The State supports research and development of new fuel for vehicle use such as ethanol, natural gas, mixed fuel and hydrogen, and encourages automobile production enterprises to develop and manufacture new-fuel vehicles.

Article 10. The automobile industry and related industries should attach importance to the development and application of new technology and fuel economy of motor vehicles. The average fuel consumption of new passenger vehicles should be reduced by more than 15 percent by 2010.

A public announcement system on fuel consumption for automobile products will be established on the basis of relative compulsory requirements on energy saving technology standards.

Article 11. To make an active study of vehicle-use new materials such as light materials, recoverable materials, and environmentally-friendly materials. The State will work out requirements on the bottom utilization ratio of recycled materials.

Article 12. The State supports research, development and production of automobile electronic products, boosts the automobile electronic industry, and speeds up application of electronic and information technology in automobile products, sales and logistics services, as well as auto production enterprises, so as to push the development of the automobile industry.

Chapter 4.   Restructuring

Article 13. The State encourages development of automobile enterprises groups and forming a new pattern of competition. The country will optimize and upgrade automobile industrial structure by strategic restructuring among enterprises on the basis of market competition in integration with macro control.

Strategic restructuring is aimed at supporting automobile production enterprises to organize large groups by asset restructuring, encouraging the founding of enterprises alliances in a co-operation form of complementation of advantages and resources sharing in order to shape up a production pattern of co-ordinated development of large automobile enterprises groups, enterprises alliances and special-purpose vehicle production enterprises.

Article 14. Complete vehicle production enterprises should raise the level of specialized production in the restructuring, and readjust their internal parts and accessories production units into independent specialized automobile parts production enterprises gradually for serving the whole society.

Article 15. Enterprises alliances should carry out all-round co-operation in product research and development, production and sales services, giving stress to readjustment of product mix, optimizing allocation of resources, lowering operation cost, economies of scale and intensive development. Enterprises joining one alliance should not take part in another one at the same time in a bid to consolidate the stability and market position of enterprises coalition. The State encourages enterprises alliances to establish an asset-based economic entity. A co-operation and development plan concerning newly-launched auto production enterprises and production projects involving automobile products under other items of enterprises alliances should follow related stipulations of the policy.

Article 16. The State encourages automobile and motorcycle production enterprises to undertake international co-operation, bring comparative advantages into play, and participate in international industrial division of labour; supports large automobile enterprise groups to co-operate with foreign automobile groups to undertake merger and restructuring of automobile production enterprises at home and abroad, and expand market operation in order to go with the trend of globalization of automobile production.

Article 17. To establish a withdrawal mechanism for complete vehicle and motorcycle production enterprises. A special public announcement will be made for automobile enterprises (including refitted vehicle production enterprises), which cannot maintain normal production and operation, and they cannot transfer their automobile and motorcycle production qualification to other enterprises and individuals, which are not engaged in the automobile and motorcycle production. The State encourages such enterprises to shift their production to special-purpose vehicles and automobile parts and components, or conduct restructuring in co-operation with other automobile production enterprises. Auto production enterprises are not allowed to trade their production qualification, and production enterprises going bankrupt will be deprived the right of being listed in the announced catalogue at the same time.

Chapter 5.   Access control

Article 18. To draft Administration Rules on Road Motor Vehicles. Governmental functional departments undertake management of such links as designing, manufacturing, certification, registration, examination, defaults control, maintenance and repair, abandonment and recovery. The management should have clear definition of responsibility and power, and be open in procedures, and convenient in operation and for social supervision.

Article 19. To draft technical compulsory requirements concerning safety, environmental protection, energy saving and anti-theft. All road motor vehicles shall implement unified technical compulsory requirements, which should be in keeping with the conditions in China and such international requirements on motor vehicles in order to promote technical progress of the automobile industry. Road motor vehicle products, which are not in conformity with the technical compulsory requirements, are not permitted to be put into production and on sale. Farm transport vehicles are restricted to run on highways under the third grade (including the third grade), but must follow relevant technical compulsory requirements.

Article 20. To establish a unified access system for road motor vehicle production enterprises and products in accordance with this policy and the State certification recognition system. Road motor vehicle products, which are in conformity with the stipulations of the access management system, relevant laws and regulations and technical compulsory requirements, and have passed the compulsory product certification system, are listed in the Announcement of Road Motor Vehicle Production enterprises and Products, which is jointly issued by the State Development and Reform Commission and the State Quality Inspection Administration. Products listed in the announcement must be labelled with the China compulsory certification (3C) mark. Imported vehicles and vehicles assembled with imported vehicle bodies are not allowed to substitute locally-manufactured products for certification procedures, and products assembled illegally and those infringing IPR are banned from market access.

Article 21. Public Security and traffic administration departments undertake vehicle registration in accordance with the Announcement of Road Motor Vehicle Production Enterprises and Products and the 3C mark.

Article 22. Relevant governmental functional departments should work out requirements for access of enterprise production by following the product classification for such products as motor vehicles, farm transport vehicles and motorcycles on the basis of the access control system, and undertake dynamic management of production enterprises and products, and those which are not in conformity with the requirements will be cancelled from the name list of the Announcement of Road Motor Vehicle Production Enterprises and Products. The requirements on access for enterprise production cover such areas as capability in product design and development, and product production facilities, consistency of product production and quality control capability, product sales and after-sales capability.

Article 23. Certification and inspection bodies for road motor vehicle products are designated by the State Quality Inspection Administration upon consulting with the State Development and Reform Commission, and carry out certification and inspection work according to the concrete regulations on the market access control system. The bodies shall be the third party, and are not allowed to have a relationship of interest with the automobile production enterprises in terms of assets and management, and conduct double inspection and fee collection of the same product. The State supports standardized development of inspection bodies for motor vehicles, motorcycles and key parts with a third-party.

Chapter 6.   Trademark and brand

Article 24. All motor vehicles, motorcycles, engines and parts production enterprises should conscientiously strive for enterprise growth and brand-name product development, while making active efforts in development of products with China's own IPR, attach importance to protection of IPR, and work hard to raise the reputation of enterprise brands and safeguard the image of enterprise brands in various production and business activities.

Article 25. All automobiles, motorcycles, engines and parts production enterprises should register their own trademarks and service trademarks in accordance with the Trademark Law. The State encourages enterprises to draft a brand development and protection plan and carry out a brand-name operation development strategy.

Article 26. Starting from 2005, all vehicles and parts assemblies manufactured in China are required to bear the registered trademarks and complete vehicles on the domestic market are required to bear, in a conspicuous place, trademarks, names of manufacturers and places of origin. If the trademarks already consist of a geographical mark of the production enterprises, there is no need to put a mark of places of origin. All brand-marketing dealers are required to place service trademarks in a conspicuous place at their service sites.

Chapter 7.   Product development

Article 27. The State supports all motor vehicle, motorcycle, engine and parts production enterprises to establish product R&D bodies, and foster capability of product innovation and independent development. Independent development can be adopted in multiple forms such as self-development, joint development and entrusted development. Investment in construction of scientific research facilities for enterprise independent development of products can be listed in pre-tax expenditure so long as it is in conformity with the related state taxation regulations for promotion of enterprise technical progress. The State will work out a policy to encourage enterprises to undertake independent development.

Article 28. Automobile production enterprises should work hard to grasp development technology of vehicle body, attach importance to development of production technology, and form development capability of chassis and engine. The State supports large automobile enterprises groups, enterprise coalitions and automobile parts production enterprises to develop advanced complete vehicle and general assembled parts and China's own IPR in industrial transformation.

Article 29. Motor vehicle, motorcycle and parts production enterprises should take an active part in key scientific and technological projects organized by the State, strengthen joint research with scientific research organisations and institutions of higher learning, and stress application and transfer of scientific research achievements.

Chapter 8.   Parts production and associated industries

Article 30. Automobile parts enterprises should follow the trend of international industrial development, and take an active part in the product development of main machine factories. A systematic development capability will take shape in key automobile parts manufacturing, and an advanced product development and manufacturing capability will be formed in ordinary parts production in order to satisfy the need of both home and overseas markets and to try to enter the international automobile parts procurement system.

Article 31. To draft a special development plan for parts production, undertake classification and support for automobile parts and components production, directing social funds to flow into automobile parts production and help parts production enterprises with comparative advantages to form specialised and industrialised production and module-type supply capability. The State gives preferential treatment to parts production enterprises which can supply parts to several independent complete vehicle production enterprises and participate in the international automobile parts procurement system in the areas of technical import and transformation, financing, merger and restructuring. Complete vehicle production enterprises should work step by step to start public procurement of parts and components by E-commerce and on-line purchase.

Article 32. According to the requirements of the automobile industry development plan, production enterprises in automobile-related areas such as metallurgy, petrochemicals, chemicals, machinery, electronics, light industry, textiles and building materials should attach importance to such products as metal materials, machinery and equipment, industrial die, automobile electronics, rubber, engineering plastics, textile products, glass, and vehicle-use oil products, improve product quality and raise market competitiveness, in order to achieve simultaneous development with the automobile industry.

Priority will be given to iron and steel enterprises for realization of a self supply of plate for passenger cars, establishment of specialized die design and manufacturing centres to raise the capability of automobile die designing and manufacturing, technical progress and product upgrading of petrochemical enterprises to bring quality of oil products and lubricant oil up to the advanced world level and satisfy the need of the development of the automobile industry.

Chapter 9.   Marketing network

Article 33. The State encourages motor vehicle, motorcycle and parts production enterprises, financial and service trade firms to develop automobile service trade by learning from internationally advanced methods of marketing, management experience and service trade concept for automobile products.

Article 34. In order to protect the legal right of automobile consumers and help them obtain good service in the process of purchase and operation, both domestic and foreign automobile production enterprises, which conduct sales of automobile products, manufactured by themselves, on China's market, must establish a brand marketing and service system for their own products at an early date. The system can be founded with their own investment by domestic or foreign automobile production enterprises or entrusted automobile traders in the form of investment. Investors from home and abroad, after obtaining the authorization from auto production enterprises and completing necessary procedures according to related regulations, can undertake brand marketing and after-sales activities of domestically manufactured or imported motor vehicles in China.

Article 35. Starting from 2005, passenger vehicles made by automobile production enterprises should undertake brand marketing and service, and starting from 2006, all types of motor vehicles will conduct brand marketing and service.

Article 36. To abolish the existing approval management method for the sales right of passenger cars. The Ministry of Commerce will work in co-operation with the State Administration for Industry and Commerce and the State Development and Reform Commission and other related departments to draft the implementation rules for management of brand marketing for automobile products. Automobile traders should undertake business activities within the scope as approved by the industrial and commercial administration departments. Of this, the business scope of brand marketing dealers of passenger vehicles with nine seats or less (including second-hand vehicles) will be approved and announced to the public by the State industrial and commercial administration departments according to the related policy. Business licenses for brand marketing dealers will be unified into brand marketing of motor vehicles.

Article 37. Motor vehicle and motorcycle production enterprises should strengthen the sales management of the marketing network and standardize the service of maintenance and repair. They have the responsibility to announce to the public the cessation of the production of certain vehicle models, and take positive measures to ensure supply of reliable fittings for after-sales service and maintenance and repair within a reasonable period of time, make regular announcements of authorized and cancelled lists of brand marketing outlets or maintenance and repair enterprises; and refuse to provide products to dealers with no authorization for brand marketing and business conditions.

Article 38. Motor vehicle, motorcycle and parts dealers should abide by related state laws and regulations in their business activities. Departments concerned will punish according to the law those selling vehicles, which are banned by the State and have halted sales as listed in the announcement; making forgery and infringement of other's factory name, legal address, certificate of quality inspection, and with no authorized right granted by auto production enterprises, continuing the original brand in automobile and fitting sales and maintenance and repair services even after the authorized right is withdrawn, as well as those selling sham and shoddy auto fittings to customers in repair service.

Article 39. Motor vehicle production enterprises should take into consideration the general interest of manufacturing and sales service links as well to improve comprehensive economic efficiency. Transferring right of sales links to another impersonal entity is regarded as a major change in the feasibility study report in the original investment project, and should be approved by the Ministry of Commerce and reported to the original project examining and approving unit for approval.

Chapter 10.   Investment management

Article 40. To reform the examination and approval management system for investment projects of motor vehicle production enterprises to undertake two forms - registration system for the record and approval system - in accordance with the principle of benefiting enterprises in independent development and government in macro control.

Article 41. Investment projects under the registration system for the record:  

1. Expansion of production capacity of the same types of product and increase varieties by the existing motor vehicle, farm transport vehicle and vehicle engine production enterprises with self-raised funds, including launching of new production units of the same product in other places with non-independent legal corporate position.

2. Investment in production of motorcycle and motorcycle engine.

3. Investment in production of parts and accessories of motor vehicles, farm transport vehicles and motorcycles.

Article 42. The projects in the first of the investment projects undertaking the registration system for the record should be reported to the State Development and Reform Commission for the record by the investment administration department of the provincial government or enterprises groups under unified planning of the central government; and those in the second and third sections of the investment projects should be reported to the investment administration department of the provincial government for the record. For contents of the record please see Appendix 2.

Article 43. Investment projects under the system of approval:

1. Launching of new motor vehicle, farm transport vehicle and vehicle engine production enterprises, including launching of a new production enterprise in other places by the existing automobile manufacturers with independent legal person position.

2. The existing automobile manufacturers producing other types of complete vehicle products.

Article 44. Investment projects under the system of approval should be reported to the State Development and Reform Commission for examination by the governmental administration department for investment at provincial level or enterprises groups under unified planning of the central government. Of this, investment projects for production of special-purpose vehicles should be reported to the State Development and Reform Commission for the record by the governmental administration department for investment at provincial level after examination and approval, and new Sino-foreign joint venture passenger car projects should be reported to the State Development and Reform Commission for examination and approval.

Article 45. Upon approval, projects involved in the development plan of large automobile enterprises groups should be carried out by enterprises themselves.

Article 46. Starting from January 1, 2006, approval for new farm transport vehicles production enterprises will be suspended.  

Article 47. New investment projects should comply with the following conditions:

1. New motorcycle and motorcycle engine production enterprises should have the capability and conditions for technological development, with total investment not less than RMB200 million.

2. Special-purpose vehicle production enterprises should have registered capital not less than RMB20 million, and boast the capability and conditions for product development.

3. Investment projects producing other types of complete vehicle products should have total investment not less than RMB1.5 billion (including the original fixed assets and tangible assets), asset/liability ratio standing at less than 50 percent, and bank rating of AAA.

4. Automobile production enterprises to produce passenger car and passenger vehicle products under another category should have the ability of batch production of automobile products, and after-tax profits exceeding RMB1 billion in the latest three years (presenting a certificate on taxes), asset/liability ratio standing at less than 50 percent, and bank rating of AAA.

5. New investment projects launched by automobile production enterprises should have total investment not less than RMB2 billion, including self-raised funds not less than RMB800 million, product research and development organisations with investment not less than RMB500 million. New investment projects of passenger vehicle and heavy-duty truck production enterprises should have an engine production line for the complete vehicle. New investment projects of vehicle engine production enterprises should have total investment not less than RMB1.5 billion, including self-raised funds not less than RMB500 million, establishment of R&D organisations, and product quality meeting the rising standards of the State technical compulsory requirements.

6. Production scale of the following newly launched investment projects are required to be:

- Heavy-duty truck, to be not less than 10,000 vehicles;

- Passenger vehicle, to be not less than 50,000 for models with four cylinders, and to be not less than 30,000 for models with six cylinders.

Article 48. Chinese partners in Sino-foreign joint venture production enterprises of complete vehicle, special-purpose vehicle, farm transport vehicle and motorcycle should control a share of not less than 50 percent. The legal person of the Chinese party must have the comparative controlling share and more than the total of the foreign counterparts when a listed company with limited liabilities of complete vehicle, special-purpose vehicle, farm transport vehicle and motorcycle is selling the corporate share to the public. A foreign company can launch joint ventures not exceeding two (including two), which produce the same types of complete vehicles (passenger vehicle, commercial vehicle and motorcycle).

Foreign automobile manufacturers will be allowed to have more than two joint ventures in China if they join forces with their existing joint venture's Chinese partners to merge other companies in China. If a foreign enterprise with legal person qualification controls a majority stake in another enterprise, they will be treated as one company in China.

Article 49. Both Chinese and foreign automobile production enterprises launching export-oriented automobile and vehicle engine projects in an export processing zone are not under the constraints of the policy, but should report to the State Council for examination and approval under a special category.

Article 50. Various parties of Sino-foreign joint venture automobile production enterprises should report to the original approval department for necessary procedures for the extension of the co-operation term, and alteration of share proportion or foreign shareholders. 

Article 51. Projects, which have not obtained approval notice, are not permitted to go through procedures for land requisition with the land administration department, loans from the State-owned banks, tax exemption with the customs, stock floating and listing with the securities regulatory commission, and enterprise registration with the administration department for industry and commerce. Relevant state departments are not allowed to handle any application for production enterprises and access of product.

Chapter 11.   Import management

Article 52. The State supports automobile production enterprises to increase the localization production capacity of automobile products, stimulate the technical progress of automobile parts enterprises, and boost automobile manufacturing.

Article 53. Automobile production enterprises, which produce vehicles with complete vehicle features with imported parts should report to the Ministry of Commerce, the General Administration of Customs and the State Development and Reform Commission, and all the imported parts for the production of the vehicles must be declared at the customs for taxes for the convenience of effective management by related departments.

Article 54. Levying taxes on imported complete vehicles and parts and accessories by strictly following the tariff rate to prevent tax evasion and losses: Related State functional departments shall conduct inspection and examination of such links as application of quota, declaration on import, and product access.

Article 55. The definition scope of complete vehicle features covers vehicle body general assembly (including driving cab), engine general assembly, transmission general assembly, drive axle general assembly, non-drive axle assembly, vehicle frame assembly, gear system and brake system.

Article 56. The definition scope of general assembly of motor vehicle covers CKD, or general assembly or systems separating step by step into key parts. Imported key parts reaching or exceeding the designated quota are regarded as shaping of complete vehicle features.

Article 57. Following are the conditions of complete vehicle features according to the definition scope of complete vehicle features:

1. Vehicles made with two big general assemblies of imported vehicle body (including driving cab) and engine;

2. Vehicles made with one of the two big general assemblies of imported vehicle body (including driving cab) and engine and three other general assemblies;

3. Vehicles made with five other imported general assemblies except the two big general assemblies of vehicle body (including driving cab) and engine;

Article 58. The State designates four coastal ports - Dalian New Port, Tianjin New Port, Shanghai Port and Huangpu Port - and two land ports - Manzhouli and Shenzhen (Huanggang), as well as the Xinjiang Alataw Pass (which handles import of complete vehicles for use in Xinjiang Uygur Autonomous Region and vehicles originally manufactured in the Commonwealth of Independent States (CIS)) to be ports handling import of complete vehicles. Imported complete vehicles must enter China via the above ports. Starting from 2005, all bonded zones in the importing ports are not permitted to store motor vehicles imported for sales on the domestic market.

Article 59. The State bans the import of second-hand vehicles and motorcycles and their parts in the forms of trade and donations, and dismantling and renovation of general assemblies and parts of old vehicles imported in the name of iron and scrap steel and scrap metals. Repairing products from the overseas or for re-export can be conducted within the export processing zone, but dismantling and the renovation of old motor vehicles and motorcycles are not permitted.

Article 60. Concrete administration rules on import of complete vehicles and parts will be drafted by the General Administration of Customs in co-operation with other related departments, and then reported to the State Council for approval and implementation. Imported vehicles as samples for inspection and exhibits for exhibitions held in China should follow the administration rules on temporary import and export commodities of the customs in management.

Chapter 12. Automobile consumption

Article 61. To foster an automobile market with private consumption as the main player, improve the environment for use of motor vehicles, and safeguard the right of automobile consumers. To direct consumers to purchase and use motor vehicles with low energy consumption, low pollution, small displacement, new energy and new power in order to strengthen environmental protection. To achieve a co-ordinated development of the automobile industry with urban transport facilities, environmental protection, energy saving and associated industries.

Article 62. To establish a national unified and open automobile market and management system, in which various local governments should encourage fair competition among motor vehicles made by different places on the local market. They are not allowed to carry out any discriminative policy or measure which may lead to discrimination against non-locally manufactured automobile products. All restrictions and extra conditions, which are not in keeping with the state regulations and laws, and requirements of this policy in automobile purchase, use and disposal of property right should be revised or abolished.

Article 63. The State drafts and announces unified items and standards for all automobile-related administrative charges and government-type fund charges, and standardized links of automobile registration and various charges collected by the government in the process of use. Various localities are not permitted to add new administrative charges and government-type fund items and fees in the links of automobile purchase, registration and operation. If there is the need for new charges, they should report for approval according to the law, regulations or approved documents of the State Council. Except charging items stipulated by the State, no departments are allowed to collect any compulsory non-operational service charges from automobile consumers. In cases where regulations have been violated and charges have been forced on automobile consumers, the consumers have the right to report and refuse to pay the fee.

Article 64. To strengthen management of operation-type service charge. Operation-type service charge concerning repair and maintenance, non-statutory insurance and parking fee for motor vehicles in the process of automobile operation should be collected by service units on the basis of consumers who are willing to accept the service. Charges and charging standards in the competitive sectors such as repair and maintenance shall be decided by service operators according to the market rule. Charging standards and management methods of such sectors as automobile parking which control resources is decided and announced as well as supervised by price administrative departments of the State Council or authorized province-level price administration bodies. Service operators shall erect notice boards on charges in parking places for the supervision by the public.

Establishment of highway toll stations must follow the related state regulations. All toll stations should publicise the basis of the charging and the charging standards in a conspicuous place at the toll stations.

Article 65. To make active efforts in developing automobile service trade, and promote spending on motor vehicles. The State supports development of automobile credit consumption. Financial institutions engaging in automobile financing should improve their service, and auto credit mortgage method. Consumers are permitted to obtain automobile consumption loans with their purchased motor vehicles as objects of pledge under the precondition of ensuring credit safety. Qualified enterprises are permitted to set up special service non-banking financial institutions, and foreign companies can undertake automobile consumption credit and rental services. The country will work for expansion of auto-related services such as rental, driving training, storage and transportation and vehicle aid, and development of an information and statistics system for the sector. It will promote development of an automobile on-line information service and e-commerce, and support qualified departments to establish a consumers' credit information system to achieve information sharing.

Article 66. The State encourages circulation of second-hand vehicles. Related departments shall make active efforts to create conditions, and unify and standardize charging forms on transaction of second-hand vehicles, provide convenience for second-hand vehicle dealers in trading, and foster and develop the second-hand vehicle market.

To establish an application assessment system for second-hand vehicles on a voluntary basis. With the exception of vehicles of the State-owned assets, transaction prices of second-hand vehicles should be decided by both the buyers and sellers; the buyers and sellers can entrust an intermediary body for assessment on a voluntary basis for reference of trading; and no units and departments are permitted to force, or force in a disguised form, an assessment of the vehicle transaction.

Article 67. Enterprises undertaking second-hand vehicle business should boast a relative amount of funds, place of business and special technical personnel, and then conduct business upon approval and registration of administrative departments for industry and commerce. Automobile dealers should provide true information for vehicle buyers when selling second-hand vehicles, and not hold back any facts or cheat. All vehicles on sale must have a Motor Vehicle Registration Certificate and a Motor Vehicle Driving license, as well as an effective annual inspection certificate produced by public traffic and environmental protection administration departments. Dealers shall accept return of second-hand vehicle from buyers when they cannot transfer the registration and acceptance registration unconditionally, and take relative responsibility.

Article 68. To improve the automobile insurance system. The insurance system should be based on consumers and the degree of risk of insurance on vehicles to collect premium, and promote diversification of automobile insurance policies and market-oriented premium rate.

Article 69. People's governments of various cities shall conduct comprehensive study of policy and methods of the need of transportation and balanced development among transport sources such as ways of transport and urban roads and parking facilities; and a public hearing system for drafting the traffic control system of non-temporary driving restricting zone.

Article 70. People's governments of various cities shall make active efforts in planning and construction of parking places and facilities by following the principle of ensuring smooth traffic flow and convenient parking, and promoting automobile consumption, according to economic development of the city; drafting policy on land use for parking places and encouraging investment, and encouraging individual, collective and foreign business to invest in construction of parking facilities. In order to standardise construction of urban parking facilities, the Ministry of Construction shall draft relative standards and requirements for construction of parking facilities in residential and commercial areas, public places and entertainment places.

Article 71.  The State departments concerned shall draft and promulgate unified standards for automobile emission, which are divided into the operational standards or expected standards. If the expected standards are to be turned into operational standards, there should be an announcement of the date of implementation one year ahead of the time.

Article 72. To implement a national unified system for registration and inspection of motor vehicles. Various localities are not permitted to draft their own administration methods. Public traffic administration departments are not allowed to ask for other certificates except certificates (such as motor vehicle owner's ID, certificate on source of the vehicle, producer's quality certificate of domestically manufactured motor vehicles or import certificate of motor vehicles, relevant tax documents, and premium certificate on legal insurance) required by related state laws and regulations, regulations of the State Council or authorized regulations. Various-level people's governments and related department are not permitted to require public traffic administration departments to increase inspection items of other certificates in registration and annual inspection. If the automobile consumers provide documents in conformity with the State regulations, public traffic administration departments are not permitted to refuse to conduct procedures of registration and annual inspection for the automobile consumers.

Article 73. Public traffic and environmental protection administration departments shall draft differential management methods according to the types of automobile products, purpose of use and conditions. New motor vehicles and non-operational vehicles are inspected infrequently, and old vehicles are inspected more frequently and the items of inspection are greater.

Article 74. The Motor Vehicle Registration Certificate issued by public traffic administration departments can be used as a property certificate of the vehicle owners in automobile rental and consumption credit, and trading business of second-hand vehicles. The Motor Vehicle Registration Certificate must be transferred at the time of vehicle trading.  

Chapter 13.   Others

Article 75. Automobile industry organisations, intermediary bodies and other social organisations shall strengthen self construction and sense of service, and play the role as an intermediary body, while actively participating in international exchange activities, play the role as a bridge and links between the government and enterprises, and promote development of the automobile industry.  

Article 76. Investors from the Hong Kong Special Administrative Zone, the Macao Special Administrative Zone and Taiwan investing in the automobile industry in the mainland of China shall follow related stipulations of this policy.

Article 77. Before the announcement of the compulsory requirements on technical standards of road motor vehicle products, the state compulsory standards shall be implemented temporarily.

Article 78. The implementation of the policy shall go into effect as of the date of promulgation, and the right to interpret the policy resides in the State Development and Reform Commission.

Appendix 1.

Word explanation:

1. Road motor vehicles -- Various motor vehicles and trailers with at least two wheels and maximum designed speed exceeding six kilometres per hour, mainly including motor vehicles, farm transport vehicles, motorcycles and other types of road transport machinery and trailers, not including vehicles running on rails, as well as various non-road motor machinery and tractors for agriculture, forestry and engineering production.

2. Motor vehicle, special-purpose vehicle, farm transport vehicle and motorcycle - motor vehicle listed in the Automobile Industry Development Policy refers to vehicles of the State standards (GB/T 3730.1-2001) 2.1 definition, including complete vehicle and special-purpose vehicle. Special-purpose vehicle refers to vehicles of the State standards (GB/T 3730.1-2001) 2.1.1.11, 2.1.2.3.5, 2.1.2.3.6 definition. Farm transport vehicle refers to vehicle of the State standards (GB18320-2001) definition. Motorcycle refers to vehicles of the State Standards (GB/T5359.1-1996) definition.

3. Product category - detailed classification of passenger vehicle, commercial vehicle and motorcycles based on the definition of the State standards, including:

(1) Detailed classification of passenger vehicles:

- Passenger car: 2.1.1.1 - 2.1.1.6 in the State standard GB/T3730.1-2001

- Other types of passenger vehicles (including multi-purpose vehicle (MPV) and sports vehicle): 2.1.1.7-2.1.1.11 in the State standard GB/T3730.1-2001

(2) Detailed classification of commercial vehicles:

- Bus type: 2.1.2.1 in the State standard GB/T3730.1-2001

- Semi-trailer and truck type: 2.1.2.2, 2.1.2.3 in the State standard GB/T3730.1-2001

4. New motor vehicle, farm transport and vehicle investment project - newly launched complete vehicle, special-purpose vehicle, farm transport vehicle and vehicle engine production enterprises (including Sino-foreign joint venture enterprises), and the existing complete vehicle, special-purpose vehicle, farm transport vehicle and vehicle engine production enterprises (including Sino-foreign joint venture enterprises) which make changes in stake holding by legal person and launch new production bases with independent corporate right in other places. Other places refer to places outside the city and county where the enterprises are located.

5. Total investment in the project - The aggregate of all the investment needed by the project in fixed assets (including the original and newly-added fixed assets), tangible assets and working funds.

6. China's own intellectual property right (IPR) - Products made based on independent development, joint development and entrusted development, and the enterprise has the product IPR, and the right of improvement and recognition and technological transfer of the product.

7. Auto production enterprises - Complete vehicle and special-purpose vehicle production enterprises (including Sino-foreign joint venture and co-operative enterprises) with legal registration in China by going through examination and approval procedures according to the State regulations.

8. Domestic market share - Proportion of sales of complete vehicles of one group (enterprise) in the national total sales of motor vehicles.

Appendix 2.

Contents of registration system for the record:

Contents of the system:

1. Basic information, legal address and name of legal representative of auto production enterprises or project investors, and performance and bank credit rating of the enterprises in the latest three years.

2. Necessity to launch the investment project and analysis of both the domestic and overseas market: Analysis of product technological level and technological sources (explanation on product IPR); sources of project total investment, registered capital and funds; production (business) scale, contents of project construction; and arrangement of construction method and construction process.

3. Basic information of foreign partner and co-operation partner of Sino-foreign joint venture, co-operative enterprises, including foreign business's name, registration country, legal address, legal representative and nationality; information and performance of investment by foreign partner in China; Proportion of shares held by Chinese and foreign sides in the investment project, form of investment and sources of funds, and co-operation term of joint venture.

4. Contracts on technical transfer by foreign side, and technical co-operation.

5. Economic efficiency analysis on the investment project.

6. Environmental protection, land and bank commitment documents, and approval documents for construction by local governments.

7. Affiliated conditions and preferential policy by local governments.