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Regions will be encouraged to increase annual car purchase
quotas and efforts will be made to support sales of second-hand
vehicles, said a statement on automobile consumption published
by 13 government agencies including state planner National
Development and Reform Commission.
As China's post-pandemic economic recovery slows, policymakers
have identified the country's automobile sector as a key lever
which they want to use to shore up growth. In June, they
unexpectedly extended a purchase tax break on new energy
vehicles (NEVs) until 2027.
But domestic consumer demand has remained weak and the world's
largest auto market has been grappling with a price war
triggered by Tesla in January that has since spread to more than
40 brands offering discounts on their vehicles.
In March, a top industry association urged the auto industry and
authorities to cool the 'price-cut hype' to ensure the healthy
and stable development of the industry.
The Friday statement aimed at encouraging automobile consumption
echoed this. "Localities must not roll out protectionist
policies and avoid vicious competition," it said.
A separate statement on supporting sales of electronics products
said authorities would encourage scientific research institutes
and market entities to actively apply domestic artificial
intelligence (AI) technology to improve intelligence levels of
electronic products.
The measures echoed similar ones announced by authorities in
recent months and failed to boost the market, with shares in
China’s automobiles index down 0.3% and the electronics index
falling 0.6% against a 0.1% rise in the benchmark index.
"These supports will unlikely significantly boost consumption
when people are still generally reluctant to spend as they lack
confidence in the economic recovery," UBS said in a note on
Friday. Investors have said they are disappointed by China’s
weak second quarter growth and want to see stronger stimulus,
with some pinning their hopes on the Politburo meeting later
this month.
(Reporting by Qiaoyi Li, Liz Lee and Brenda Goh; Additional
reporting by Jason Xue; Editing by Tom Hogue and Muralikumar
Anantharaman)
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