The Star reported that China should end preferential policies for automotive companies to curb over capacity in an industry where sales jumped 55% in August.
Mr Chen Bin a top official at China’s economic planning agency said that booming auto sales were leading to blind investment in the industry which could result in annual production capacity of over 31 million units by 2015.
Mr Chen said that serious overproduction capacity will lead to negative market competitiveness a loss in enterprise efficiency, factory stoppages and other problems.
He said that judging from our understanding of the situation as reported by local governments and related departments, production capacity will far outstrip market demand for the coming period.
Last year, China became the world’s largest auto market when over 13.6 million vehicles were sold. Sales have boomed this year, jumping 55.7% in August YoY as the government rolled out a new subsidy scheme for energy saving vehicles.
Mr Chen said that to curb overcapacity, local governments should stop pushing manufacturers to increase production and end preferential tax and land policies aimed at spurring production.
He said that the industry’s penchant for using preferential energy-saving policies to ramp up production of traditional automotive products should also be curbed.