China’s government has approved new measures designed to boost demand for new vehicles.

The China Daily newspaper reports that the State Council’s executive meeting – chaired by Premier Li Keqiang – agreed to stabilise and expand auto consumption, encourage local authorities to fine-tune restrictive measures regarding car purchases and raise the licence plate quota ceiling.

The report said promotion campaigns will also be carried out for vehicle purchases in rural areas and trading in used cars for new ones. In rural areas where conditions permit, residents will also be encouraged to buy trucks with a capacity no bigger than 3.5 tonnes and passenger cars with engines no bigger than 1.6 litres, the newspaper reported.

The Chinese authorities will also subsidise car purchases for people upgrading from gasoline-powered vehicles with a national emission standard of three or below to speed up the phasing out process.

Since the beginning of this year, policies introduced by the China’s central and local governments have stimulated demand in China’s auto market and lifted its recovery after the Covid crisis in the early part of the year.

According to the China Association of Automobile Manufacturers (CAAM), 2.57 million vehicles were sold in China in October, 12.5% ahead of last year.

In remarks at the State Council, Premier Li noted progress this year, but also warned that difficulties remain in restoring normal growth.

“At present, the prominent restraint on economic development lies in consumption as the main growth engine was seriously affected by COVID-19 earlier this year,” he said. “It has been picking up in the past few months, yet notable difficulties remain in restoring normal growth. We need to explore new highlights in consumption to spur domestic demand.”

See also: China sales rise 12.5% in October