The Xinhua News Agency reports, once again, that the Chinese government wants to tighten its approval criteria on automotive projects initiated by local governments in an effort to prevent possible oversupply.
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“Some local governments are currently very keen on building automobile parks and factories, which may have a negative impact on the industry,” Zhu Hongren, a division head at the Bureau of Economic Operation under the State Economic and Trade Commission, or SETC, was quoted as saying.
A number of municipal authorities have been active in attracting investment in China. Shanghai for example, plans to set up an industrial park specifically for the automotive industry with several car manufacturing operations.
Observers have noted the rush of vehicle makers into China in recent years, attracted by the country’s massive market growth prospects. However, Beijing is thought to be concerned that the Chinese industry is developing in a fragmented way – encouraged by ambitious regional authorities.
The Chinese car market boomed in 2002 amid intense price competition precipitated by the country’s entry into the WTO.
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