According to a report carried on the Business Daily Update, China will tighten regulations on the construction of vehicle manufacturing projects amid concerns about overproduction. The report cited as source the State Economic and Trade Commission official Zhu Hongren.

Zhu, who heads an SETC department responsible for coordinating industry, warned of a “price war” as domestic car production is expanded and new vehicle models are launched.

“Some local governments are currently very keen on building automobile parks and factories, which may have a negative impact on the industry,” Zhu said in the report.

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 ambitous regional authorities.

The Chinese car market boomed in 2002 amid intense price competition precipitated by the country’s entry into the WTO.