A government economy boosting plan, unveiled in China on Wednesday, includes measures to boost vehicle sales.


The government also said it would push for consolidation in the steel industry whichh now faces over-capacity as global prices fall.


The State Council said it would temporarily halve sales tax on cars with engine sizes under 1.6 litres to 5% from 20 January until the end of the year.


Owners of high-emission vehicles trading up to more fuel-efficient and cleaner models will get one-off cash subsidies totalling RMB5bn (US$732m), Reuters reported.


“To speed up the consolidation and revival of the auto industry, China must implement an active policy to boost consumption,” the council said in a statement.

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Falling consumer confidence slowed passenger car sales growth 7.3% in 2008, the first year of single-digit growth in over 10 years.


The council added it hoped the measures would also improve Chinese automaker competitiveness while boosting own-brand models plus vehicle and parts exports.


It would also set up a RMB10bn fund to promote new technology, including renewable energy, over the next three years, while supporting the eventual volume production of electric vehicles, the report added.