China will phase out the equity cap on automotive joint ventures by 2022, with the cap on manufacturers of new energy vehicles and special-use vehicles to be removed later this year, according to Beijing’s National Development and Reform Commission (NDRC).
The move will be welcomed by foreign OEMs with JVs in China and it takes some of the sting from accusations of protectionist practices that have been levelled at Beijing in the past.
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The relaxation also comes amid heightened trade tensions between the US and China, with new tariffs on a range of products potentially to be introduced on bilateral trade between the two nations at the end of May.
The equity cap that stops JVs from being majority owned by foreign companies will be removed for commercial vehicle producers in 2020 and passenger car producers in 2022. International carmakers will be allowed to have more than two joint ventures also.
The change follows President Xi Jinping’s recent remarks when he said China would scrap ownership limits “as soon as possible”.
Tesla is one company that could be an early beneficiary as it has been seeking to set up a wholly owned plant in Shanghai. Reuters noted that Tesla chief Elon Musk said last month China’s auto rules created an uneven playing field.
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By GlobalDataSee also: Beijing says will lower tariffs on car imports this year
