China last month made the announcement that is removing from the list where foreign investment is encouraged, the automotive industry. The new set of rules are taking into effect on the 30th of January, China’s official Xinhua news agency said on Tuesday.
The regulatory change comes as the Chinese market has passed the sales boom. Sales went from a 42 percent rise in 2009, 34 percent in 2010 and to a 2.6 percent rise until January-November 2011.
The move resulted from excess capacity of the Chinese car manufacturing industry. Having more than 130 finished car manufacturers, Xinhua said.
To counteract the new over capacity of the industry the government has been controlling approval of new auto projects more strictly in the last years, the unnamed official told Xinhua.
They also said that their aim is to guide future foreign investments into projects with better return and market prospects. Highlighting energy saving and also environmentally friendly technology, high end equipment manufacturing, advanced materials among others.
The Chinese market was a life boat for the global automotive market in recent years. Companies like VW Group and GM that have seen slowed down sales in their home market. Have seen such a huge increase that now China is the biggest market for both companies.