China looking to car sales as it seeks to get faltering economy back on track

The guidelines published on Friday by seven government departments, led by the industry ministry, set a target of selling around 27 million new vehicles this year, a 3 per cent increase on the 2022 figure.

In particular, it set a goal of increasing sales of electric cars to approximately 9 million units this year, a 30 per cent increase.

The plan describes the industry as a vital pillar of the world’s second biggest economy, but warns that “international uncertainties and instability are increasing” and identifies the three main domestic pressures it is facing as “shrinking demand, supply disruption and weakened expectations”.

China, the world’s largest car sales market, saw 26.86 million units sold last year, up 2.1 per cent year-on-year,according to data from the China Association of Automobile Manufacturers.

New energy vehicles sales reached 6.89 million units last year, an increase of 93.4 per cent, according to the industry body.

The new plan also said tax incentives will be offered to boost sales of new energy vehicles and more charging infrastructure will be created.

It also calls on local authorities not to impose any further restrictions on car sales and encourages regions that impose quotas for the number of new cars that can be sold to increase the limit.

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The plan also sets out measures to increase exports, boost second-hand car sales, cultivate a “strategic alliance” of companies to safeguard the auto supply chain and sets a goal of increasing the value of the car manufacturing industry this year by 5 per cent.

It will also support efforts to develop new technologies such as car chips, solid-state batteries, operating systems and high-precision sensors.

In July, the country’s exports of cars rose 35.1 per cent from a year ago to 392,000 units while domestic sales declined 1.4 per cent to 2.39 million units, according to the China Association of Automobile Manufacturers..

But that month automobile industry profits dropped by 30 per cent year-on-year.

The action plan also sets out a goal for the automotive industry to operate “within a reasonable range” next year, with further improvements in quality and efficiency.

The plan is the latest in a series of efforts to revive the country’s economy, which is recovering slowly and risks missing Beijing’s annual growth target of 5 per cent for this year.

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Beijing has said that the country’s road to post-Covid economic recovery will not be smooth and will sometimes feature twists and turns.

A 20-point package to boost consumer spending unveiled in early August prioritised efforts to get the country’s 1.4 billion population to splash out on big-ticket items such as houses and cars.