China’s aim to further open up its aircraft and car manufacturing sectors will be beneficial for both local and foreign companies planning to increase their investments, said industry experts.
As part of the country’s broader opening-up push, China will phase out the 50 percent equity cap for foreign aircraft and car manufacturers in joint ventures in China, effective on July 28, according to a statement jointly released by the National Development and Reform Commission and the Ministry of Commerce on June 28.
“This is significant positive news. It will be beneficial for the local manufacturing industry and high-tech aviation companies to expand their investments in China. It will surely help to deepen the collaboration between foreign manufacturers and their Chinese counterparts,” said George Xu, CEO of Airbus China.
“Airbus values the significance of the China market, our largest market, and it also recognizes the manufacturing and innovation ability of the country. We hope to achieve a win-win situation together with China,” he said.
The manufacturing of planes for flying on trunk and regional routes, general aviation aircraft, helicopters and unmanned aerial vehicles will benefit from the relaxation in the equity cap restrictions, according to the statement. Before, China’s aviation industry had a high threshold for foreign investment access.
Meanwhile, the current 50 percent cap on foreign equity will be removed this year for companies that produce new energy vehicles and special-purpose vehicles, the statement said.
The limits will be canceled for commercial car producers in 2020 and for passenger car producers from 2022. Foreign carmakers will be allowed to have more than two Chinese joint ventures as well in 2022, according to the statement.
“In the long term, the move will help to build a powerful Chinese automotive industry, despite the fact that it may bring more benefits to foreign brands than Chinese ones at the initial stage,” said Dong Yang, executive vice-president of the China Association of Automobile Manufacturers.
Making the new negative list public is an important move to implement the central authorities’ arrangement for the opening-up strategy, relax market access to a great extent, and push forward high-level opening-up, the NDRC said.
“The new round of opening-up will provide new impetus for attracting more foreign investment, promoting market competition and raising innovation capability,” the commission said.