System limits car exporters
By Dai Yan (China Daily)
Updated: 2006-06-29 08:48

China will limit the number of domestic companies able to export cars next year, an official from the Ministry of Commerce said.

Zhang Ji, deputy director of the mechanics, electronics, and hi-tech industry department under the China's Ministry of Commerce, said the ministry is drafting a new system to rectify automobile export orders. It will come into effect in January.

Under the system, the government will limit the number of companies that can export vehicles through the use of export licences, he told an auto industry forum in Beijing.

The system is aimed at protecting firms from vicious competition.

It is expected that only companies with a large enough export volume will be awarded export licences under the new ruling, as smaller companies usually use price-cutting strategies to enter foreign markets, which hurts the nation's interest.

China's automobile output makes up 10 per cent of the world's total while its export volume accounts for less than 1 per cent of the world's total.

In recent years, however, the number of cars being exported is increasing rapidly, as Chinese automobile manufacturers are facing an increasingly competitive market at home. Producing so many vehicles,  they need to export worldwide.

China exported 62,628 automobiles in the first quarter of this year, up 139 per cent from the same period in the previous year, according to statistics from the Ministry of Commerce.

The total value amounted to US$647 million, an increase of 204.5 per cent year-on-year.

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