Foreign automakers may profit from smog--China Economic Net
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Foreign automakers may profit from smog
Last Updated:2013-01-25 00:00 | Shanghai Daily
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"In China, the level of development is outpacing the level of support infrastructure," Duncan said. "The past week may be the tipping point for the government to really concentrate on particular areas of change."

Shanghai and Beijing have rapidly expanded their Metro systems in recent years, and nine other Chinese cities have subway systems, with another 35 under construction or in planning. Nonetheless, it's not uncommon for new districts with homes for tens of thousands of residents on the outskirts of cities to be built with little access to public transport.

Public transportation

The State Council, or Cabinet, pledged earlier this month to support the development of less polluting urban transport and offer tax breaks and fuel subsidies for mass transit. The Cabinet said it wants public transport to account for 60 percent of motor vehicle use in towns and cities.

The government contributed to the worsening air quality by encouraging auto sales to boost consumption in the global financial crisis. Subsidies were extended for auto purchases and trade-ins by rural residents as part of its 4 trillion yuan stimulus package in 2009, the same year China surpassed the US as the largest vehicle market.

Now, the government is planning similar support to hasten the shift to cleaner cars. Beijing will soon match a 60,000-yuan central government subsidy for electric vehicles and exempt them from license-plate quotas designed to cut the number of autos on the road, according to Chen Guiru, deputy head of the local government arm in charge of alternative-energy vehicle development.

Beijing's acting mayor Wang Anshun said the city will take 180,000 old vehicles off the road and replace coal-burning heaters in 44,000 homes in a bid to cut air pollutants. The capital will also promote clean-energy vehicles among government departments, Xinhua reported on Tuesday.

China may see "increased emphasis on trying to speed up the development of alternative-energy automobiles," said Thomas Callarman, director of the center for automotive research at China Europe International Business School in Shanghai.

That would help the country get closer to a target of cumulative sales of 500,000 electric vehicles by 2015 and 5 million by 2020. Sales totaled about 13,000 EVs from 2009 to 2011, according to Bloomberg News Energy Finance. A lack of infrastructure and expensive models are behind the slow pace of adoption, the researcher said.

Despite the new initiatives, auto production remains a pillar of the Chinese economy, said Han Weiqi, an analyst at CSC International Holdings in Shanghai. That means any new initiatives are likely to take the form of limits on emissions and pollution rather than restrictions that would hurt automakers across the board.

"If there are measures to slow down car sales, the car companies will be unhappy," Han said. "And consumers won't like only taking public transport."

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