CAAM Fights Plan to Ease Foreign Ownership Rules in China

A plan to ease restrictions on foreign investments in China could destroy the country's domestic auto industry, warns the China Assn. of Automobile Manufacturers.

"Foreign ownership being capped at 50% is the red line we must not cross," declares CAAM Secretary General Dong Yang on the association's Web site.

Reuters, which first reports Dong's comments earlier today, notes that domestic producers account for only 30% of today's Chinese car market.

Last month China's Ministry of Commerce told reporters the government was preparing to relax what another ministry official described in October as an "imbalance of policy."

The current ownership limits, coupled with requirements that foreign carmakers transfer certain technology to their Chinese partners, are intended to bolster the capabilities of domestic carmakers. But Beijing also aims to consolidate the country's 100 or so carmakers into no more than five or six companies.