China Shifts Course on Foreign Auto Investment

The Chinese government says that foreign carmakers will be given preferential treatment for spending projects in the country's less-developed central and western regions, starting June 10.

The policy unveiled on Friday by the Ministry of Commerce and the National Development and Reform Commission is an about-face from Beijing's decision in late 2010 to remove overseas automakers from its list of favored industries. That move was seen as an effort to stem excess factory capacity and protect local manufacturers from powerful foreign competitors.

Analysts tell Bloomberg News that the government has reversed course because it is worried by declining in foreign direct investment in China, which could stunt the country's economic growth. The revised policy also could create jobs in the country's interior, where unemployment often is high.