China Urged to Continue 50% Ownership Cap on Auto Ventures

China should continue its 50% limit on foreign ownership of carmaking ventures for at least five years, the state-backed China Assn. of Automobile Manufacturers tells Bloomberg News.

CAAM Deputy Secretary Ye Shengji says the domestic partners in such ventures will need at least that much time to prepare for direct competition with foreign carmakers. Ye suggests to the news service that lifting the ownership cap begin with the motorcycle industry in 1-2 years, then move to the commercial truck and bus business in 3-4 years before addressing China’s auto industry.

The ownership caps were imposed to help China’s domestic manufacturers gain technology and production expertise. But critics say the rule also has sheltered the companies from the pressure of competition and postponed the need to develop their own competitive products.

Ye says CAAM has presented its views to the country’s two primary regulators: the National Development and Reform Commission and the Ministry of Industry and Information Technology.