China auto lobby, policymakers collide over foreign investment

SHANGHAI - China's auto lobby has urged Beijing to support local carmakers after the regulator said it was considering further opening up the market to outside investment amid a deepening row between policymakers and state-owned car firms.

Despite foreign carmakers needing to set up joint ventures to produce vehicles for China, foreign brands including General Motors, Volkswagen AG, Ford Motor Co and Toyota Motor Corp still dominate the Chinese auto market.

China's auto lobby is opposed to plans that would relax foreign ownership rules for China ventures, currently capped at 50 per cent.

"China should open the sector more to domestic investors rather than foreign capital," Dong Yang, secretary general of the China Association of Automobile Manufacturers (CAAM), said in a statement on CAAM's website, adding only car firms with a substantial investment from China should be given the "green light".

Volvo is wholly owned by Chinese carmaker Geely Automobile Holdings Ltd, while China's Dongfeng Motor Group Co Ltd agreed this month to buy a 14 per cent stake in struggling French carmaker Peugeot SA.

Dong's comments came days after China's auto industry regulator said authorities plan to further open the country's automobile industry to foreign investors.

Beijing hopes opening up will boost the competitiveness of Chinese partners through absorbing foreign technology and management expertise.

China's central government has made "fresh calls for more opening" and relevant bodies are "studying the issue and will implement it", Xiao Chunquan, a spokesman of the Ministry of Industry and Information Technology (MIIT), said this week.

The stance of CAAM, which has around 2,000 members including China's biggest automakers such as SAIC Motor Corp Ltd , FAW Group and Dongfeng, underscores widening tension between the state auto industry and policymakers.

CAAM has previously voiced its opposition to relaxing rules of foreign investment in China's auto sector.

"If China relaxes foreign ownership rules, it would be devastating to China's indigenous brands. Chinese local brands would be killed in the cradle," it said earlier this month.