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The annual session and the auto industry

The government work report delivered by Premier Li Keqiang at this year’s annual session of the National People’s Congress (NPC) on March 5 again touched upon several issues related to the auto industry. Automotive executives who are delegates of the NPC or members of the Chinese People’s Political Consultative Conference (CPPCC), on the other hand, submitted a variety of proposals and motions that reflect the most pressing issues confronted by the industry and their respective companies.

“Invigorate the used car market, speed up construction of urban parking lots and new energy vehicle charging facilities” appeared in item three on expanding domestic demand in the section “Key Government Work in 2016” of Li’s report. “Build or rebuild 200,000 km of rural roads and speed up opening of hardened roads and bus routes in qualified villages and towns as well as administrative villages” appeared in item four on expanding development of modern agriculture, while “national rollout of State-V-compliant fuel, elimination of 3.8 million yellow-labeled and old vehicles and joint prevention and control of pollution in key regions” appeared in item six on strengthening of environmental administration efforts.

Clearly, these measures point to the government’s desire to improve the consumption environment of and boost demand for cars through direct and indirect means, while making sure that the auto industry’s effect on the environment itself, as far as pollution and emissions are concerned, is kept to a minimum. It would be interesting to see if restrictive policies on inter-region circulation, which has hindered the development of the used car market, will finally be lifted this year. In fact, a day before the start of the annual sessions, the Ministry of Commerce held a regular press conference where its spokesman said that three major existing regulations related to new vehicle sales, used vehicle sales and vehicle scrappage will be revised this year.

The proposals and motions submitted by automotive executives had three major themes this year: autonomous driving, NEVs and operational environment. Geely Chairman Li Shufu and Baidu CEO Robin Li, coincidentally both submitted motions urging the government to speed up legislation on autonomous driving/driverless cars. It is not surprising given that the former is also the chairman of Volvo Car Corp., which is aggressively pursuing commercialization of autonomous driving by 2020, and the latter heads the search giant that began road testing of driverless cars at the end of last year.

The government work report, proposals and motions from NPC delegates and CPPCC members from the auto industry will lead to both short- and long-term consequences of where the industry will go, especially considering that 2016 marks the beginning of China’s 13th Five-Year Plan period (2016-2020). As a pillar industry of the national economy, the auto industry and its healthy development will be crucial as China eyes annual economic growth of at least 6.5 percent in the next five years.  

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