China to lift foreign ownership limits
BEIJING: China announced yesterday a timeline to open up its manufacturing sector including scrapping ownership limits for foreign automakers, shipbuilders and aircraft firms — addressing a contentious issue in its trade dispute with the United States.
The liberalisation meets a longtime demand of the US and other countries seeking better access for their companies in the world’s biggest car market and one of the largest markets for air travel.
China currently restricts foreign auto firms to a maximum 50% ownership of joint ventures with local companies.
The country will this year end shareholding limits for new energy vehicle firms such as those that produce electric cars, according to the National Development and Reform Commission (NDRC).
“The move will be followed by commercial vehicles in 2020 and passenger cars in 2022, when it will also abolish restrictions limiting foreign automakers to two joint-venture partners,’’ the NDRC said in a statement.
“After a five-year transition period, the auto sector will lift all restrictions,” it said.
Under the current setup, foreign carmakers must transfer proprietary technology to the joint venture companies they set up — the issue of forced technology transfer has been a top concern for the Trump administration.
“China’s full opening of the manufacturing industry is a clear indication of our opposition to trade and investment protectionism, and shows our clear support to widening and deepening the development of economic globalisation,” the NDRC said.
“Through the full liberalisation of the manufacturing industry, we will support Chinese and foreign companies in achieving common development on a level playing field,” it said.
It said it hoped the liberalisations would encourage greater exchanges of capital, technology, management and personnel of Chinese and foreign firms.
President Xi Jinping announced the plans for the auto industry last week without giving any timeline.
Xi’s announcement was among a series of measures seen as potential concessions to Trump in the face of a potential trade war, including a pledge to lower car tariffs this year.
Still, after Xi struck the conciliatory note in his speech, Trump showed no indication he would back down from imposing the threatened tariffs on $150 billion worth of Chinese goods, and Beijing said it was ready to hit back in kind.
Officials in Washington say they have grown wary of China’s endless promises that often result in little action. The NDRC announcement could allay those complaints by giving specific dates for completion of the reforms.
The NDRC said t he shipbuilding industry would this year scrap foreign ownership restrictions on firms designing, making and repairing vessels.
It will also lift restrictions on foreign ownership of aircraft manufacturing firms this year, including those that make large-body commercial airliners, regional jets, helicopters, drones and blimps.
But in another move that could exacerbate tensions, China decided yesterday to slap provisional anti-dumping duties on imports of US sorghum, saying its domestic industry has suffered from “substantial damage”..
The Commerce Ministry said it ordered importers to pay Chinese customs a deposit amounting to 178.6% of the value of imported sorghum.
The ministry will make a final ruling after further investigation, which may lead to anti-dumping tariffs.
The US shipped 4.8 million tonnes of sorghum to China last year, a fourteen-fold increase from 317,000 tonnes in 2013, said the ministry’s trade remedy and investigation bureau.