China may ease caps on foreign stakes in JVs

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China's Ministry of Industry and Information Technology wants to loosen ownership restrictions on foreign automakers' joint ventures despite strong opposition from state-owned automakers.

Under existing policy, foreign automakers must form partnerships with local companies to produce vehicles in China. Foreign shareholders are barred from owning more than 50 percent of these joint ventures.

At a press conference this week in Beijing, ministry spokesman Xiao Chunquan said the organization will join other ministries to figure out how to implement the reforms.

Xiao did not indicate when the ministry might loosen its restrictions.

The China Association of Automobile Manufacturers, whose key members are state-owned auto companies, voiced strong opposition last week to any relaxation of the limits.

"Relaxing the current foreign ownership restrictions will wipe out Chinese brands," the association said in a statement. "Foreign companies can totally use the competitive advantage of their global supply chains to support a price strategy to kill Chinese brands in the cradle."

The Ministry of Industry, which regulates the auto industry and other industrial sectors, is taking action in the wake of the communist party's decision to further open the economy.

The party issued its directive at a plenary meeting in November.

President Xi Jinping, who took office in 2012, has pledged to deregulate government control of the domestic economy and to further open industrial sectors to private and foreign investors.

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