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TABLE OF CONTENTS CHAPTER I AIM OF THE POLICY CHAPTER II DEVELOPMENT PLAN CHAPTER III TECHNICAL POLICY CHAPTER IV STRUCTURAL ADJUSTMENT CHAPTER V ADMISSION CONTROL CHAPTER VI BRANDS OF TRADEMARKS CHAPTER VII PRODUCT DEVELOPMENT CHAPTER VIII COMPONENTS AND PARTS AND RELEVANT INDUSTRIES CHAPTER IX MARKETING NETWORKS CHAPTER X INVESTMENT ADMINISTRATION CHAPTER XI IMPORT ADMINISTRATION CHAPTER XII AUTOMOBILE CONSUMPTION CHAPTER XIII MISCELLANEOUS PROVISIONS In order to meet the requirements for continuously improving the socialist market economy system and suit the new situation for the development of automotive industry at home and abroad after the entry into the World Trade Organization, promote the structural adjustment and upgrading of the automotive industry, improve the overall international competitiveness of the automotive industry, and satisfy the increasing demand of consumers for auto products, as well as promote the healthy development of automotive industry, we hereby formulate the policy on automotive industry development. The aim for the implementation of the present policy is to have the automotive industry of our county developed into the supporting industry of national economy before the year 2010, and to make greater contributions to realizing the goal of building an all-round well-off society. CHAPTER I AIM OF THE POLICY Article 1. The principle of combining the fundamental role of market allocation of resources with the macro-control of the government shall be adhered to so as to create a market environment of fair competition and unification, and improve the administrative system of rule by law on automotive industry. The functional departments of the governments shall, in accordance with the mandatory requirements of the administrative laws and regulations and the technical specification, implement administration on the enterprises undertaking the production of automobiles, farming transportation vehicles (low speed cargo trucks and tri-cars, the same hereinafter), motorcycles and components and parts, and the products thereof, and regulate market acts of various economic bodies in the field of automotive industry. Article 2. The harmonious development of the automotive industry and the affiliated industries, urban transportation infrastructures and environmental protection shall be accelerated. A better environment shall be created for the use of automobiles, and a healthy auto consumer market shall be fostered to protect the rights and interests of the consumers, and promote the private consumption of automobiles. By the year 2010, our country will become one of the major auto manufacturing countries of the world with the auto products satisfying the major demand of the domestic market and entering into the international market by batches. Article 3. The auto production enterprises shall be encouraged to improve the research and development ability and technological innovation ability, and positively develop products with self-owned intellectual property rights, and pursue the strategy of famous-brand operation. In 2010, the auto production enterprises shall form some famous-brand products of automobiles, motorcycles and components and parts. Article 4. The auto industry structural adjustment and reorganization shall be promoted to expand the large-scale benefits of enterprises, improve the centralization of the industry and avoid the scattering, disorder and low level repeated construction. Several large automobile enterprise groups with international competitiveness shall be formed through market competition, and every effort shall be made to have them ranked among the world top 500 enterprises by the year 2010. Automobile production enterprises shall be encouraged to be cartelized according to the market rules to realize the complementary advantages and sharing of resources, and expand business scale. A batch of components and parts enterprises that have comparative advantages shall be fostered to realize mass production and enter into the international system of procurement of auto components and parts to take an active part in the international competition. CHAPTER II DEVELOPMENT PLAN Article 5. The state shall give guidance to the compilation of the industry development plan according to the policy of automotive industry development. The development plan shall include the middle and long-term development plans and the large auto enterprise group development plan. The medium and long-range development plans shall be formulated by the National Development and Reform Commission together with the relevant departments on the basis of widely soliciting opinions, and shall be implemented after being reported to and approved by the State Council. The large automobile enterprise groups shall compile the development plans of their own group on the basis of the medium and long-range development plans of the industry. Article 6. If any automobile enterprise group has characteristics such as the self-developed products under unified planning, independent trademarks and famous-brand products, and all-in-one administration on the system of sales and services, and the domestic market shares of the automobile products produced by its kernel enterprises and the subordinated wholly-owned subsidiary enterprises, shareholding enterprises and the Sino-foreign joint venture enterprises are over 15%, or the annual income from the sale of the whole automobiles accounts for over 15% of the sales income of the whole automobiles of the automotive industry, it may compile and report the group development plan separately as a large automobile enterprise group. And the plan shall be implemented after it has been demonstrated and approved by the National Development and Reform Commission. CHAPTER III TECHNICAL POLICY Article 7. The principle of combining the introduction of technology with self development shall be adhered to. The international advanced technology shall be followed up and researched on. International cooperation shall be carried out to develop the advanced and applicable technology with self-owned intellectual property rights. The products with the introduced technology should have international competitiveness, and can meet the demands of the development of mandatory requirements for international automobile technical specification. Efforts shall be made to gear the self-developed products to the international technical level and take part in the international competition. The state shall render support in tax policies to the research and development activities conforming to the technical policy. Article 8. The state shall guide and encourage the development of small gasoline engine emission automobiles of energy saving and environment protection. The automotive industry shall, in combination with the requirements of the strategy of state energy source structural adjustment and emission standards, positively carry out research and industrialization of new types of power such as the electric cars, batteries used as vehicles power, etc., and focus on the development of hybrid vehicle technology and diesel motor technology for cars. The state shall take measures in aspects such as the scientific and technological research, technological transformation, industrialization of new technologies, and policies and environments, etc., to promote the production and use of the hybrid power vehicles. Article 9. The state supports the research and development of alcohol fuels, natural gas, hybrid fuels, hydrogen fuels and other new types of vehicle fuels, and encourages the automobile production enterprises to develop and produce automobiles using such new types of fuels. Article 10. The automotive industry and the relevant industries shall give emphasis to the development and application of new technology to improve the economy of the fuels of automobiles. Before the year 2010, the average oil consumption of new passenger cars shall be reduced by more than 15% compared to the year 2003. The system of public notice on oil consumption of auto products shall be established in accordance with the mandatory requirements of technical specifications in the relevant aspects of energy saving. Article 11. Researches shall be carried out actively on light materials, reclaimable materials and environmental protection materials and other new materials for vehicle use. The state shall timely formulate the requirements on the minimum rate of use of the reclaimable materials. Article 12. The state supports the research and development and production of auto electronic products, develops the auto electronic industry, and speeds up the application of electronic information technology in auto products, sales and logistics and production enterprises to promote the development of automotive industry. CHAPTER IV STRUCTURAL ADJUSTMENT Article 13. The state encourages the group development of auto enterprises to form new competition situation. The optimization and upgrading of the structure of automotive industry shall be realized through strategic reorganization among enterprises on the basis of combining market competition with the macro control. The aim of the strategic reorganization is to support the auto production enterprises to develop themselves into large automobile enterprise groups by way of assets reorganization, and to encourage the cartelization by such cooperative ways of complementary advantages and sharing of resources, so as to form the industry structure of harmonious development of large automobile enterprise groups, enterprise consortiums and special automobile production enterprises. Article 14. The whole automobile production enterprises shall improve their level of specialization of production during the structural adjustment, and adjust the internal entities undertaking the production of matching parts so that they may develop themselves into independent and specialized enterprises undertaking the production of components and parts facing society. Article 15. The enterprise consortiums shall make cooperation widely in fields such as the product research and development, supporting and collaboration in production and sales and services, etc., which shall embody the structural adjustment of products, optimization of resource allocation, and reduction of business cost, and realize the large-scale benefits and intensivism development. The enterprises taking part in a certain enterprise consortium shall no longer cartelize with other enterprises to consolidate the stability and market status of the enterprise consortium. The state encourages the enterprise consortiums to form the economic entities linked up by assets as soon as possible. The relevant provisions of the present Policy shall be followed for newly established automobile production enterprises and items of production of automobiles of different types involved in the cooperation and development program of the enterprise consortiums. Article 16. The state encourages the enterprises undertaking the production of automobiles or motorcycles to carry out international cooperation, bring into play the comparative advantages, and take part in the international division of industries; and supports large automobile enterprise groups and the overseas automobile groups to jointly merge and reorganize automobile production enterprises at home and abroad, so as to expand the business scope of market and gear to the trend of globalization of auto production. Article 17. The mechanism of exit of the enterprises undertaking the production of the whole automobiles and motorcycles shall be established to make special public notice on the automobile production enterprises (including the existing enterprises undertaking the production of reassembled automobiles) that cannot sustain ordinary production and business operation. Such enterprises shall not transfer their qualifications of production of the automobiles and motorcycles to the non-automobile or non-motorcycle production enterprises or individuals. The state encourages such enterprises to transfer to the production of special automobiles, the components and parts of automobiles or to make assets reorganization with other whole automobile production enterprises. No auto production enterprises may buy or sell their production qualification. The automobile production enterprises that have gone bankrupt shall cancel the check-list of public notice concurrently. CHAPTER V ADMISSION CONTROL Article 18. The Regulation on the Administration of Road Motor Vehicles shall be formulated. The functional departments of governments shall, according to the Regulation, make administration on the design, manufacture, authentication, registration, inspection, defect administration, repair and maintenance, and discarding as useless and reclamation of the road motor vehicles, and other links thereof. The administration shall be conducted by following the rule of clear definition of duties, open procedures, convenient operation, and easy supervision by the society. Article 19. The mandatory requirements on the technical specification shall be made in such aspects of the road motor vehicles as safety, environmental protection, energy saving, and guarding against theft. All the road motor vehicles shall implement the unified mandatory requirements on technical specification, which shall correspond with the situation of our country and be geared to the international mandatory requirements on vehicle technical specification, so as to promote the technological progress of the automotive industry. Where any road motor vehicle product fails to meet the corresponding mandatory requirements on technical specification, it shall be prohibited from production and sale. Farming transportation vehicles may only run on those roads at or below the third level, and shall implement the corresponding mandatory requirements on technical specification. Article 20. A unified system of admission control shall be established on road motor vehicle production enterprises and products in accordance with the present Policy and the state regulations on certification and accreditation. Where any road motor vehicle product corresponds with the provisions of admission control system and the mandatory requirements of the relevant regulations and technical specification and has passed the compulsory certification on products, it shall enter into the Public Notice on Road Motor Vehicle Production Enterprises and Products, which shall be promulgated jointly by the National Development and Reform Commission and the State Administration of Quality Supervision, Inspection and Quarantine. The products within the Public Notice shall bear the mark of China Compulsory Certification (3C). No one may make certification on imported automobiles and automobiles assembled with imported bodywork in place of self-produced products. The products that are illegally assembled and have infringed upon the intellectual property rights may not be permitted to flow into the market. Article 21. The public security organs in charge of traffic control shall handle vehicle registration in accordance with the Public Notice on Road Motor Vehicle Production Enterprises and Products and the mark of China Compulsory Certification (3C). Article 22. The relevant functional departments of the governments shall set down admission conditions through classification for the enterprises undertaking the production of automobiles, farming transportation vehicles and motorcycles, and other products, and make dynamic administration on the production enterprises and their products. If the enterprise or product does not conform to the provisions, its check-lists in the Public Notice on Road Motor Vehicle Production Enterprises and Products shall be revoked. The production admission conditions of the enterprises shall include such requirements as the ability of product design and development, ability of product production facilities, ability of production consistency of products and the quality control, and ability of product sale and after sale services, etc.. Article 23. The road motor vehicle product certification institutions and testing institutions shall be designated by the State Administration of Quality Supervision, Inspection and Quarantine after negotiation with the National Development and Reform Commission, and shall carry out certification and testing work according to the specific provisions of the market admission control system. The certification institutions and the testing institutions shall have the just status of the third party, and may not have any interest relations with the auto production enterprises in the aspects of assets and management, nor may they make repeated testing and charging on the same product. The state supports the normative development of such testing institutions of automobiles, motorcycles and major components and parts that have the just status of a third party. CHAPTER VI BRANDS OF TRADEMARKS Article 24. The enterprises undertaking the production of automobiles, motorcycles, engines and components and parts shall strengthen the sense of brand of the enterprises and of the products, positively develop products with self-owned intellectual property rights, value the protection of intellectual property rights, and make great efforts to improve the popularity of the brand of the enterprises in the production and business operation activities, so as to maintain the image of the brand of the enterprises. Article 25. All the enterprises undertaking the production of automobiles, motorcycles, engines and components and parts shall register the self-owned trademarks of commodity and services of their enterprises in accordance with the Trademark Law. The state encourages the enterprises to make plans for the development and protection of brands, and make efforts to implement brand operation strategy. Article 26. From 2005, all the homemade automobiles and assembly components shall bear the registered trademarks of commodity of the production enterprises. For the products of the whole automobiles sold at domestic market, the trademarks of commodity of the production enterprises and the names of the enterprises or origins of the commodity shall be indicated in the eye-catching exterior positions of the bodywork. In case in the trademark of the commodity, the mark of geography of the production enterprises has been included, the origin of the commodity may no longer be indicated. All the distributors of the brands shall mark the service trademark of the production enterprises at the eye-catching places in their place of sales and services. CHAPTER VII PRODUCT DEVELOPMENT Article 27. The state supports the enterprises undertaking the production of automobiles, motorcycles and components and parts to establish product research and development institutions to form the product innovation ability and self-development ability. The self-development may take various ways such as self development, joint development, and development by entrustment, etc.. All the investment in the construction of scientific and research establishments for the self-developed products of an enterprise, which corresponds with the relevant tax provisions on promotion of enterprise technical progress, may be outlaid before paying income tax. The state will enact policy of encouraging the enterprises to make self-development as soon as possible. Article 28. The automobile production enterprises shall make great efforts to master the automobile bodywork development technology, pay attention to the development of the technics of the products, and form the ability to develop the chassis and engines as soon as possible. The state shall, in the restructure of industrialization, support the large automobile enterprise groups, enterprise consortiums or enterprises undertaking the production of auto components and parts to develop the whole automobiles or assembly of parts that have modern advanced level and self-owned intellectual property rights. Article 29. The enterprises undertaking the production of automobiles, motorcycles and components and parts shall actively take part in the major projects of tackling key problems organized by the state, strengthen cooperation and research with the scientific and research institutions and universities and colleges, and pay attention to the application and transformation of scientific and research fruits. CHAPTER VIII COMPONENTS AND PARTS AND RELEVANT INDUSTRIES Article 30. The enterprises of automobile components and parts shall adapt themselves to the trend of development of international industry, take an active part in the work for the development of products of the mainframe manufactories. Systematic development abilities shall be formed in the field of key automobile components and parts, and abilities for the development and manufacture of advanced products shall be formed in the field of ordinary automobile components and parts to meet the demand of the domestic and overseas markets. And efforts shall be made to enter into the international system of procurement of automobile components and parts. Article 31. A special development plan for the components and parts shall be made to give guidance and support to the products of automobile components and parts through classification, and to guide the public funds to invest into the field of production of automobile components and parts, and impel the enterprises of components and parts that have comparative advantages to form the ability of specialization, large batch of production and modularization goods supply. For those enterprises undertaking the production of components and parts, which can support several independent enterprises that undertake the production of the whole vehicles and which enter into the international system of procurement of automobile components and parts, the state shall support them in priority in aspects such as the introduction of technology, technological transformation, financing and merger and reorganization, etc.. The enterprises undertaking the production of the whole automobiles shall stock components and parts from the society by ways of electronic commerce, or net procurement step by step. Article 32. According to the requirements of the development program of the automotive industry, the production enterprises in such relevant fields of automotive industry as metallurgy, petrochemical and chemical industries, machinery, electronic, light industry, textile, construction materials, etc. shall pay attention to improving the level of the products and the market competition ability in aspects such as the metal materials, machine equipment, frocks and moulds, auto-electronics, rubber, engineering plastic, textiles, glass, and oil products for vehicle use, etc., so that they may keep pace with the development of the automotive industry. Focuses shall be laid on supporting the steal production enterprises to realize the ability of supplying plates for car use. The establishment of centers for the design and manufacture of specialized moulds is to be supported to improve the ability of the design and manufacture of the car mould. Petrochemical enterprises shall be supported to make technical progress and product upgrading so as to have the quality of oil products such as the refined oil and lubricating oil, etc. improved, and satisfy the demand of automotive industry development. CHAPTER IX MARKETING NETWORKS Article 33. The state encourages the enterprises undertaking the production of automobiles, motorcycles, and components and parts, and finance and service trade enterprises to use the international mature ways of auto marketing, management experience, and ideas of service trade for reference to positively develop auto service trade. Article 34. In order to protect the legal rights and interests of the automobile consumers, and enable them to get good services during the process of purchase and use of the automobiles, all the auto production enterprises home and abroad, which sell the self-made auto products at domestic markets, shall set up the system of sale and service for self-made auto brands as soon as possible. This system may be set up by the auto production enterprises home and abroad by ways of self-investment or authorizing automobile dealers to invest. All the domestic and overseas investors may, after being authorized by the auto production enterprises and going through the necessary formalities in accordance with the relevant provisions, undertake such activities of sale and after sale service of homemade automobiles or imported automobile brands. Article 35. From 2005, the self-produced passenger vehicles of automobile production enterprises shall realize brand sale and service. From 2006, all the self-produced auto products shall realize the brand sale and service. Article 36. The relevant existing measures for the administration of approval of rights to sell cars shall be cancelled. The Ministry of Commerce shall formulate measures for the implementation of the administration on famous brand automobiles together with the State Administration for Industry and Commerce and the National Development and Reform Commission. The auto distributors shall carry out auto management activities within the business scope approved by the administrative departments for industry and commerce. For the business scope of the dealers of famous brand passenger cars (including used vehicles) that have no more than nine seats shall be approved and publicized by the state administrative department for industry and commerce in accordance with the relevant provisions. The business license of famous brand dealers shall be approved uniformly as for the sale of famous brand automobiles. Article 37. The enterprises undertaking the production of automobiles and motorcycles shall strengthen sales administration on marketing network, regulate the maintenance service, and shall have the duty to make public notice to the society on the models of vehicles being stopped of production, and take positive measures to ensure the provision of reliable fittings applied to after sale service and maintenance within reasonable time limit; and shall publicize to the society periodically the name lists of the enterprises they authorize to or cancel the authorization to brand sale or maintenance; and shall not supply products to those dealers without authorization and have no business conditions. Article 38. The distributors of automobiles, motorcycles and components and parts shall observe the relevant state laws and regulations in business activities. Those distributors who sell the vehicles prohibited by the state or stopped of sale through public announcement, forge or assume other factory name, address, or certificate of conformity to sell vehicles, or who use the former brand without authorization of the automobile production enterprises, or after being cancelled of authorization, but still make sale and maintenance service of automobiles and fittings, as well as those who sell counterfeit, false and low quality automobile fittings to provide repair service to customs, shall be punished by the relevant departments according to law. Article 39. The auto production enterprises shall give attention concurrently to the whole interests in the links of manufacture and of sales and services, improve the complex economic benefits. If they transfer the rights and interests in the link of sales to other institutions with legal person status, the transfer shall be deemed as the major alteration of the feasibility study report of the former investment project, which shall be, in addition to being reported to the Ministry of Commerce for approval prescribed, reported to and approved by the former entity of the project that made the examination and approval. CHAPTER X INVESTMENT ADMINISTRATION Article 40. The principle of being beneficial to the self-development of enterprises and the implementation of macro-control by the government shall be followed to reform the administration system of examination and approval of the government to the investment projects of auto production enterprises, and such two ways of archival filing and approval shall be implemented. Article 41. The investment projects subject to the archival filing shall be as follows: (1) The existing enterprises undertaking the production of the automobiles, farming transportation vehicles, and vehicle use engines raising funds by themselves to enlarge the throughput of the same class of products and to increase varieties of the products, including newly establishment of production entities without a legal person status that undertake the production of the same class of products in a different place; (2) Investing to produce motorcycles and the engines thereof; and (3) Investing to produce the components and parts of automobiles, farming transportation vehicles and motorcycles. Article 42. The item (1) in the investment projects that are subject to the archival filing shall be submitted to and put on archives at the National Development and Reform Commission by the departments of investment administration of the provincial governments or the enterprise groups under separate planning. The items (2) and (3) shall be submitted to and put on archives directly at the departments of investment administration of the provincial governments by the enterprises. For the contents of archival filing, please refer to attachment Two. Article 43. The investment projects subject to approval shall be as follows: (1) The newly established enterprises undertaking the production of automobiles, farming transportation vehicles, and vehicle use engines, including the production enterprises with independent legal person status that are newly established by the existing automobile production enterprises in a different place; and (2) The existing automobile production enterprises producing other class of products of the whole automobiles exceeding their classes of products. Article 44. The investment projects subject to approval shall be reported to the National Development and Reform Commission for examination by the provincial departments of investment administration or enterprises groups under separate planning, of which the investment in the projects for the production of special automobiles shall be put on archives at the National Development and Reform Commission after being approved by the departments of investment administration of the provincial governments, and the newly established Sino-foreign joint venture car projects shall be reported to the State Council for approval by the National Development and Reform Commission. Article 45. The projects included in the approved development plan of large automobile enterprise groups shall be carried out by the enterprises themselves. Article 46. Before January 1, 2006, the approval for the establishment of new farming transportation vehicle production enterprises shall be suspended. Article 47. The new investment projects shall meet the following requirements: (1) The newly established enterprises undertaking the production of motorcycles and their engines shall possess the ability and condition for technology development, and the total investment of the project shall be no less than RMB two hundred million Yuan; (2) The registered capital of special car production enterprises shall be no less than RMB 20 million Yuan. And the enterprises shall possess the ability and condition for product development. (3) If the investment projects undertake the production of other kinds of whole automobiles exceeding the class of products, the total investment of the projects (including making use of the original fixed assets and intangible assets, etc.) shall be no less than RMB 1.5 billion Yuan. The assets-liability ratio of the enterprises shall be within 50%. And the bank credit grade shall be AAA; (4) The automobile production enterprises undertaking the production of cars exceeding their own class of products and other passenger vehicle products shall have outstanding achievements in mass production of automobile products, and the accumulative profits after tax in the recent three years shall be over RMB one billion Yuan (with taxation certificate). The asset-liability ratio of the enterprises is within 50%. And the bank credit grade shall be AAA; (5) The total investment of the investment projects of newly established automobile production enterprises shall be no less than RMB 2 billion Yuan, among which the self-owned capital shall be no less than RMB 8 hundred million Yuan. And an institution for the research and development of products shall be established with the investment to be no less than RMB 5 hundred million Yuan. The investment projects of newly established passenger car or heavy cargo vehicle production enterprises shall include the production of engines matching the whole automobiles. The total investment in the investment projects of newly established vehicle use engines enterprises shall be no less than RMB 1.5 billion Yuan, among which, the self-owned capital shall be no less than RMB 5 hundred million Yuan. And research and development institutions shall be established. The level of the products shall meet the requirements of the increasingly improved mandatory requirements of state technical specification; and (6) The production scale of the following investment projects shall be no less than: Heavy-duty trucks: 10,000; Passenger cars: those loading 4 engines shall be 50,000; those loading 6 engines shall be 30,000. Article 48. The proportion of shares of the Chinese party of Sino-foreign joint venture enterprises undertaking the production of the whole automobiles, special cars, farming transportation vehicles and motorcycles shall be no less than 50%. Where the stock companies of the whole automobiles, special cars, farming transportation vehicles and motorcycles enterprises whose stocks are listed sell their corporation shares, one of the Chinese legal persons shall have controlling shares comparatively and the shares thereof shall be more than the total foreign capital institutional shares. The same foreign investor may establish no more than (including two) two joint venture enterprises in China that undertake the production of the same kinds (the classes of passenger cars, commercial cars and motorcycles) of whole automobile products. If the foreign investor merges other automobile production enterprises in China together with the Chinese joint venture partner, it may not be restricted by the said two joint ventures. In case an overseas enterprise with legal person status controls the shares of another enterprise comparatively, it shall be regarded as one foreign investor. Article 49. The relevant clauses of the present Policy may not bind the projects invested by domestic and overseas automobile production enterprises in export processing zones for the production of export automobiles and vehicle use engines, but such projects shall be reported to and examined and approved by the State Council as special projects. Article 50. Where all the parties of the Sino-foreign joint venture automobile production enterprises extend the term of the joint venture, or alter the proportion of shares of the joint venture or shareholders of the foreign party, they shall report to the original departments of examination and approval for handling in accordance with the relevant provisions. Article 51. Where the investment projects subject to approval fail to obtain the notice of approval, the departments of land administration shall not handle land requisition, the state-owned banks shall not issue loans, the customs shall not handle tax exemption, the securities regulatory commission shall not approve the issuance of stocks and listing, and the administrative departments for industry and commerce shall not handle formalities for the registration of newly established enterprises. The relevant departments of the state shall not accept the admission application of the production enterprises and their products. CHAPTER XI IMPORT ADMINISTRATION Article 52. The state supports the auto production enterprises to make efforts to improve the local throughput of automobile products, promote the technical progress of the automobile components and parts enterprises, and develop the automobile manufacturing. Article 53. Where any automobile production enterprise produces automobiles by using imported components and parts, which forms the character of the whole automobiles, it shall report to the Ministry of Commerce, General Administration of Customs, and National Development and Reform Commission according to the facts. And all the imported components involved in the model of the automobiles shall be applied to the customs at its locality for paying duties so that the relevant departments may implement effective administration. Article 54. Duties shall be collected strictly in accordance with the tax rate on the imported whole automobiles and components and parts to prevent the loss of the duties. The relevant functional departments of the state shall check links such as the application for quotas, application to customs for import, and product admission, etc.. Article 55. The scope of determination of the character of the whole automobiles shall include the bodywork (including cab) assembly, engine assembly, assembly of transmission, driving gear assembly, non-driving gear assembly, vehicle frame assembly, automotive steering system, and brake system, etc.. Article 56. The scope for determination of the character of the automobile assembly (system) shall include the import of a complete set of assembly spare parts, or disassembling of the assembly or the system one by one into several key parts to import. All those imported key parts that have reached or exceeded the prescribed amount shall be deemed as having constituted assembly character. Article 57. Where the following states come into being according to the scope of determination of the character of the whole automobiles, it will be deemed as constituting the character of the whole automobiles: (1) Importing two assemblies including bodywork (including cab) and engines; (2) Importing one of the two large assemblies of bodywork (including cab) or engine and other remaining three or more assemblies (including three); and (3) Importing the remaining five or more assemblies other than two large assemblies, the bodywork (including cab) and engine. Article 58. The state designates such four ports along the seas as the Dalian New Port, Tianjin New Port, Shanhai port and Huangpu port, and two inland ports such as the ManZhouli and Shenzhen (Huanggang), as well as the Alashan port of Sinkiang (importing the whole automobiles for self-use in the Sinkiang Autonomous Region, and the country of origin being the Commonwealth of Independent States) as the ports for import of the whole automobiles. The whole automobiles shall be imported through the preceding ports. From the year 2005, no bonded zones in the import ports may keep the automobiles aiming at entering into the domestic market. Article 59. The state prohibits the import of old automobiles and old motorcycles and their components and parts by ways of trade and accepting donations, or the import of the assembly and components of the old automobiles in the name of waste steal or waste metals to make dismantling and reconditioning. The maintenance of the above-mentioned products overseas that are re-transported out of the territory of our country shall be made in the export processing zones, but no one may carry out the business of dismantling and reconditioning of old automobiles and old motorcycles. Article 60. The concrete administration measures for the imported whole automobiles and components and parts shall be formulated by the General Administration of Customs together with the relevant departments, and shall be implemented after being reported to and approved by the State Council. For those automobiles imported temporarily from abroad which are delivered as samples for inspection, or which enter our country for exhibition, shall be administered in accordance with the administration provisions on goods imported and exported temporarily. CHAPTER XII AUTOMOBILE CONSUMPTION Article 61. The automotive markets with the private consumption as the principal part shall be fostered, and the auto use environment shall be improved to maintain the rights and interests of the auto consumers. The auto consumers shall be guided to purchase and use the automobiles with low cost of energy, less pollution, small gasoline emission, new energy sources and new power, so as to strengthen environmental protection and realize the harmonious development of the automotive industry with the urban traffic facilities, environmental protection, energy saving and relevant industries. Article 62. A national unified and open automotive market and administration system shall be established. All the local governments shall encourage the automobiles produced at different districts to realize fair competition at the local markets, and shall not implement discriminative policies or measures that may lead to discriminative result to the auto products not produced in their own regions. The various restrictions and attachment conditions on aspects such as the purchase, use and property disposal of automobiles, which do not correspond with the state laws and regulations and the requirements of the present Policy shall be revised or cancelled without exception. Article 63. The state shall uniformly formulate and publicize the charging items and standards for all the administrative charges and government funds concerning automobiles, so as to regulate the various charges of the governments in the process of registration and use of automobiles. No locality shall add new administrative charges and items and amounts of governmental funds in the link of purchase, registration and use of the automobiles. Where there is real necessity to add new charges, then that shall be reported for approval in accordance with procedures and with the laws, regulations or the documents of approval of the State Council. Except the charging items prescribed by the state, no entity may collect any non-business service fees by force from the auto consumers. If they collect fees by force in violation of provisions, the auto consumers shall have the right to make report and refuse to pay the fees. Article 64. The administration on service fees for business operation shall be strengthened. The service fees for business operation involved in the use of the automobiles such as fees for the repair and maintenance, non-legal insurance fees, and vehicle parking fees, etc., shall be collected in pursuance of the principle of auto consumers' voluntary acceptance of services, and shall be collected by the business operation service entities. The charges and standards for competitive industries such as the repair and maintenance, etc., shall be determined by the business service providers in pursuance of the market rules. For vehicle parking and other industries that carry out business services by using the monopoly resources, their charging standards and administration measures shall be formulated, promulgated by and implemented under the supervision of the competent price department of the State Council or the competent provincial price departments authorized by the State Council. The business service providers shall set up dynamic bulletin board on charging information at the fee-charging place, and shall accept the supervision of the general public. The establishment of charging stations and stops of highways shall correspond with the relevant state provisions. All the charging stations and stops shall publicize the charging basis and charging standards at the eye-catching places of the charging stations and stops. Article 65. The auto service trade shall be developed actively to push the consumption of automobiles. The state supports the development of auto credit consumption. The financial institutions undertaking the automobile consumption credit business shall improve their services, and perfect the measures for auto loan mortgage. Under the precondition of ensuring the loan safety, the consumers shall be allowed to mortgage the automobiles they have purchased for obtaining the auto consumer loans. The enterprises meeting the requirements may, upon approval, establish non-bank financial institutions that provide special services to the sale of automobiles. And foreign investors may carry out business such as auto consumer loans and leasing, etc.. Efforts shall be made to develop various businesses such as auto lease, training of drivers, storage and transportation, and rescue etc.. And information statistics system of automotive industry shall be improved to develop the auto network information services and electronic commerce. Entities with mature conditions shall be supported to establish consumer credit information system so that the share of information may be realized. Article 66. The state encourages the circulation of the used vehicles. The relevant departments shall create conditions positively, regulate the measures for the administration of collection of taxes and fees for the transaction of the used vehicles uniformly, and make convenient the transaction of the used vehicles by the auto distribution enterprises, and foster and develop the used vehicle market. The system of voluntary application for evaluation on the used vehicles shall be established. Except the vehicles involved in the state-owned assets, the transaction price of the used vehicles shall be determined through negotiation between the buyer and the seller. The parties may entrust intermediary institutions that have qualification certificate to make evaluation at their own will for reference in transaction. No entity or department may force or force in disguised ways to make evaluation on the transacted vehicles. Article 67. Enterprises undertaking the business operation of the used automobiles shall have the corresponding capitals, places, and professionals, and shall carry out business activities after being approved by and registered at the administrative departments for industry and commerce. The auto distributors shall, when selling used vehicles, provide to the purchaser the true facts about the vehicles, and shall not make any disguise or fraud. The vehicles they sell shall have the Motor Vehicle Registration Certificate and the Vehicle Driving Permit, and shall have the effective annual inspection certificate of the public security organs in charge of traffic control and the administrative department of environmental protection. In case the purchasers buying the used automobiles are unable to handle the registration for transferring out or transferring in the motor vehicles, the distributors shall accept the returned vehicles unconditionally, and shall bear the corresponding liabilities. Article 68. The auto insurance systems shall be improved. In the insurance system, insurance premiums shall be collected on the basis of the different consumers and the extent of risk of the automobiles insured. The insurance industry shall be encouraged to promote the pluralism of the auto insurance products and the market-orientation of the insurance rate. Article 69. The people's governments of all the cities shall make comprehensive research into the policies and methods that can balance the development of the traffic demand and the ways of communications, the urban roads and parking facilities and other traffic resources. And the hearing system shall be established in the formulation of the non-temporary traffic control plans for restricted driving areas. Article 70. The people's governments of all the cities shall, according to the situation of economic development of their own cities, abide by the principle of ensuring that the traffic be unblocked, convenient parking and promoting the automobile consumption, do well the planning and construction of the parking places and the establishments. The land use policy and investment encouragement policy of the parking places shall be made to encourage the individuals, collectives, and foreigners to invest in the construction of parking facilities. In order to regulate the construction of the urban parking facilities, the Ministry of Construction shall formulate corresponding standards to clarify the requirements on the building of parking facilities at the residential areas, commercial areas, public places and recreational places, etc.. Article 71. The relevant state departments shall formulate and promulgate the automobile emission standards uniformly, which shall be divided into the existing standard and the anticipated standard according to the situation of our country. The people's governments at all provinces, autonomous regions and municipalities directly under the Central Government shall choose to implement the existing standard or the anticipated standard according to the reality of their own locality. If they choose the anticipated standard as the existing standard, they shall announce the date of implementation at least one year in advance. Article 72. A national unified administration system of vehicle registration and inspection shall be implemented. No localities may formulate administration measures by themselves. When the owners of the motor vehicles apply for handling vehicle registration and annual inspection, the public security organs in charge of traffic control may not require the submission of other proofs other than the proofs (identity certificate of the owners of the motor vehicles, proof of source of the motor vehicles, certificate of conformity of leaving factory of the homemade vehicles or the proof of import of the imported motor vehicles, the relevant tax certificate, proof of payment of insurance premiums of legal insurance, and the proof of conformity of annual inspection, etc.) prescribed by the relevant state laws and regulations, and by the State Council or upon the authorization of the State Council. And the people's governments or the relevant departments may not require the public security organs in charge of traffic control to increase checking on other proofs in the registration and annual inspection. Where the formalities provided by the auto consumers correspond with the state provisions, the public security organs in charge of traffic control may not refuse to handle registration and annual inspection for them. Article 73. The public security organs in charge of traffic control and the administrative departments of environmental protection shall formulate measures for differentiation administration according to the class and use of the auto products and whether they are new or old upon negotiation with the relevant departments. The intervals for the inspection of new automobiles and non-operating automobiles shall be extended properly, and frequency and items for inspection on the old automobiles shall be increased properly. Article 74. The Motor Vehicle Registration Certificate issued by the public security organs in charge of traffic control shall be used as the proof of ownership of the owners of motor vehicles in the auto lease, automobile consumption credit, and used automobile transaction, and shall be transferred at the time of auto transaction concurrently. CHAPTER XIII MISCELLANEOUS PROVISIONS Article 75. The automotive industry organizations, intermediary organizations and other public organizations shall strengthen self-construction, enhance their sense of services, and make great efforts to bring into play the role of the intermediary organizations; and shall actively take part in the communications activities of the relevant international industries, and bring into full play the role of bridge and link between the government and the enterprises to promote the development of automotive industry. Article 76. The relevant provisions of the present Policy shall be followed when the investors of Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan region invest in the automotive industry in the Mainland of China. Article 77. The mandatory standards of the state shall be implemented temporarily before the enactment of mandatory requirements of technical specification of road vehicle products. Article 78. The present Policy shall come into force as of the date of promulgation. The power to interpret the present Policy shall remain with the National Development and Reform Commission. ATTACHMENTS: 1. Interpretations of Terms 2. Contents of Archival Filing of Auto Investment Projects Attachment 1 INTERPRETATIONS OF TERMS I. Road Motor Vehicles---The various motor vehicles and their trailers running on the road with at least two wheels, and whose maximum designed speed exceeds 6 kilometers per hour, which mainly include automobiles, farming transportation vehicles, motorcycles and other road transportation machines and trailers, but not include vehicles that run by making use of railroads, or various agriculture, forestry, and engineering motor machines and tractors not used on road. II. Automobiles, Special Automobiles, Farming Transportation Vehicles, and Motorcycles---The "Automobiles" mentioned in the Policy on the Development of Automotive Industry shall refer to the vehicles defined in 2.1 of the National Standard (GB/T 3730.1---2001), which include the whole automobiles and special automobiles. The "Special Automobiles" mentioned therein shall refer to the vehicles defined in 2.1.1.11, 2.1.2.3.5, 2.1.2.3.6 of the National Standards (GB/T 3730.1-2001). The "Farming Transportation Vehicles" mentioned therein shall refer to the vehicles defined in the National Standard of (GB18320-2001). And the "Motorcycles" mentioned therein shall refer to the vehicles defined in the National Standard of£¨GB/T5359.1-1996). III. Class of Products---The passenger cars, commercial cars and motorcycles and their detailed classification defined in accordance with the National Standard, of which: 1. The detailed classification of the Passenger Cars shall be: Cars: The 2.1.1.1 to 2.1.1.6 of the National Standard of GB/T 3730.1-2001; Other Passenger Cars (including vehicles of more purposes and vehicles used for sports): The 2.1.1.7-2.1.1.11of the National Standards of GB/T 3730.1-2001. 2. The detailed classification of Commercial Cars shall be: Passenger Cars: The 2.1.2.1 of the National Standard of GB/T 3730.1-2001; Semi-trailer Tractor and Trucks: The 2.1.2.2£¬2.1.2.3 of the National Standard of GB/T 3730.1-2001. IV. The Newly Established Investment Projects of Automobiles, Farming Transportation Vehicles, and Engines for Vehicle Use---The newly established enterprises (including Sino-foreign joint venture enterprises) undertaking the production of the whole automobiles, special automobiles, farming transportation vehicles, and engines for vehicle use; the existing enterprises (including Sino-foreign joint venture enterprises) undertaking the production of the whole automobiles, special automobiles, farming transportation vehicles, and engines for vehicle use, which alter the shareholders with legal person status, and establish new production enterprises with independent legal person status in different places. The different places shall refer to the places outside the cities or counties where the said enterprises are located. V. Total Investment of a Project---The total of all the investment of fixed assets (including former fixed assets and newly increased fixed assets), intangible assets and working capital needed for investing in a project. VI. Self-owned Property Rights (Self-owned Intellectual Property Rights)---The products obtained through self-development, joint development or development by entrustment, whose industry property rights, product improvement and certification rights and technology transfer of the products are owned by the enterprises. VII. Auto Production Enterprises---The enterprises (including Sino-foreign equity joint venture enterprises and contractual joint venture enterprises) undertaking the production of the whole automobiles and special automobiles, which are legally registered within the territory of China in accordance with the examination and approval procedures prescribed by the state. VIII. Domestic Market Share---The proportion of the sales volume of the whole automobiles produced by a group (enterprise) in the domestic market the whole year to the sales volume of all the domestic automobiles. Attachment 2 CONTENTS OF ARCHIVAL FILING OF AUTO INVESTMENT PROJECTS The contents of archival filing shall include the following: I. The basic information of the auto production enterprises or the project investors, their legal address, names of the legal representatives; the outstanding business achievements and bank credit of the enterprises in the past three years. II. The necessity of the construction of the investment project and the analysis on the domestic and overseas markets; the analysis on the technical level of the products and the technical sources (statements on the intellectual property rights of the products); total investment of the project, registered capital and source of capital; throughput or business scale, contents of project construction; ways of construction, arrangements for construction progress. III. Basic information of the Chinese-foreign equity joint ventures and contractual joint ventures, including the name of the foreign investors, registered country, legal address, and legal representatives, nationality; the investment conditions of the foreign party in China and the outstanding business achievements; the proportion of shares of the Chinese party and foreign party in the present investment projects, ways of investment and capital sources, term of the joint venture. IV. The contract of technology transfer or cooperation of the foreign party. V. Analysis on the economic benefits of the investment projects. VI. The documents concerning the environmental protection, land and bank commitments, as well as the documents of approval of the local governments for the construction. And VII. The matching conditions and preference policies of the local governments. |
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