China’s government is considering the removal of caps on stakes foreign carmakers can own in joint ventures with local partners, potentially loosening a policy criticized for shielding state-owned companies from competition.
Xu Shaoshi, chairman of the National Development and Reform Commission, said the government is looking into lifting the 50 percent cap in an interview at a World Economic Forum event in Tianjin.
Li Shufu, the billionaire chairman of Volvo Cars parent Zhejiang Geely Holding Group Co., said the rule change would encourage competition and be in the interests of consumers.
But the China Association of Automobile Manufacturers opposes the removal of the caps. In 2014, the association warned that Chinese brands would be “killed in the cradle” if foreign automakers are allowed to become more independent from their domestic partners.
Chinese auto brands increased their share of domestic passenger-vehicle sales for the first time in five years in 2015, driven by surging demand for cheaper crossovers and SUVs.
Foreign carmakers that want to produce vehicles in China must do so through joint ventures with domestic companies. For example, Ford Motor Co. has partnered with Changan Group, and Hyundai Motor Co. works with BAIC Group.