China’s capital Beijing has increased the quota for new energy vehicle (NEV) number plates. Many Chinese metropolises – including Beijing, Shanghai, Shenzhen, Guangzhou and Tianjin – had imposed car purchase restrictions to ease traffic congestion and reduce pollution. They had implemented a lottery-style system to distribute number plates. “The need to stimulate consumption is outweighing considerations of traffic congestion, and the Beijing government is easing original car-buying restrictions, akin to the recent relaxation of real estate regulations,” said Peng Peng, Executive Chairman of the Guangdong Society of Reform think tank in Guangzhou. “So far, governments have launched support in promoting the consumption of cars, housing, furniture and home appliances, but the key still depends on the residents’ income and job security, which involves their confidence in the prospects.”
Beijing’s new quota represents a 34% increase from the original target, with the city’s government having planned to distribute 58,400 number plates annually for families. It had previously announced a quota of 77,000 NEV number plates for families, individuals and companies, with the number of applications hitting 844,020. Cars are a pillar industry in China, contributing around 10% of retail sales of consumer goods, tax revenues and urban employment. Production and sales of cars in China stood at 13.9 million units and 14 million units in the first half of the year, respectively, according to the China Association of Automobile Manufacturers (CAAM), a year-on-year increase of 4.9% and 6.1%, respectively.
Domestic demand in China is experiencing a prolonged downturn due to the declining stock and real estate markets, coupled with rising unemployment, leading to the consumer price index (CPI) hovering around zero for more than a year. China’s government rolled out a trade-in scheme for consumer goods and equipment upgrades on a large scale in March, which is expected to boost consumer spending and create market demand worth over CNY1 trillion. The Ministry of Commerce (MOFCOM) said in April that the government would provide subsidies of CNY10,000 for eligible new energy vehicles and CNY7,000 for fuel vehicles. At the conclusion of the Communist Party's Third Plenum, members were asked to take active steps to stimulate domestic consumption, and build new momentum to drive exports and imports, the South China Morning Post reports.
