Supporter

Insisting on the 50:50 proportion is pointless as the auto industry is not a sector of vital importance to the nation's economy and the people's livelihood and the industry's growing momentum and China's economic development speed have changed significantly since 2001, when China joined the WTO, according to Wang Zhigang, a research fellow at the State-owned Assets Supervision and Administration Commission of the State Council.

"We used to worry foreign capital would manipulate China's auto industry by controlling technologies, brands and markets, but Chinese automakers performed well and avoided a recession following WTO membership," said Wang.

"Joint ventures are compliant to their foreign sides in most aspects, and their development strategies are formulated by their foreign sides, too," said Qian Pingfan, vice director of Research Department of Industrial Economy of Development Research Center of the State Council.

It's better to open up the industry appropriately to stimulate and pressure large auto groups than enforce an unhelpful restrictive policy, Qian said.

Foreign executives from auto joint ventures also point out the 50:50 structure lacks efficiency. Strategies and decisions are discussed again and again at the expense of market opportunities.

Different opinion

Chinese sides of joint ventures will lose their rights if the 50:50 proportion is not enforced, as they have no brands and no core technologies, according to Xu Changming, deputy director of the Department of Information Resources under the State Information Center.

The proportion is in accord with the interests of Chinese enterprises, which are in weak positions in joint venture management, said Han Lei, vice secretary-general of the China Association of Automobile Manufacturers.

"Right now, foreign companies transfer profits through auto parts premium and technologies. If the policy is loosened, it will be more difficult for Chinese companies to get technologies and voices," said Dong Zhiyuan, vice general manager of Beijing Automotive Holding Co Ltd.

The 50:50 shareholding policy on auto joint ventures won't change in the next two to three years at least, said Li Honglu, vice general manager of Beijing Hyundai Motor Co Ltd. "Chinese automakers are weak and discarding the policy goes against their interests," Li said.

However, "The restriction won't be abolished in the near future because Chinese auto enterprises are not yet mature," said Dong Suhua, press principal of PSA China.