New guideline for auto joint ventures

The Ministry of Commerce has announced that, from April 10, the shareholdings of Chinese parties in joint ventures should be above 50 percent for automobile companies.

The ministry and the State Development and Reform Commission jointly issued a new guideline for joint ventures in China and encouraged foreign investment.

The guideline indicates that each foreign automaker may set up at most two joint ventures for passenger and commercial vehicles or motorcycle. That limit does not cover the situation where a foreign firm joins with domestic counterparts in mergers.

The guideline has reduced much red tape for foreign companies and is expected to inspire international forays into the environmental protection and energy efficiency sectors.