China to Test Easing Curbs on Foreign Electric Vehicle Firms

China’s government said it will carry out a trial by June that would allow foreign carmakers to set up wholly owned electric-vehicle businesses in its free-trade zones, taking the first step toward overhauling the country’s decades-old auto industry policy.

The plan, announced by China’s foreign ministry Thursday, will also permit overseas companies to set up factories on their own to make utility vehicles, without the need for a local partner mandated by current rules. Authorities will “gradually” lower vehicle import tariffs in an appropriate manner, according to the foreign ministry.

China has been considering easing restrictions on foreign electric vehicle makers, Bloomberg News reported in June citing people familiar with the matter. Thursday’s announcement coincided with U.S. President Donald Trump’s state visit to China, where he said the Asian country is taking advantage of American workers and companies with unfair trade practices.

President Xi Jinping said Thursday that China will take “big strides in reform” in coming years and that foreign companies in China will find the business environment more transparent and more orderly. But Trump’s visit to Beijing resulted in few concrete concessions on addressing a yawning trade deficit, and many deals failed to break new ground. Even an agreement by Ford Motor Co. for an electric-vehicle alliance with Anhui Zotye Automobile Co. that was on display this week had already been announced in August.

China’s weighty import tax — 25 percent for luxury cars — means foreign automakers must produce in China to make them mass-market affordable. A relaxation of the joint venture rule would give companies like Tesla Inc. the opportunity to set up fully owned manufacturing operations in China, the world’s biggest market for electric vehicles. In addition to Ford’s joint venture in China, Volkswagen AG has partnered with Anhui Jianghuai Automobile Group Corp. to produce electric cars.

China has been gradually opening up access to foreign auto manufacturers in free-trade zones. Foreign companies were allowed to set up 100 percent-owned motorcycle and battery manufacturing operations in China starting July 2016.

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