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China’s Economic Support Measures Includes Extension of NEV Incentives and Postponement of the China 6 Implementation

The Chinese government has launched a series of economic support measures since February 2020 in line with the resumption of economic activities in order to minimize the economic impact of the COVID-19 pandemic. Of these, deregulation and subsidies for the automotive industry are the main support measures. One of the significant economic support measures by the central government is the 2-year extension of the new energy vehicle (NEV) purchase subsidy system, which was supposed to end in 2020. This extension is expected to contribute to stable growth in the NEV market. Other measures, such as the expansion of the issuance of license plate in regions with restrictions and the abolition of used car trading regulations, are also expected to revitalize the automobile market. In addition, the implementation of the China 6 standard may be postponed. As for the measures by local governments, they intend to provide supports for the production and sales of local manufacturers. Local governments such as Guangzhou in Guangdong and Shanxi are planning to add a subsidy clause exclusive for China 6 vehicles in an attempt to accelerate the shift to the China 6. Following a series of support measures, it is highly likely that car sales in China will achieve a V-shaped recovery from the latter half of 2020. However, there is also an assumption that it would difficult to recover the reduced production from January to March because there is still a delay in parts supply due to the suspension of production by overseas parts manufacturers.

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