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Change to auto parts imports regulation has limited market impact
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China's move to do away with a four-year-old regulation on auto parts imports, effective Tuesday, would have limited impact on the country's auto market, analysts say.

Under a government policy released last week, China is scrapping a regulation which required higher tariffs on auto parts imports that did not meet certain standards. This was unlikely to cause much impact on the local market as "car producers bought about 70 percent of their parts inside China," said analyst Zhong Shi.

Standards require the amount of imported auto parts used in assembly to be under 60 percent. If not, tariffs for the parts are 25 percent, compared to a rate of 10 percent for other imported parts.

Zhong said with a greater amount of auto parts production now highly localized, most car producers would not be likely to give up the relatively low-cost local option for imports.

Analyst Teng Bole said abandoning the regulation was also a sign of a more open auto market in China.

Reports suggest the move to scrap the regulation is in response to a WTO ruling last year that China failed to honor its commitments to international trade rules. An appeal by China was turned down last December.

China initiated the regulation in 2005 to prevent tax evasion by multinational automobile companies.

(Xinhua News Agency September 2, 2009)

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