The Ministry of Commerce said yesterday that the nation's new method of overseeing auto imports had worked well in its first month of implementation.

The country lifted all quotas on auto imports in line with its commitments to the World Trade Organization (WTO) and began to offer automatic import licenses to importers from January 1.

The import permits are granted to the qualified sellers with licenses granted by carmakers.

According to the ministry's statistics, it issued permits worth more than US$7 billion last month.

Imports of auto components were granted licenses worth US$4.5 billion, or 64.1 percent of the total. Licenses were granted to 43,362 vehicles worth US$1.9 billion, accounting for some 27 percent.

"The figures include the vehicles with quotas reserved from last year," said Li Minglin, director of the ministry's department of mechanic and electronic product exports and imports. "So it is hard to compare them with those of last year."

The director said this new mechanism is aimed mainly at monitoring China's imports of autos and their components.

The new method is also a way to enhance the brand sales of cars in China.

According to the auto industry development policy implemented in June last year, brand sales must be realized for all automobiles made in China in 2006.

"This strategy will reduce the number of car sellers and strengthen the management of the sales channels of automobiles," said Jia Xinguang, an analyst at the China National Automotive Industry Consulting and Development Corp.

For example, only a fraction of the current more than 2,000 auto dealers in Beijing will be granted licenses to sell cars.

"In addition, it will better protect the benefits of consumers because it ensures people's purchases of cars are legal," Li said.

The ministry is working on a regulation on the importing of automobile components, under which the same tariff will be imposed on imports of some key components as is imposed on completed vehicles.

The regulation covers the following components that can be used to assemble whole vehicles in China:

Engines and auto bodies

Engines and any three or more of a combination of transmissions, driving axles, driven axles, chassis, steering systems, braking systems and air conditioning systems

Auto bodies and any three or more of a combination of transmissions, driving axles, driven axles, chassis, steering systems, braking systems and air conditioning systems

Any five or more of a combination of transmissions, driving axles, driven axles, chassis, steering systems, braking systems and air conditioning systems

This move has aroused great concerns among domestic and overseas automakers because of the gap between tariffs on completed vehicles and components.

China's tariffs on the imports of completed vehicles and components will be reduced to 25 percent and 15 percent by the middle of 2006.

Experts believe this new policy is a measure to push foreign auto makers to increase the local content of their cars made in China despite canceling the requirement on the content rate of cars made in China.

However, Jia said, the implementation of this policy requires hard work by China's Customs because it must monitor the imports, transportation and assembly of the components.

(China Daily February 4, 2005)