China's Ministry of Commerce released long-awaited regulations governing the automobile trade on Friday.

China encourages overseas investors, which have advanced marketing and sales expertise as well as sound international sales networks, to invest in the nation's auto trading sector, according to the regulations.

The auto trading sector includes sales of new and used vehicles and auto parts, as well as scrap business and vehicle recovery.

The regulations urge both foreign and domestic automakers to establish a sound vehicle sales and after-sales service system by themselves or their authorized dealers as soon as possible to ensure customers' legal rights in the process of purchasing and using vehicles.

Any companies wanting to undertake vehicle sales activities in China must gain authorization from automakers, according to the regulations.

Jia Xinguang, chief analyst with the China Automotive Industry Consulting and Development Corp, told China Daily: "The regulations mark the further opening up of China's auto trading sector. They will benefit foreign car makers and dealers.

"Many weak Chinese auto dealers will be put out of businesses," Jia said.

The regulations ban overseas-built vehicles from being deposited into bonded areas of China's ports for the purpose of export to the domestic market.

The measure has been implemented from January 1, 2005.

China will also ban the import of used vehicles and parts as well as right-hand drive cars, according to the regulations.

The nation will also take anti-dumping-and-subsidy measures to safeguard the domestic auto industry, the regulations said.

To boost China's vehicle and parts exports, the nation will foster some domestic exporting bases and encourage domestic automakers and dealers to set up sales and after-sales service networks abroad either independently or through co-operation with foreign partners, the regulations said.

China will use the central government's foreign trade development fund to facilitate the vehicle and parts exports.

The nation will also support domestic vehicle and parts manufacturers to respond to anti-dumping-and-subsidy charges and other safeguard measures from foreign countries to protect their legal rights.

(China Daily August 15, 2005)