CAAM against lifting limit on foreign stakes

Workers on a car assembly line at Dongfeng Peugeot Citroen Automobile Co Ltd in Wuhan, Hubei. [Shepherd Zhou / for China Daily]

China shouldn't raise the 50 percent ceiling on foreign ownership of vehicle joint ventures, because doing so will put domestic automakers under severe pressure, the China Association of Automobile Manufacturers said.

"If foreign partners dominate joint ventures, Chinese automakers will lose their say and China will become a processing base for international auto manufacturers," said Dong Yang, general-secretary of CAAM.

On Thursday, the association officially came out against giving foreign vehicle producers more control in joint ventures.

"The stake limit is most important to the auto industry. A change could spell the end for Chinese automakers," added Dong, who has spoken previously against any change in the policy.

The Third Plenum of the 18th Central Committee of the Communist Party of China said last year that the country will phase in higher limits on foreign capital in vehicle joint ventures.

Shen Danyang, Ministry of Commerce spokesman, said in November that China is considering lifting the ceiling, and not just for the car industry.

He said the limit might also go up in the steel and chemical sectors.

Dong has contended the vehicle industry should be an exception, because it is a strategic sector for the economy.

Any change could mean that "our own automobile industry will stop developing", he said.

He also said China is expected to have a strong vehicle sector, and not just a big one, within the next eight to 10 years, so Chinese automakers should retain their protected position.

"We strongly oppose the proposal in consideration of the struggling domestic auto brands. They will face more challenges if foreign capital has great power," said Dong.

Daimler revs up with key stake in BAIC	Daimler aims for China impetus with BAIC Motor stake