China Eases Foreign Investment Limits: Global car brands expected to open more wholly owned plants

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In this year's government work report, Premier Li Keqiang said China will give foreign businesses broader market access and remove foreign investment limits in more areas. Global car brands welcomed the announcement and expect to open more wholly owned plants. Wu Lei reports.

China has been the world's largest car market for the last 10 years. But sales and production are slowing down. Now authorities say some restrictions on foreign firms can be removed.

WU LEI SHANGHAI "Foreign car brands have had to set up joint ventures with local automakers to open factories in China. Take Toyota for example, its joint venture with First Automotive Works is why this car is called FAW-Toyota. It's a 50-50 split in ownership. But China has announced gradually removing foreign investment ownership limits."

During this year's session of the National People's Congress, Chinese Premier Li Keqiang said China will continue to open its economy to attract more foreign investment.

LI KEQIANG CHINESE PREMIER "China will give foreign businesses broader market access, shorten the negative list for foreign capital, and allow more wholly foreign-owned operation in more areas."

The 50 percent equity cap on the New Energy Vehicle Sector was removed in 2018. The electric car firm Tesla became the first foreign automaker to set up a wholly owned plant in China. Construction of its gigafactory in Shanghai is underway and it's supposed to start production by the end of this year.

ELON MUSK CEO, TESLA "The opening up policy has been a steady movement towards opening, we feel very optimistic about the long term future. We think the direction has been great."

With China removing the industry's foreign capital cap, other global car brands have welcomed the latest measures to open up the market.

JENS PUTTFARCKEN, CEO PORSCHE CHINA "I think that is very positive, because it gives us our customers the possibility to look for a wider choice of additional options to put into their cars, to enrich their car and have even more personalized cars."

The new foreign investment law aims to ensure that Chinese and foreign capital compete on a level playing field. Domestic carmakers say they may face short term pain, but market competition is good for China's auto sector in the long run. WL, CGTN, SH.