Beijing Closes Out 2019 With New Call to Make Car Buying Easier

China’s cabinet has again prodded local governments to relax restrictions on local car sales in the latest effort to revive a domestic auto market experiencing its worst-ever downturn alongside the nation’s slowing economy.

The latest call to action by the State Council is aimed at coaxing major cities like Beijing and Shanghai to issue more license plates for cars each year, which is the method typically used to limit sales. Many of China’s largest cities rolled out such restrictions over the last two decades in a bid to ease road congestion and limit pollution during the nation’s explosive growth period.

But now central planners are trying to reverse such actions in a bid to boost sales in the world’s largest auto market now heading into a second year of contraction.

The State Council’s latest call came Tuesday in an opinion document on stabilizing the employment environment. That directive once again raised the issue of boosting domestic consumption, including encouraging cities to “perfect” their management of restrictions on local car purchases. While encouraging such action, the document was more moderate in tone than a series of similar government directives issued over the last four months.

One of those came in late August, when the State Council issued another document explicitly calling on local governments to gradually relax or eliminate buying restrictions. Two months earlier, the National Development and Reform Commission (NDRC), China’s top economic planner, issued a document forbidding local governments from issuing new car-buying restrictions, and called on cities that already had such measures to step up measures to encourage sales. That order also forbade more measures limiting new energy car buying, and called for cancellation of such restrictions already in place.

A number of cities have already answered the government’s call this year. In September, the southwestern city of Guiyang announced it was removing all buying restrictions. The wealthier southern cities of Guangzhou and Shenzhen, as well as Hainan province, have also announced steps to raise the number of new license plates they issue each year. Guangzhou has boosted its current quotas by 100,000 over a year and a half, while Shenzhen is planning to boost its quota by 40,000 next year.

But four of China’s biggest and most congested cities, Beijing, Shanghai, Hangzhou and Tianjin, have yet to take any action.

Wang Qing, a senior market researcher at the State Council, previously told Caixin that relaxing buying restrictions wouldn’t necessarily provide a clear stimulus to the market. He pointed out that even if such relaxation resulted in 200,000 more car sales, that would still account for only 1% of all sales. “If only restrictions are relaxed … the assistance honestly wouldn’t be that big,” he said.

Contact reporter Yang Ge (geyang@caixin.com; twitter: @youngchinabiz)