Beijing rolls out 60 billion-yuan tax incentive to revive car sales

Beijing rolls out 60 billion-yuan tax incentive to revive car sales

The central Chinese government will provide tax incentives totaling 60 billion yuan ($9 billion) to stimulate sputtering passenger vehicle sales this year. 

The incentive program was announced at a meeting chaired by Chinese Premier Li Keqiang on Monday at the State Council, China’s cabinet, as part of a sweeping economic package to spur business and consumer spending, state news agency Xinhua reported Tuesday. 

The tax incentive, which will take the form of a reduced vehicle sales tax, will be applied to “a portion” of passenger vehicle products, according to Xinhua. 

Additional details about the tax incentive were not disclosed. New car and light-truck sales have slumped in recent months in the wake of stringent COVID lockdown measures that have undermined production and sales.

The tax incentive will boost passenger vehicle sales by 1 million to 2 million in China this year, according to a research report published Tuesday by Citic Securities, a Shenzhen-based investment bank.

Currently, passenger vehicle purchasers are subject to a tax equivalent to 10 percent of vehicles’ selling prices. 

China’s official 2022 growth target of around 5.5 percent is at risk as government officials enforce zero-COVID policies, some analysts believe. The economy grew 4.8 percent in the first quarter.

As anti-virus measures upended supply chains and distribution, new light-vehicle sales in China skidded 43 percent to around 965,000 in April, a 10-year low for the month, with year-to-date dipping 4.2 percent to 6.51 million, according to the China Association of Automobile Manufacturers.

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