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Another curb for government car consumption

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Reform,or trade-in? [By Jiao Haiyang/China.org.cn]

In February China's Ministry of Industry and Information Technology issued a draft list of vehicles for government purchase. According to this draft, vehicles for official use must be chosen from domestic branded products, and even joint-venture brands are not included in the list.

In China, government departments and institutions for public affairs have budgets to purchase cars for official use. The expenditure on these government cars in some places has been increasing, becoming a huge burden on local finances. Furthermore, some officials are inclined to buy luxury cars and use those cars for private affairs. It is estimated that China now has at least 3 million government cars, spending no less than 300 billion yuan ($47.6 billion) on them each year.

The extravagant consumption on government cars and the waste of public resources it causes have been attacked by the public for a long time. To handle this problem, the Central Government has been deepening the reform of government cars, including cutting the permitted number and the budget. According to a survey conducted by The Beijing News newspaper, more than half of the respondents support purchasing domestic branded cars for official use, because domestic branded cars are much cheaper than foreign branded ones of the same type. The following are excerpts of some views on the Central Government's plan to exclude foreign branded cars for government car purchases.

Shu Shengxiang (China Youth Daily): The highlight of this draft list is that all cars must be domestic brands. It's not the so-called trade protectionism, but a common practice in auto manufacturing countries. China is trying to act in an international way.

Last year, Chinese authorities issued new regulations on government car purchases, saying that only those auto manufacturers whose spending on research and development accounts for no less than 3 percent of their major revenues could be qualified to participate in the bid for government car purchases. For joint ventures, most of their products are just assembled in China with no redesign for the Chinese market, and thus it's natural for these enterprises to be excluded in the list.

The Central Government issued three important regulations on government car purchases in 1994, 1999 and 2004 respectively, all stressing the importance of choosing domestic cars. The fact is, these regulations have never been put into effective implementation. As a result, the proportion of domestic cars is extremely low in overall government purchasing. Therefore, to demand government departments buy domestic cars is actually an effort to put into real practice the existing regulations.

Through government purchasing, China's domestic auto manufacturers will sell more cars and more importantly, the authorities are setting a good example for society. We don't want to see a situation that the authorities issue various documents and plans to support domestic auto industry and encourage the public to buy low-emission domestic cars, while government departments purchase luxury foreign branded cars. If the government means to promote the growth of a certain industry, or it means to encourage certain consumption habits, government purchase is a very important channel to realize this objective.

Domestic cars are usually much cheaper than foreign cars, so the draft list will effectively restrain government departments from overspending on car purchases. As a matter of fact, even if the list includes the purchase of only a small range of foreign brands, Chinese cars will still be discriminated against and the expenditure on government cars will still be very high. However, when government departments are all restricted to buying domestic cars, they will set an example for the whole society, which will be really beneficial for the domestic auto industry.

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