The Ministry of Industry and Information Technology and other government agencies have studied the future of China's auto industry, Zhu Hongren, the ministry's spokesman, told reporters.

"The basic consensus is to take electric cars as the main strategic direction for the transformation of China's auto industry," Zhu said.

Efforts will be made to develop better batteries, engines and electric control technology with the aim of mass producing electric vehicles and plug-in hybrid cars, he said.

China overtook the United States last year to become the world's largest auto market in terms of units sold.

Zhu said vehicle sales were expected to hit 17 million units this year, up around 25 percent from a year ago.

But he warned that "high attention should be paid" to energy and environmental limitations and the problem of traffic congestion.

China said in June it would subsidise purchases of alternative energy vehicles in five cities including Shanghai on a trial basis amid efforts to reduce emissions, save energy and spur development of green technology.

It has also announced plans to offer subsidies of 3,000 yuan for purchases of cars that have 1.6 litre or smaller engines and consume 20 percent less fuel than current standards.

State media have reported that the government plans to invest more than 14 billion dollars over the next decade to boost the development of energy-saving vehicles.

earlier related report
General Motors sets up used car joint venture in China
Shanghai (AFP) Oct 28, 2010 - US auto giant General Motors said Thursday it had set up a used car joint venture with its Chinese partner SAIC to expand into a largely untapped segment of the world's biggest auto market.

The joint venture, which GM said was the first of its kind in China, will offer used vehicles of Shanghai GM's Buick, Chevrolet and Cadillac brands as well as selected brands from other automakers, the US firm said in a statement.

The new venture aims to cooperate with distributors of Shanghai GM to set up about 20 facilities across China within the next five years, which would acquire, repair and certify used cars for resale, it said.

"There is currently no standardised system for the sale of previously owned vehicles in China," said Kevin Wale, president and managing director of GM China.

"Our new joint venture is adopting unified nationwide standards for the sale and service of used cars."

The US auto giant, a market leader in China, currently has nine other joint ventures with SAIC in China including Shanghai GM.

China overtook the United States last year to become the world's biggest auto market. Many consumers are first-time car buyers.

The US company and its joint venture partners expect to sell more than two million cars in China this year after selling a record 1.83 million in 2009.

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