Moves announced by Chinese authorities on Friday to help boost sales of automobiles and electronics have received a cool reaction.
The government is anxious to bolster a sluggish economy, but the latest steps failed to impress investors who have been urging stronger stimulus.
Regions will be encouraged to increase annual car purchase quotas and efforts will be made to support sales of second-hand vehicles, over a dozen government agencies said a statement on automobile consumption. They included the state planner, known as the National Development and Reform Commission.
Car group urges end to ‘price-cut’ hype
As China’s post-pandemic economic recovery slows, policymakers have identified the country’s automobile sector as a key lever which they want to use to shore up growth.
In June, they unexpectedly extended a purchase tax break on new energy vehicles until 2027.
But domestic consumer demand has remained weak and the world’s largest auto market has been grappling with a price war triggered by Tesla in January that has since spread to more than 40 brands offering discounts on their vehicles.
In March, a top industry association urged the auto industry and authorities to cool the “price-cut hype” to ensure the healthy and stable development of the industry.
‘Avoid vicious competition’
The statement on Friday aimed at encouraging automobile consumption echoed this. “Localities must not roll out protectionist policies and avoid vicious competition,” it said.
A separate statement on supporting sales of electronics products said authorities would encourage scientific research institutes and market entities to actively apply domestic artificial intelligence technology to improve intelligence levels of electronic products.
The measures echoed similar ones announced by authorities in recent months and failed to boost the market, with shares in China’s automobiles index down 0.3% and the electronics index falling 0.6%, against a 0.1% rise in the benchmark index.
Investors have said they are disappointed by China’s weak second-quarter growth and want to see stronger stimulus, with some pinning their hopes on the Politburo meeting later this month.
- Reuters with additional editing by Jim Pollard