State Council unveils auto bailout plan

Beijing announced plans to boost the domestic auto industry in an effort to maintain a GDP growth rate of 8% for 2009, the Financial Times reported. The State Council announced it will halve the 5% tax on cars with engine capacities under 1.6L and give one-off cash subsidies to owners of high-emission vehicles who trade them in for low-emission ones. The government also plans to set up a US$1.5 billion fund to develop energy-efficient vehicles, and will encourage consolidation in the country’s auto sector. Stimulus measures targeting the auto sector had been expected after China posted its largest drop in auto sales in 10 years earlier this week.