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China: Government Subsidy for Energy-Saving and Alternative-Energy Vehicles

(Feb. 27, 2009) On January 23, 2009, China's Ministries of Finance and of Science and Technology jointly issued the Provisional Measures on the Management of Government Subsidies for Energy-Saving and Alternative-Energy Vehicles. These Measures are applicable in 13 large cities selected as pilots.

According to the Measures, the central government will provide a “one-off” subsidy for buying hybrid, electric, and fuel-cell vehicles. At the initial stage, as stated by the Measures, the subsidy will be provided only for vehicles in public service areas, such as public transportation, taxis, cars for government use, city clean-up trucks, and postal service vehicles. A fuel-cell city bus longer than 10 meters that saves 100% of the fuel of a traditional vehicle will receive the highest subsidy, RMB600,000 (about US$87,790). The same size electric bus will receive a RMB500,000 subsidy (about US$73,147). A Belt-driven Starter Generator hybrid passenger vehicle that saves 5% to 20% of the fuel used by a traditional, equivalent vehicle will receive the lowest subsidy, RMB4000 (about US$585).

The initiative covers almost all of the largest cities in China, including Beijing, Shanghai, Chongqing, Changchun (the capital city of Jilin Province), Dalian (in Liaoning Province), Hangzhou (the capital city of Zhejiang Province), Jinan (the capital city of Shandong Province), Wuhan (the capital city of Hubei Province), Shenzhen (in Guangdong Province), Hefei (the capital city of Anhui Province), Changsha (the capital city of Hunan Province), Kunming (the capital city of Yunnan Province), and Nanchang (the capital city of Jiangxi Province). The local governments in which the pilot cities are located are also required to allocate funds for the supporting facilities.

The subsidy will come from a special central government fund for energy saving and emissions reduction, according to the Measures. (Provisional Measures on the Management of Government Subsidies for Energy-Saving and Alternative-Energy Vehicles [in Chinese] (issued Jan. 23, 2009), official website of the Ministry of Finance,

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