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China: New Cash for Clunkers Plan

(May 26, 2009) China is launching a RMB5 billion (about US$714 million) plan to encourage automobile sales in the countryside, where the majority of the Chinese population lives. On March 16, 2009, seven central government departments jointly issued the Action Plan for Cars and Motorcycles to the Countryside. According to the plan, the state will reimburse up to RMB5,000 (about US$714) of a farmer's purchase of a minivan or light truck, in addition to subsidizing the scrapping of old vehicles, and up to RMB650 (about US$93) on the purchase of a motorcycle, effective between March 1 and December 31, 2009. Passenger cars, however, are not covered. (Qiche motuoche xiaxiang shishi fang'an [Action Plan for Cars and Motorcycles to the Countryside] (CJ [2009] No. 104), Central People's Government official website, Mar. 16, 2009, available at

Under the new plan, subsidies are to be granted only on the scrapping and purchase of government-designated automobiles, produced by designated manufacturers. On April 15, 2009, the Ministry of Finance published the first list of the designated manufacturers and products. (Guanyu yinfa diyipi qiche motuoche xiaxiang shengchan qiye mingdan ji chanpin mulu de tongzhi [Circular on the First List of Cars and Motorcycles to the Countryside Plan Manufacturers and Products] (CJ [2009] No. 153), Ministry of Finance official website, Apr. 15, 2009, available at