China to allow full foreign ownership in auto industry

China announced plans today to allow full foreign ownership of automakers in five years, ending restrictions that helped to fuel its escalating dispute with US President Donald Trump and strained relations with other trading partners.

The change would scrap rules that require global automakers to work through local state-owned partners, an arrangement that forces them to share technology with potential competitors.

It was unclear whether that might help to mollify Trump, who has threatened to hike tariffs on as much as USD 150 billion of Chinese goods in response to complaints Beijing pressures foreign companies to hand over technology.

President Xi Jinping announced in a speech last week that Beijing would ease ownership restrictions and cut auto import duties, though he didn't say at that time those limits would be repealed completely.

Limits on foreign ownership of electric vehicle producers will be eliminated this year, the Cabinet's planning agency said. That will be followed by a similar repeal for makers of commercial vehicles in 2020 and passenger vehicles in 2022.

"Following a five-year transition period, all ownership restrictions will be lifted," said the announcement by the National Development and Reform Commission.

Until now, global automakers such as General Motors Co. and Volkswagen AG have been allowed to own no more than 50 percent of a joint venture with a Chinese partner and could invest in no more than two joint ventures.