Opinions on Improving the Management of Automotive Investment Projects by the National Development and Reform Commission and the Ministry of Industry and Information Technology

Opinions on Improving the Management of Automobile Investment Projects by the National Development and Reform Commission and the Ministry of Industry and Information Technology

Development and Reform Industry [2017] No. 1055

Development and Reform Commissions of all provinces, autonomous regions, municipalities directly under the central government, and cities specifically designated in the state plan, as well as the Xinjiang Production and Construction Corps:

In order to implement the relevant requirements of the "Notice of the State Council on Issuing the Directory of Government-Approved Investment Projects (2016 Edition)" (Guo Fa [2016] No. 72), improve the management of automobile investment projects, and promote the healthy and orderly development of the automobile industry, the following opinions are hereby proposed.

1. Promote Structural Adjustment in the Automobile Industry

(1) Optimize the capacity layout of traditional fuel vehicles. Promote the concentration of capacity in regions with solid industrial foundations, complete supporting systems, and obvious competitive advantages. New traditional fuel vehicle capacity should be built in provinces where the capacity utilization rate in the last two years is higher than the industry average (according to industry design specifications, capacity is calculated based on 250 days per year and two shifts per day). Encourage regions and enterprises with low capacity utilization rates to increase mergers and acquisitions, accelerate technological progress, enhance market competitiveness, and continuously improve the utilization level of existing capacity.

(2) Promote the healthy and orderly development of new energy vehicles. Support social capital and enterprises with strong technological capabilities to enter the production fields of new energy vehicles and key components. Guide existing traditional fuel vehicle enterprises to accelerate their transformation into new energy vehicles, enhancing the internal driving force for the development of the new energy vehicle industry. Continuously improve technical requirements for new energy vehicle investment projects and production access standards based on industrial development levels, encouraging enterprises to enhance their industrialization capabilities and technical levels for new energy vehicles.

Scientifically plan the layout of the new energy vehicle industry. New enterprise investment projects should be built in regions with good industrial foundations, complete innovation systems, strong supporting capabilities, and great development potential, promoting new capacity to concentrate in areas with strong consumer demand for new energy vehicles and significant potential for replacing traditional fuel vehicles. Encourage key areas for air pollution prevention and control such as Beijing-Tianjin-Hebei to develop and use new energy vehicles, promoting pollution control. Strictly manage new enterprise investment projects to prevent blind site selection and low-level repeated construction.

(3) Encourage automobile enterprises to improve their quality and strength. Guide automobile enterprises to enhance their independent innovation capabilities, improve technical levels and brand added value, enhance international competitiveness, and expand international market share. Support automobile enterprises in scientifically formulating investment plans, strengthening internal resource sharing within groups, optimizing product structures, and improving capacity utilization rates. Encourage deep cooperation among automobile enterprises in capital, technology, capacity, etc., jointly developing products and organizing production together. Accelerate reforms of state-owned automobile enterprises, encourage mergers and acquisitions as well as strategic cooperation among enterprises to enhance industry concentration. Promote the exit of zombie automobile enterprises from the market.

2. Improve Management of Automobile Investment Projects

(4) Strictly control new traditional fuel vehicle capacity. In principle, no new investment projects for independent legal entity traditional fuel vehicle manufacturing enterprises will be approved: first, investment projects for newly established independent legal entity traditional fuel vehicle manufacturing enterprises; second, investment projects for existing vehicle manufacturing enterprises crossing passenger car and commercial vehicle categories; third, investment projects for existing vehicle manufacturing enterprises that have been suspended or partially suspended for several years with continuous losses or insolvency that rely on government subsidies or bank loans while relocating across provinces or autonomous regions.

Existing vehicle manufacturing enterprises applying to expand traditional fuel vehicle production capacity must meet the following conditions: The capacity utilization rate in both of the last two years must be higher than the industry average; The proportion of new energy vehicle output in the last year must be higher than the industry average; The proportion of R&D expenditure relative to main business income in the last year must be higher than 3%; The products must have international market competitiveness. Existing passenger car enterprises applying to expand traditional fuel vehicle production capacity must also meet national standards regarding average fuel consumption.

(5) Clarify approval conditions for cross-category investment projects. Existing passenger car and commercial vehicle enterprises applying for cross-category (passenger car subcategories include sedan type and other passenger car types; commercial vehicle subcategories include bus type, semi-trailer truck type, and freight truck type) investment projects must meet the following conditions: possess complete R&D experience for proposed products, a professional R&D team, and positive R&D capabilities; proposed products must reach advanced levels compared to similar domestic products; The proportion of new energy vehicle output in the last year must be higher than the industry average.

Enterprises applying for investment projects to establish specialized automobile manufacturing must have product development capabilities and conditions with advanced technology levels for proposed products.

Enterprises applying for investment projects to establish engine manufacturing must meet existing regulations; proposed gasoline engines should have a power output not lower than 70 kW; proposed diesel engines should have a power output not lower than 50 kW.

(6) Standardize conditions for new energy vehicle enterprise investment projects. Enterprises applying for investment projects to establish pure electric passenger car manufacturing (including existing commercial vehicle enterprises producing pure electric passenger cars) must comply with requirements outlined in "Regulations on Management of Newly Established Pure Electric Passenger Car Enterprises" (National Development and Reform Commission Ministry of Industry and Information Technology Order No. 27 [2015]). Enterprises applying for investment projects to establish pure electric commercial vehicle manufacturing (including existing passenger car enterprises producing pure electric commercial vehicles) must meet all following conditions: Enterprises must have complete R&D experience, a professional R&D team, positive R&D capabilities for complete vehicles; possess core technologies related to complete vehicles as well as drive control systems, power battery systems, complete vehicle integration, lightweighting technologies along with corresponding testing capabilities; construction content includes high-performance power battery systems, drive systems, control systems as well as complete vehicle (body forming, painting, assembly etc.) production systems; newly established enterprises must have product quality assurance capabilities along with sales service capabilities; possess registered trademarks and brand ownership for proposed products; proposed products' energy consumption and range indicators must reach advanced domestic levels. Existing pure electric vehicle enterprises applying to expand production capacity must have a capacity utilization rate higher than industry average in last year.

Support enterprises in conducting international cooperation; encourage them to fully utilize international technology, capital, talent resources to enhance domestic new energy vehicle industrialization levels. The provisions regarding approval of investment projects for newly established Sino-foreign joint venture passenger car enterprises only apply to traditional fuel vehicles; approval procedures for newly established Sino-foreign joint venture pure electric passenger car enterprise investment projects shall follow "Regulations on Management of Newly Established Pure Electric Passenger Car Enterprises."Investment projects related to fuel cell vehicles shall follow management regulations applicable to pure electric vehicles. Investment projects related to plug-in hybrid vehicles shall follow management regulations applicable to traditional fuel vehicles.(7)

3. Strengthen Monitoring and Early Warning of Automobile Capacity

Strengthen the release and warning of automotive production capacity. The National Development and Reform Commission organizes industry associations and relevant institutions to establish an annual automotive production capacity verification and information release mechanism, timely releasing information on changes in automotive production capacity, strengthening capacity warnings, and guiding enterprises and social capital to invest reasonably. Provincial development and reform commissions should improve the automotive production capacity monitoring system in their regions, conduct in-depth analysis of changes in production capacity utilization rates, strengthen guidance and supervision of enterprises, help enterprises effectively respond to and timely resolve the risks of overcapacity, and strive to keep the automotive production capacity utilization rate in their regions at a reasonable level. Four, standardize the supervision and management of the automotive industry.

Strengthen departmental coordination and cooperation. Establish a coordinated linkage mechanism for managing automotive investment projects and the access management for automotive production, improve product access standards and industry normative conditions, and enhance industry regulatory capabilities and efficiency. Promote the public disclosure and sharing of credit information for automotive enterprises, increase penalties for illegal enterprises in the fields of automotive investment projects and production access management through a joint incentive mechanism for trustworthy behavior and a joint punishment mechanism for untrustworthy behavior.

Improve the industry exit mechanism. Accelerate the elimination of backward products and zombie enterprises. Enterprises that cannot maintain normal production operations will be subject to a special public notice management for two years. Enterprises under special public notice must accept verification to meet the requirements for maintaining access review for automotive production enterprises; those that meet the requirements will have the special public notice canceled; if they do not meet the requirements by the end of the special public notice period, or if there are hidden dangers to public safety, personal health, or life and property safety, their production and sales activities will be suspended.

Implement supervisory management responsibilities. Provincial government investment authorities must strictly implement the "Regulations on Approval and Filing Management of Enterprise Investment Projects" (State Council Order No. 673), the "Notice on Publishing the Catalog of Government-Approved Investment Projects (2016 Edition)", automotive industry development policies, and these opinions, improve rules and procedures for approval and filing, handle approval and filing of automotive investment projects according to laws and regulations, and promptly report approved filing information to the National Development and Reform Commission through the "National Online Approval Supervision Platform for Investment Projects". At the same time, provincial government investment authorities should further strengthen supervision during and after the event based on the principle that whoever approves is responsible for supervision, accurately grasping the construction, operation status of automotive investment projects, and enterprise development conditions to provide good investment services for enterprises.

The National Development and Reform Commission and the Ministry of Industry and Information Technology will conduct special inspections on how various regions implement the requirements of the "Regulations on Approval and Filing Management of Enterprise Investment Projects", "Notice on Publishing the Catalog of Government-Approved Investment Projects (2016 Edition)", automotive industry development policies, and these opinions.

These opinions are interpreted by the National Development and Reform Commission and the Ministry of Industry and Information Technology.

These opinions shall take effect from the date of publication.

National Development and Reform Commission Ministry of Industry and Information Technology June 4, 2017