June 19, 2012 / 2:08 AM / 5 years ago

China eyes subsidies to develop energy-saving vehicles: paper

An electric vehicle waits for a battery exchange robot at China's largest electric vehicle battery recharging station located in Beijing May 30, 2012.David Gray

SHANGHAI (Reuters) - China is considering tax exemptions and subsidies for buyers of energy-saving vehicles in an attempt to boost its low-emissions auto sector, the Shanghai Securities News reported on Tuesday.

The development plan submitted to the State Council is part of broader efforts to upgrade China's fragmented automobile sector and establish an early footing in the production of low-emission and environmentally friendly vehicles.

In 2009, Beijing introduced a similar stimulus package with tax incentives for cars with engine sizes of 1.6 liters or smaller and subsidies for rural residents. That move spurred car sales and helped China surpass the United States as the world's largest auto market.

Under the new proposal, those purchasing electric vehicles or hybrid cars would be exempt from a vehicle purchase tax, the paper said, citing Zhang Xiangmu, secretary of the Ministry of Industry and Information Technology.

Zhang also said the government was studying plans to subsidize vehicle buyers in rural areas.

The paper separately quoted a car association official saying that electric car buyers would also get a sales rebate as well as a reduction in the value-added tax.

While plans to construct charging facilities for electric vehicles would support the country's demand for a raft of base metals, including copper.

The government said in May that it plans to spend up to 2 billion yuan ($315.06 million) from this year to help develop energy-saving vehicles to cut carbon emissions.

Reporting by Fayen Wong and Samuel Shen; Editing by Michael Perry

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