News That Stays News

Command and Conquer December 29, 2010

Glimpses of the remnants of China’s command economy in this NYT article about the business environment the car industry deals with there.

Key paragraphs:

Automakers have been struggling for years to keep up with demand in China, as sales have climbed at a pace never seen in a major auto market. The number of cars and light trucks sold in China was one-tenth of that in the United States in 2000. This year, sales in China have been more than 50 percent higher than in the depressed American market.

The result has been traffic jams in the largest Chinese cities, particularly Beijing. And that has elicited an unexpectedly strong response from policy makers.

The Beijing municipal authorities announced last week that they would cap the number of new car registrations at 240,000 a year, just a third of the sales pace this year.

The finance ministry announced separately this week that on Saturday it would restore the sales tax on cars with small-displacement engines to 10 percent, its level before the global downturn. (The tax had been at 5 percent in 2009 and 7.5 percent this year; through the downturn, the tax has remained as high as 40 percent for sport utility vehicles and sports cars with the most powerful engines.)