Zombie Cars: China Targets Overcapacity in Auto Industry

Initial reports out of China earlier today focused on the alternative energy aspect of the policy, but it looks more like the goal is reducing overcapacity.
The Economic Times: China to curb 'haphazard and redundant' auto investment

China's National Development and Reform Commission, seeking to address mounting excess auto manufacturing capacity, wants to restrict ways automakers can invest in new capacity to manufacture traditional gasoline-fueled cars as well as electric battery cars, according to a draft of the policy which has made public.

To be allowed to invest in greenfield developments such as new factories, automakers would need to have healthy, above-industry-average capacity utilization and R&D investment, and a commitment to green cars and exports, among other conditions.

Industry players are alarmed by the prospects because they say very few automakers would be able to meet the conditions fully if the proposed policy took effect as drafted.

According to this article, about one-third of China's auto production capacity is idle. Will it work? As with coal and steel, many auto producers may be provincial and local government-owned companies. They fought to keep plants open for years.

There is, however, a view among some industry officials that no matter how severely NDRC restricts investments for new manufacturing capacity, the decree might be disregarded given fierce competition among different cities and provinces chasing investments.

"Provincial governments will prioritise attracting new investments as in the process will find ways to ignore NDRC's rules," one of the two industry officials said.

Same as it ever was. 山高皇帝远 Local Chinese Officials Don't Follow President Xi's Orders