China plans to introduce new policies on recycling scrapped vehicles with the expectation to increase the purchase of new and second-hand cars, according to a recent article in China Daily.
‘The vice-minister of commerce, Wang Bingnan, said at a policy briefing hosted by the State Council Information Office earlier this year that, “the new policy will legalise the selling of a scrapped vehicle’s engine, gearbox, front and rear axle and frame to eligible automobile remanufacturing enterprises at market prices. Significantly increasing the value of scrapped cars and raise owners’ motivation to scrap obsolete vehicles.”
At this time, these five main parts are only allowed to be sold as scrap metal to iron works. Their value is around 1,290 yuan (£146) per metric tonne.
Secretary-general of the China Passenger Car Association, Cui Dongshu said, “As China’s car ownership is seeing rapid growth and the upgrading of automobile products is accelerating, there is an urgent need for new rules in the scrap industry”.
According to ce.cn, a news website hosted by Economic Daily, China has approximately 240 million vehicles and based on the international average scrap ratio of 4-6 percent, 14 million cars will become obsolete this year and 17 million units will be discarded by 2020.
Zheng Shuwei, director of the Department of Market System Development at the Ministry of Commerce, said, “Scrapping is the last link in automobile circulation”.
“By boosting the price of recycling scrapped vehicles, owners are expected to be more willing to scrap their old cars, which will play an important role in the consumption of new and used vehicles”.
Each region in China can only set up one scrapped vehicle recycling enterprise, meaning the total number was capped. Therefore, the qualified recycling enterprises have monopoly, which is not conducive to the development of the industry.
The new rules amend the market’s entry and exit mechanism, treating domestic and foreign funded enterprises equally.
As long as an enterprise obtains a business license and recycling qualification lawfully, it can engage in the recycling and dismantling business of scrapped vehicles.
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