The Wall Street Journal: China to ease rules on foreign auto makers after U.S. calls for level playing field

SHANGHAI–China said Tuesday it will phase out rules requiring foreign auto makers to share their factory ownership and profits with Chinese companies by 2022, answering U.S. calls for a level playing field in the world’s biggest auto market.

China now forces foreign auto makers to set up 50-50 joint ventures with Chinese partners if they want to locally produce cars to avoid 25% tariffs. The government said these rules will be eliminated this year for companies building electric vehicles–a move that could benefit Tesla Inc. TSLA, -3.04%  –and for all vehicles by 2022.

“This will completely change the situation in China within 10 years,” said Yale Zhang, managing director of Shanghai-based consultancy Automotive Foresight.

The action could bolster President Donald Trump’s assertions that his policy of pressurizing China to modify its trade behavior is yielding swift results. Even so, people in the industry said the reshaping of China’s auto sector wouldn’t necessarily hand an advantage to foreign players, as the implications of the reforms would take years to become clear.

An expanded version of this report appears at WSJ.com.

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