China plans rescue to avert US-style auto crisis

SHANGHAI (AFP) — China's top economic planning agency is drafting a stimulus package to save the automotive sector from a US-style crisis, state media reported Thursday.

The National Development and Reform Commission is to send rescue plans to the cabinet by the end of the week, and if approved they are expected to be implemented in January, the Shanghai Securities News said, citing sources.

Measures will include cuts in the 10 percent vehicle purchase tax to boost consumption, and direct government funding to help automakers upgrade their technologies, the report said.

The Ministry of Science and Technology has also suggested steps such as facilitating mergers in the sector and encouraging banks to provide low-interest loans to automakers, the report said.

China's auto sales fell 14.6 percent in November from the same month a year earlier, according to industry association figures, as consumer confidence showed further signs of weakening amid the economic slowdown.

China cut gasoline and diesel prices by around 13 percent and 17 percent respectively last week, in what was seen as a signal aimed at boosting confidence among car buyers and manufacturers.