What is missing in China's auto industry stimulus plan?

One month ago the Chinese government has published a detailed auto industry policy, called the "Automobile Industry Adjustment and Stimulus Plan".

The plan basically cover measures to boost vehicle purchases through tax breaks and subsidies, restructure the industry through mergers and a new focus on independent Chinese brands and development of alternative energy vehicles.

With all measures included, something is still missing in the package, according to some industry observers.

That is a role for the foreign automakers. No issues such as technology transfer or foreign investment were mentioned in the plan.

The policy has otherwise set a target for domestic brands to raise market share from the current 25 percent to 40 percent in three years.

This, of course, implies that foreign brands still dominate China's market by holding the other 60 percent, but they will gradually cease to be the centerpieces of auto production as domestic brands improve their technology strength, backed by supportive government policies.

But if China's market grows at 10 percent per year as scheduled, then, even if the foreign brands lose 15% of market share over the next three years, they would still be able to sell about the same number of vehicles every year as they do now.

This chart shows the top ten auto brands in China in 2008.
Only two of them are domestic: Chery and Geely.