The Chinese government is focusing on stimulating its domestic car market following a fall in demand, it has been reported.

According to China's Xinhua news agency, an official from the Ministry of Commerce has revealed that consumers are to be encouraged to get rid of their old cars and buy new ones.

Subsidies are set to be offered to ensure people are provided with an extra incentive to buy a new car rather than stick with their current model.

Further details of the scheme are set to be published in the near future, the official said, while tax cuts and greater credit availability for car purchase have also been mooted.

Passenger car sales in China have plummeted of late, with figures dropping by 10.3 per cent in the year to November.

This has not escaped the government's attention, particularly given the importance the car industry assumes in relation to the wider economy.

"Reviving the auto industry will be helpful to spur domestic demand because a one-yuan-increase in this sector's output means 2.64 yuan in others on the industry chain," Zhang Boshun from the China Association of Automobile Manufacturers told Xinhua.

There are also concerns in China over the direction of corporate earnings growth.

Source:

China moots scrap incentives to boost car sales, 26/12/08

http://www.reuters.com/article/reuterscomService5/idUSTRE4BP1V620081226