China to remove foreign automaker ownership limits by 2022

China is planning to repeal its foreign ownership restrictions on car manufacturers, with the cap to be fully removed by 2022.

The country's state planner has informed the BBC and other news outlets it will remove foreign ownership caps on makers of fully-electric and plug-in hybrid vehicles this year.

Commercial vehicle manufacturers will be freed from restrictions in 2020, while general automakers can be fully owned by an overseas entity from 2022.

In 1994, China restricted foreign ownership of any and all car manufacturers to 50 per cent. This rule was enacted to give local makers the chance to compete, as well as gain vital knowledge and expertise through joint ventures.

Since the rule came into being, foreign car makers wanting to produce vehicles in China have been forced to find a 50/50 joint-venture partner. With imported vehicles subject to high tariffs, all mainstream marques have gone down this route.

It's not clear if overseas car makers will use this opportunity to buy out local partners from their Chinese businesses.

A senior GM executive has told Reuters it is unlikely to sever ties with SAIC, saying GM would not be as successful in China without its Shanghai-based partner.

Others, including Volkswagen, Daimler, Nissan, Ford and Honda, said they would study the situation.

China will also lift its foreign ownership restrictions on ship and aircraft manufacturers this year.

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