China unveils $72bn tax break for electric cars

China unveiled on Wednesday a 520 billion yuan ($72.3 billion) package of tax breaks over four years for electric vehicles and other green cars, as it seeks to boost auto sales.

Weakening sales growth in the world’s biggest auto market has raised concern over China’s economic growth and while financial support was widely expected after an earlier government pledge to promote the industry, shares in major automakers jumped after the details were released.

“The extension by another four years beat market expectations,” said Cui Dongshu, secretary-general of the China Passenger Car Association.

New energy vehicles purchased in 2024 and 2025 will be exempted from purchase tax amounting to as much as 30,000 yuan per vehicle. The exemption will be halved and capped at 15,000 yuan for purchases made in 2026 and 2027, the Ministry of Finance said in a statement.

China had also previously offered a subsidy for EV purchases for more than a decade but the program ended last year.

Chinese auto shares rallied after the announcement.

The new package extends the current NEV purchase tax exemption which expires at the end of 2023. NEVs include all-battery EVs, plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles.

Cumulative NEV tax breaks, which were first introduced in 2014 and extended three times as recently as in 2022, exceeded 200 billion yuan as of last year, Vice Minister of Finance Xu Hongcai said at a press conference.

Xu said this year’s exemption would top 115 billion yuan, indicating the new package of 520 billion yuan would be the biggest ever amount of tax breaks for the industry.

“This will aid China’s EV growth,” said Susan Zou, vice president at researcher Rystad Energy, anticipating EVs sales would grow 30 percent in 2024, accelerating from 15 percent estimated this year.

NEV sales rose 10.5 percent in May from a month earlier, showed data from the China Passenger Car Association. They jumped 60.9 percent from a year earlier when COVID-19 curbs still roiled auto production and sales.

Wheat harvest

Top wheat producer China has nearly completed this year’s harvest, state media reported on Wednesday, but most demand for the grain so far is coming from animal feed makers.

China was expected to produce 137 million metric tons of winter wheat this year, and state media have reported a “bumper crop.”

But heavy rain and wind hit large swathes of the crop in central Henan province in early May just before the harvest began, triggering widespread early germination in the grain and other quality issues.

Beijing has urged local reserves to buy up some of the damaged grain but purchases have been slow so far, reported state-backed media China Grain.

Online games

China’s gaming regulator granted publishing licenses to 89 domestic online video games, including titles belonging to NetEase and YOUZU Interactive, according to a list published by the National Press and Public Administration.