Overview and Analysis of Environmental and Climate Policies in China’s Automotive Sector

Abstract

This article categorizes the mode of the most important environmental and climate policy instruments adopted in the automotive industry in China and identifies challenges to instrument implementation as well as potential ways to overcome them. The analysis shows that command-and-control standards are the dominant mode of environmental policy in China’s automotive industry and incentive-based instruments, taxes, and other market-based measures that form the backbone of transport policies in Europe and elsewhere are underrepresented. However, exceptions to this rule exist in form of locally applied incentive-based instruments, and in form of subsidies in the policy field of new energy vehicles. At present, command-and-control regulation shows the highest efficacy despite design flaws. Incentive-based instruments will achieve sufficient effectiveness in China only if their design as well as implementation and enforcement infrastructure are reformed substantially. This includes defining clear responsibilities, and powers in enforcement as well as rulemaking.