China to Start Probe Into New-Energy Vehicle Subsidies Fraud

  • Ministerial-level investigation will blacklist violators
  • China new-energy vehicle sales surged threefold last year

China’s central government will investigate reports that companies are committing fraud to obtain state subsidies for new-energy vehicle sales as it seeks to ensure the billions of dollars spent on promoting the use of emission-free autos are going to legitimate automakers.

The finance, industry and science ministries will start a probe with the National Development and Reform Commission and severely punish and blacklist violators, Finance Minister Lou Jiwei said at a weekend forum in Beijing. The results of the investigation will be released to the public, he said.

Chinese media have reported on scams including companies assembling and selling poor-quality vehicles to shell companies to obtain state subsidies. If true, the reports suggest that China has made less progress in promoting the use of new-energy vehicles than painted by official statistics. The China Association of Automobile Manufacturers predicts that sales will more than double to 700,000 units this year after surging threefold last year.

China has given consumers and automakers subsidies to promote the use of electrified vehicles as part of a national push to reduce tailpipe emissions and a reliance on imported oil. The country has invested about 37 billion yuan ($5.6 billion) into the new-energy vehicles segment over the past five years, according to Gao Feng Advisory Co., which estimates the government will provide another 63 billion yuan by 2020.

— With assistance by Haixing Jin

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