China to expand sales tax cuts on cars in 2010-paper

SHANGHAI Nov 30 (Reuters) - China will continue to support its auto industry next year with more extensive tax incentives, the Shanghai Securities News said.

The Ministry of Finance and the National Development and Reform Commission have both agreed to carry on with sales tax cuts on cars in 2010, a move which has bolstered the country's auto sales to record monthly highs this year, the newspaper said over the weekend, without citing sources.

Tax cuts will apply to all passenger cars, not just on cars with a 1.6 litre engine or smaller, like they had been for this year even though smaller cars or those with lower fuel emission levels will enjoy deeper tax cuts, it said.

China's auto market has been a major bright spot amid a global industry downturn thanks to Beijing's policy incentives, which also include subsidies for buyers in rural areas who traded in old vehicles for new and more fuel efficient ones.

Many industry executives, including Chen Hong, president of China's biggest automaker SAIC Motor Corp (600104.SS), had said recently that they believed the government would continue to support the auto industry, a major growth engine of the economy.

Auto sales in 2010 may slow from roughly 40 percent growth this year due to a much higher comparative base, but they will continue to expand at a fairly rapid level, executives said. (Reporting by Fang Yan and Jacqueline Wong) ((yan.fang@thomsonreuters.com; Reuters Messaging: yan.fang.reuters.com@reuters.net; +86 21 6104 1793)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))