China says to subsidize buyers of green cars

A general view shows vehicles travel on the West 2nd Ring Road during rush hour in Beijing July 18, 2008.

SHANGHAI (Reuters) - China will subsidize sales of green vehicles in five cities selected for a pilot programme as the government steps up efforts to promote environmentally friendly vehicles in a bid to cut fuel emissions.

A statement on the main government website (www.gov.cn) late on Wednesday said Beijing would hand out rebates to private car buyers for the first time. It did not provide further details.

Beijing will also expand its pilot scheme to subsidize the purchase of clean-energy vehicles for public transport fleets in 13 to 20 cities, it said, without giving a timetable or naming the cities.

The trial scheme, first unveiled in February, will promote the use of electric, hybrid and fuel-cell vehicles by public transport operators, taxi firms and postal and sanitary services.

Subsidies will be based on the gap in prices between more energy-efficient vehicles and those with traditional engines, with subsidies running up to 600,000 yuan ($87,880) for fuel cell powered large commercial buses.

Many Chinese automakers, such as BYD Co -- 10 percent controlled by U.S. billionaire investor Warren Buffett's Berkshire Hathaway Inc -- have unveiled their self-developed electric or hybrid models.

But it is difficult for the industry, still in its infancy, to take off without aggressive government support, industry executives and analysts said.

($1=6.827 YUAN)

(Reporting by Fang Yan and Jacqueline Wong)