China to tighten green car subsidy program following scandal

BEIJING (Reuters) - China will raise technical requirements for green energy cars to receive subsidies and make awards retroactive rather than at the time of purchase, as it tries to rein in widespread cheating by automakers uncovered earlier this year.

China has spent heavily on its green car subsidies, $4.5 billion last year alone, to combat heavy pollution which affects large swathes of the country and as a means for the Chinese automotive industry to catch up to global competitors.

The program helped quadruple sales of electric and plug-in hybrid cars in 2015 and fueled a 60 percent jump this year, but it also spurred fraud. Beijing has so far accused 5 automakers of breaking rules on green car subsidies and alluded to more violations by unnamed firms, while state media has reported the names of a further twenty.

“(The cheating) has attracted a high degree of attention from all of society and even the international automotive industry with the State Council attaching great importance to demanding that acts of cheating be seriously investigated and dealt with,” the Ministry of Industry and Information Technology said in a statement on Wednesday.

China will soon issue a policy making a variety of adjustments to the program, including setting upper limits on local and central subsidies, the ministry said, adding subsidies will be rewarded retroactively and the government will strengthen the application and inspection procedure.

The ministry said it would particularly change requirements for coach buses and special-use vehicles.

The Ministry of Finance announced results of a probe into subsidy cheating in September, with violations particularly prevalent among bus makers.

($1 = 6.9491 Chinese yuan renminbi)

Reporting by Jake Spring; Editing by Himani Sarkar