Auto emission constitutes an increasingly severe source of pollution to Chinese urban areas as the country is developing its economy rapidly. Vehicles contribute most of air pollution in metropolitans like Beijing and Shanghai. The State Environmental Protection Administration(SEPA) will take the following measure to give a brake to this situation, improve the air quality in urban areas and prevent photochemical air pollution accident.

Firstly, a legal system will be ready. SEPA has its draft of regulations on auto emission pollution control submitted to the State Council. The draft is designed to manage new vehicles, vehicles in use and oil for autos including cars, motorcycles and those for agricultural purpose. It will be a comprehensive process ranging from new autos modeling, production, check-up, marketing and importation, to inspections of autos in use, retire vehicles and fuel oil.

The standard system will also be upgraded. SEPA has prepared an upgraded standard for auto emission which is similar to Euro III. This new standard will be released in advance so that enterprises have enough time to get ready for it technically.

Secondly, information on environmental friendly auto models up to standard will get to the public in a more efficient way. The database for such models, the most comprehensive one in China, has offered powerful technical back-up to the program of preventing and reducing pollution caused by vehicles in this country. SEPA will improve the mechanism to make sure enterprises have their autos up to the set standard and those which fail are punished in line with the Law of Prevention and Treatment of Air Pollution.

Thirdly, vehicles in use will be put under stricter management. One of the focuses is the annual inspection on environmental protection of those vehicles. SEPA will start very soon to set up a database for information on pollutants emission from autos in use. Enterprises which fail to have their autos in use up to the standard will be put under scrutiny if the SEPA finds it is necessary.

Fourthly, autos in major cities like Beijing can be subject to stricter emission standard to prevent photochemical pollution and reduce the damage to air caused by automobiles.

Fifthly, fuel of higher quality used for autos will be available. A program of fuel with low sulphur is being made under the cooperation between SEPA and other departments and enterprises concerned. This is to address the issue of fuel supply to autos under Euro III standard so that auto products will have another leap forward in the next decade and catch up the developed regions like US and EU.

In 2000, the Ministry of Finance and State Administration of Taxation jointly issued a notice to reduce consumption tax by 30 percent for newly manufactured cars which were up to the Euro II emission standard before the benchmark was put into effect. This is the first time the government has given fiscal incentives to enterprises to promote environmental protection.

Tax reduction policy has been approved by the State Council to be extended to models which are produced in line with Euro III emission standard before the standard takes effect. The Ministry of Finance and State Administration of Taxation is working on rules specifying the implementation of the policy.