The latest plan to boost car sales is not as strong as th

stimulus policy issued a decade ago. For example, the new plan does not include nationwide tax cuts for car purchases. This mean

s local governments will have to make detailed local plans without any guaranteed financial support from the central government.

Nevertheless, the policy will help the market see modest-perhaps 5 percent-growth in sales this year.

A fall in macroeconomic growth would temporarily reduce car sales but

the auto sector still has great long-term potential, as the number of car ownership per thou

sand people in China is 170, compared with 800 in the United States, and 500-600 in European countries and Japan.

However, as plenty of young people from smaller cities move to metropolises, the restri

ction on license plates in order to reduce traffic jams and reduce air pollution will prevent demand from rising high.

The government should work out a plan to better manage the

roadways and traffic, so it can gradually loosen the restrictions on the issuance of license plates.

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