(Yicai Global) March 4 -- The chairman of leading Chinese carmaker Changan Automobile Group will call on the government to improve the review process for foreign investment in new vehicle projects to avoid redundant capacity hurting the interests of its old Chinese joint venture partners.

Regulators needs to monitor closely new solo investment by foreign carmakers in the country after the restrictions on overseas investment in the Chinese auto sector were lifted, since any new plants could hurt the business of existing JVs, Zhu Huarong, who is also a delegate to the National People’s Congress, will propose during the annual NPC meeting, which is scheduled to open in Beijing tomorrow.

Moreover, local governments can compete against each other for investment by foreign carmakers, Zhu said, adding that that could enable them to secure subsidies or tax breaks from more than one local government, resulting in unfair competition.

Zhu also said he is going to recommend that the government improve policy implementation to avoid such loopholes, and will ask it to guide foreign carmakers to put more resources into shifting their JVs from making fossil fuel-powered cars to clean energy vehicles.

Chongqing-based Changan Auto has a joint venture with US auto giant Ford Motor, with several production plants in various Chinese cities. The JV’s Chongqing plant is Ford’s second-largest after the its Detroit factory.

The Chinese government has relaxed policy regarding foreign investment in passenger car manufacture since Jan. 1. There will no longer be any policy barrier for foreign firms to set up solely owned new factories, acquire other existing firms, raise their shareholding ratio in existing JVs as well as set up new JVs with new partners in the country. 

Editor: Tang Shihua, Futura Costaglione