Individuals are unlikely to be allowed to act as used car salespeople for the time being because of the lack of a sound and efficient social credit system in China, according to a senior official.

"We should be cautious in making such a deregulation," said Chen Lin, vice-director of the Department of Market System Development of the Ministry of Commerce, denying media reports that the ministry has decided to open the second-hand car sales market to individuals.

Speaking to a seminar of the ongoing China International Fair of Investment and Trade, which opened Wednesday in Xiamen, Chen said the regulations for used car sales have been drafted and are being aired for advice and suggestions from companies, industrial associations and relevant organizations.

Due to concerns on defaults and irregularities in the used car market, individuals may still be barred from used car sale business by the new regulations, Chen said.

However, other deregulations will be made.

"We will greatly reduce the red tape in second-hand auto deals," said Chen, adding the ongoing proceedings are too heavy a burden for dealers.

"For example," he said, "car dealers in Beijing should undergo up to 13 procedures to finish a deal."

This situation will be rectified as the new regulations will simplify the whole process.

Moreover, Chen said the regulators are considering eliminating the compulsory appraisal system in used car sales, a move said to further liberalize the used car market.

"Used cars, if not State assets, should not been subject to compulsory appraisal," he said.

China's used car transactions are still under strict location, qualification and procedural requirements. Businesspeople and market observers have called for regulators to open the market wider.

As for normal auto sales, Chen said the ministry is also busy drafting rules to push for the brand sale and service mode, which means sellers and service providers of different brands of cars should be auto suppliers themselves or franchised by auto suppliers.

"By 2006, all autos should be subject to such a mode," Chen said.

The move is to regulate market order and safeguard the interests of car buyers.

Overseas investors will be allowed to be sellers and service providers for Chinese-made cars.

Second-hand auto circulation and auto sale are two aspects of a five-part package of regulations that the ministry is working on. The other three will be auto component circulation, disposal of waste cars and foreign trade of automobiles, Chen said.

"We are working with relevant departments to update and improve the legal framework for China's auto service and trade sectors, giving a real boost to auto manufacturing," said Chen.

"The move aims to foster a batch of competitive auto trading companies and fuel China's auto imports and exports," he added.

The improved legal framework for auto service and trade follows the new auto policy set out in June, which replaced the old one outlined in 1994 and provides a roadmap for China's auto development in coming years.

The policy, made by the National Development and Reform Commission, calls for balanced development of the auto-making industry, and the auto service and trade industry.

Unlike developed countries, China lacks a complete set of auto service and trade sectors, which is hampering the further development of the auto industry.

China has become the world's fourth largest auto maker in 2003 with an annual output of 4.44 million cars.

(China Daily September 10, 2004)