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China investigates massive fraud among manufacturers of green vehicles

Staff Writer | September 13, 2016
Chinese authorities are investigating possible large-scale fraud among the manufacturers of green vehicles suspected of receiving subsidies illegally.
Green vehicles
Auto industry   Chinese authorities are investigation subsidies
The China Association of Automobile Manufacturers (CAAM) announced, EFE reports. A couple of days after five automakers were penalized for carrying out such practices, an official from CAAM said the authorities had identified other companies who had breached regulations to obtain government subsidies.

Xu Yanhua, a deputy secretary general of the CAAM, did not specify the number of companies who had flouted regulations, although data released by state-run media indicates that up to 20 more companies could be involved in the fraud.

On Thursday, China's Ministry of Finance announced that it would penalize five car manufacturers for committing breaches including inflating production and sales figures to qualify for and obtain subsidies worth around $150 million.

The ministry said it will revoke the production license of one of the five automakers, Suzhou Gemesa Coach Manufacturing, and disqualify it, along with the other four companies, from receiving any more government subsidies.

The sector of eco-friendly or green vehicles is one of the priorities of the Chinese government, which has included them in its "Made in China 2025" plan launched last year.

Beijing has offered substantial subsidies to manufacturers of such vehicles and introduced tax breaks on purchases of electric cars while expanding the network of charging stations for such vehicles with the aim of developing this sector.

Sales of hybrid and electric vehicles tripled in China in 2015 over the previous year to 331,100 units, according to CAAM.