CHINA will allocate an annual fund of up to 2 billion yuan (US$316 million) from this year to help develop and mass produce new-energy vehicles to cut fuel consumption and carbon emissions, Vice Minister of Finance Zhang Shaochun said.

Government departments, logistics operators and car rental firms in 25 pilot cities will be encouraged to use environmentally-friendly cars while buses with hybrid engines will run in major cities.

In a statement posted on the ministry's website yesterday, Zhang also called on participating cities to lift traffic curbs on green cars and introduce preferential policies to help with parking, electricity fees and highway tolls to boost their use. The construction of related infrastructure, such as charging stations, also needs to be speeded up, he said.

By 2015, it is hoped to have 500,000 electric and hybrid units on the roads, going up to 5 million units by 2020.

But the road ahead seems to have several bumps.

Ye Sheng, auto research director of market research company IPSOS, said Chinese car buyers tend to pay high attention to cost-effectiveness.

"Though a study shows 30 percent of them are willing to pay extra money for an environmentally-friendly car, most of them are not interested in the current models as they find the energy-saving function cannot offset the cost of purchase in the long run," Ye said.

Source:shanghaidaily.com