China steers funds to auto industry

China said it would lower taxes on car purchases and subsidize vehicle purchases for farmers to prop up the steel and automobile industries.

The plan to help two pillar industries includes dropping vehicle sales taxes from 10 percent to 5 percent for cars under 1.6 liters, Xinhua news reported Thursday.

The government also set aside $730 million for one-time allowances to farmers who wish to upgrade from three-wheeled vehicles to mini-trucks or mini-vans, the report said.

A portion of the funds will be used to increase subsidies for scrapping old cars. Part of the program also includes loosening restrictions on vehicle purchases.

Another $1.5 billion was set aside to assist with technology upgrades for car plants in an effort to help them develop alternate-fuel vehicles.