Fuel Efficiency

In 2017, the average fuel economy of new vehicles sold in China was roughly 6.29 liters per
100 kilometers (L/100 km).6 (This is equivalent to 37.4 miles per gallon.) The fuel efficiency
of new Chinese vehicles has improved roughly 2% per year on average for the past decade.
In recent years Chinese vehicles have become heavier on average, slowing improvements in
energy efficiency.7

Historically, China’s vehicle fleet has been among the world’s least fuel efficient. For most of the past decade, the average fuel efficiency of passenger cars in China was slightly less than in the United States and Canada, somewhat less than in Mexico, and much less than in Europe and Japan.8

The Chinese government requires all new passenger vehicles to meet fuel efficiency
standards. According to the State Council, the purpose of these standards is “to ease fuel
supply and demand contradictions, reduce emissions, improve the atmospheric environment,
and promote the automotive industry and technological progress.” 9

The Ministry of Industry and Information Technology (MIIT) specifically identifies CO2
emissions reduction as among the “expected social benefits” of its fuel efficiency standards.
MIIT estimates that its 2020 vehicle fuel efficiency standards will reduce CO2 emissions by 113
million tons (as compared to its 2015 standards).10

The Chinese government’s fuel efficiency standards have two main parts. First, each individual
vehicle model must meet specific standards based on its weight. The vehicle fleet is divided
into 16 categories by weight for this purpose. These standards were first promulgated in 2005
and have been tightened every few years since.11
 

Note on Units

In addition, every vehicle manufacturer must achieve corporate average fuel consumption
(CAFC) limits. These limits apply on an annual basis to each manufacturer’s new vehicle fleet
as a whole. The standard for 2016 was 6.7 L/100 km. The standard for 2020 is 5.0 L/100 km.12

Manufacturers are offered several “flexibility schemes” to help meet the CAFC standards. First,
manufacturers are allowed to count each electric vehicle (which uses 0 L/100 km) up to five
times in determining fleet-wide averages. Second, performance may be averaged over several
years, using overperformance in one year to compensate for underperformance in other years.13

China’s fuel economy standards are established by the Chinese Automotive Technology and
Research Center (CATARC) and promulgated by the Ministry of Industry and Information
Technology (MIIT).

Enforcement of fuel efficiency standards is uneven, with some experts saying manufacturers
face few penalties for failing to comply. MIIT publishes fuel efficiency data for each
manufacturer annually. In 2016, 43 manufacturers failed to meet MIIT’s standards.14

Nevertheless, one analysis found that China’s domestic vehicle manufacturing industry as a
whole met the government’s fuel efficiency standards in 2015. According to the Innovation
Center for Energy and Transportation, a nongovernmental organization, the fuel efficiency
of the Chinese domestic new vehicle fleet in 2016 was 6.56 L/100 km, well below the
government standard of 6.7 L/100 km. (When credits for electric vehicles were removed, the
fuel efficiency was 6.83 L/100 km.)15

Chinese taxes on the manufacture and import of passenger cars vary by size, with larger cars
paying more. This promotes fuel efficiency. There is also a 10% tax on “super-luxury vehicles”
(priced above 1.3 million yuan, equal to roughly $190,000). The Finance Ministry says this tax
is aimed at encouraging “rational consumption” and promoting energy conservation.16

References

6. Calculation based on data in Ministry of Industry and Information Technology, “年度乘用车企业平均燃料消耗量与新能源汽车积分情况” [2017 annual average of fuel consumption of passenger car] (April 10, 2018),  http://www.miit.gov.cn/n1146295/n1652858/n1653100/n3767755/c6124752/content.html.

7. See Innovation Center for Energy and Transportation (ICET), “China Passenger Vehicle Fuel Consumption
Development Annual Report 2016” (September 2016), http://www.icet.org.cn/english/admin/upload/2016092735417005.pdf.

8. Zifei Yang and Anup Bandivadekar, “2017 Global Update Light-Duty Vehicle Greenhouse Gas and Fuel Economy Standards,” International Council on Clean Transportation (ICCT) (2017), https://www.theicct.org/sites/default/files/publications/2017-Global-LDV-Standards-Update_ICCT-Report_23062017_vF.pdf.

9. State Council, “Notice on the issuance of energy-saving and new energy automotive industry development plan
(2012–2020), (June 28, 2012)” http://www.gov.cn/zwgk/2012-07/09/content_2179032.htm; Ministry of Industry
and Information Technology, “Stage 4 Fuel Consumption Standards for Passenger Cars” (January 26, 2015) at #7, http://chinaafc.miit.gov.cn/n2257/n2260/c97720/content.html.

10. State Council, “Notice on the issuance”; MIIT, “Stage 4 Fuel Consumption Standards” (January 26, 2015) at #7.

11. Josh Miller et al., “China: Light-duty: Fuel Consumption,” TransportPolicy.net (modified February 23, 2016), http://www.transportpolicy.net/index.php?title=China:_Light-duty:_Fuel_Consumption; Innovation Center for Energy and Transportation (ICET), “China Passenger Vehicle Fuel Consumption Development Annual Report 2016” (September 2016) at p.2.

12. Innovation Center for Energy and Transportation (ICET), “China Passenger Vehicle Fuel Consumption
Development Annual Report 2017” (December 2017), http://www.efchina.org/Attachments/Report/report-ctp20171201/2017%E5%B9%B4%E4%B8%AD%E5%9B%BD%E4%B9%98%E7%94%A8%E8%BD%A6%E7%8 7%83%E6%96%99%E6%B6%88%E8%80%97%E9%87%8F%E5%8F%91%E5%B1%95%E6%8A%A5%E5%91%8A-final.pdf. See also MIIT, Ministry of Finance and MOFCOM, “Measures for the Parallel Administration of the Average Fuel Consumption and New Energy Vehicle Credits of Passenger Vehicle Enterprises” (September 27, 2017), http://www.miit.gov.cn/n1146295/n1146557/n1146624/c5824932/content.html; Zheng Yu, “China – Energy-Saving and New Energy Development Plan for the Automobile Industry,” (October 28, 2017), http://www.conventuslaw.com/report/china-miit-released-measures-for-parallel-point/.

13. Miller et al., “China: Light-duty: Fuel Consumption” (modified February 23, 2016); Innovation Center for Energy and Transportation (ICET), “China Passenger Vehicle Fuel Consumption Development Annual Report 2016” (September 2016) at p.6.

14. “工信部公示2016年度汽车企业平均油耗 43家未达标” [43 Companies failed to meet the standards in 2016] (April 14, 2017), http://www.sohu.com/a/133963193_430921.

15. Feng Hao, ”China’s EV push hurting fuel economy standards,” China Dialogue (November 21, 2016), https://www.chinadialogue.net/article/show/single/en/9414-China-s-EV-push-hurting-fuel-economy-standards; Innovation Center for Energy and Transportation (ICET), “China Passenger Vehicle Fuel Consumption Development Annual Report 2017” (December 2017) at pp.29 and 34.

16. Ministry of Finance, “Notice about Additional Taxation on Luxury Vehicles,”  http://szs.mof.gov.cn/zhengwuxinxi/zhengcefabu/201611/t20161130_2469890.html.

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