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Market News

 May 29, 2009
China Imposes Stricter Mileage Rules Than U.S.

 The president of China's Innovation Center for Energy and Transportation has said that Chinese officials are drafting new mileage standards that would require an 18 percent improvement in fuel economy by 2015. New cars in China already average about 35.8 mpg and under the new rules, would be required to get 42.2 mpg by 2015. The new U.S. standards require an average mgp of 35.5 by 2016.

The average mpg in China is greater than in the U.S. because the majority of their cars are much smaller. The country favors smaller cars with a 1 percent sales tax while mid-size and larger cars can come with a 40 percent sales tax. China's new rules stand to benefit more than just the environment.

Up until 1995, the country was self-sufficient in oil, but now they import three-fifths of their oil needs. Breaking free of that foreign dependence could mean economic and political advancement for the country as well.

Domestic automakers stand to gain from the new rules because they're mainly making the small subcompact models that need very little improvement to reach the new standard. Multinational companies that make up most of China's mid-size and larger market have the greatest gains to make in mpg to meet the new standards.

While China still has a long way to go in cleaning up their technologies, they've repeatedly shown great ambition and advancements in areas like electric cars and renewable energy. These new mpg standards can be added to the list.