Now, as what seems like a knee-jerk reaction to the severe pollution problems, the government is implementing regulations to limit auto sales in eight of the dirtiest cities. If implemented, the new purchasing rules could potentially result in a two-percent drop in nationwide sales. Needless to say, that'd be bad for the economy. These measures follow a pollution tax instituted in Beijing just over a month ago.
Despite its rampant growth, a slowing economy is a legitimate concern in China. Vehicle sales may be up 14 percent in 2013, but dealers have been offering ever higher discounts, according to a story on Bloomberg. Fears of a "cash crunch" have gripped the country, as borrowing rates between banks skyrocketed in June, making financing more difficult for potential car buyers.
The China Association of Automobile Manufacturers is also opposing the regulations on more practical grounds, arguing that they "go against efforts to boost consumption, [deprive] people of the equal right to own a car and don't do much to ease traffic jams," according to CAAM spokesman Shi Jianhua.