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1、Journal of Asian Electric Vehicles, Volume 16, Number 1, June 20181781Law and Policy on the Development and Promotion of the New Energy Vehicle (NEV) Market in ChinaDennis Nikolaus BlattKoGuan Law School, Shanghai Jiao T

2、ong University, hinack@sjtu.edu.cnAbstract China’s commitment towards becoming more innovative and environmentally-friendly, has led to the implementa-tion of a myriad of policies to fulfill future development plans; whi

3、ch has subsequently allowed the New Energy Vehicle (NEV) market to thrive. The NEV market has benefitted from policies which incentivize and prioritize in-dustries in the field of innovation and environmental technology,

4、 in addition to policies providing generous sub-sidies specifically towards the manufacturing and sales of NEVs. As China’s NEV market continues to grow at a rapid pace, this paper will analyze the significance played by

5、 policies implemented at various government levels, towards facilitating the development and promotion.Keywords China, policies, development, promotion, new energy vehicle1. INTRODUCTIONChina is currently the world’s la

6、rgest electric vehicle market, and having set a sales target of 5 million New Energy Vehicles (NEVs) by 2020, has led to the im-plementation of policies at various government levels, to help facilitate further advancemen

7、ts towards the development and promotion of the NEV market. The NEV market plays an integral role in China’s future development, as the 13th 5-Year Plan (2016-2020) has emphasized the importance towards innovation and tr

8、ansitioning into a Green Economy; as the targets provided in China’s 5-Year Plans aren’t policies them-selves, they require policies to help facilitate achiev-ing such targets.China’s commitment towards positioning thems

9、elves as global powerhouse in the fields of environmental development and innovation, has resulted in the nation shifting towards eco-friendly and innovative industries to help achieve future targets [Zheng et al., 2012]

10、; thus, allowing the NEV market to thrive. China’s NEV market has had a positive impact towards help-ing achieve such targets, as the market has facilitated such areas as reducing urban air pollution and carbon emissions

11、, reducing the nation’s dependence of oil, in addition to strengthening the labor market by provid-ing more jobs and increasing the demand for special-ized talents.The current policies are a clear indication of China’s s

12、trong commitment towards their NEV market. Poli-cies regarding the issuance of subsidies, allows eligi-ble NEVs to be sold at competitive prices; additional-ly, it removes skepticism over the lack of facilities, as subs

13、idies are also provided to manufacturers of charg-ing facilities. The NEV market has also benefitted through certain restrictions placed on their emission-based counterparts, thus creating a market-friendly environment f

14、or NEVs. Currently, the Chinese NEV market is a subsidy driven market, and has surpassed the United States in terms of sales volume, by achieving a sales total of 336,000 NEVs in 2016, according the statistics provided

15、by the International Energy Agency [International Energy Agency, 2017]. According to a report published on September 2017 by Bloomberg New Energy Finance, domestic NEV manufacturers such as BYD and BAIC fared better than

16、 their foreign counterparts, with both manufacturers accounting for roughly 40 % of the market, whereas Tesla accounts for 9 % of the market and is the only foreign NEV manufacturer holding a respectable share of China’s

17、 NEV market [Bloomberg, 2017]. China’s NEV market can be categorized into three types of vehicles; them being, battery electric vehicles (BEV), plug-in hybrid vehicles (PHEV), and fuel cell vehicles (FCEV).Although the N

18、EV market is currently a subsidy-driv-en market, the State Council has announced that all NEV subsidies would be slowly phased out by the end of 2020; hence, making the amendment and imple-mentation of certain NEV-relate

19、d policies inevitable. 2. HISTORY2.1 Early stages (Developing NEVs) The source of China’s earliest NEV-related strategies can be traced back to the period of China’s 8th 5-Year Plan, which proposed a plan to develop el

20、ectric ve-hicles; resulting in the introduction of government-Journal of Asian Electric Vehicles, Volume 16, Number 1, June 20181783updated catalog; the 15th version of the catalog was published on 19 December 2017 [Mini

21、stry of Industry and Information Technology, 2017].The issuance of subsidies has helped towards creat-ing a market friendly environment in other areas of the market, as subsidies are also provided towards the manufacturi

22、ng of charging facilities, additionally, the development strategy for charging facilities are pro-vided in the “Development Guideline on EV Charging Infrastructure 2015-2020”. The plan provided nation-wide target of 5 mi

23、llion newly constructed charging piles throughout 2015 to 2020, whilst addressing the need to establish a more developed charging network; this resulted in the strategic placement of charging piles throughout different c

24、ities and saw charging piles being erected in gas stations and public parking facilities. Additionally, the plan called for the strength-ening of support measures, to go in accordance with the “Guiding Opinions on Accele

25、rating the Promotion of the Application of New Energy Vehicles”; stating that the relevant state departments are encouraged to formulate additional policies to provide fiscal support, whilst encouraging local government

26、s to introduce the aforementioned policies and provide the fiscal subsi-dies at the local level. Although the issuance of subsidies is the preferred method towards developing the market, other incen-tives are provided; m

27、ainly towards the buyers of NEVs, with the incentives varying by region. NEV owners are entitled to NEV-specific license plates in various cities, allowing them to obtain a license plate without having to participate in

28、a license plate lottery. Certain areas provide NEVs with preferential parking or a reduction in highway fees. 3.2 Energy conservation and emission reductionAs NEVs have helped towards conserving energy and reducing emis

29、sion rates, the continuous development and promotion of NEVs has been has been considered as an effective method of mitigating both concerns, as stated in State Council’s publication of the “Air Pol-lution Prevention and

30、 Control Action Plan” in 2013; which simultaneously proposed restrictions to be placed on emission-based vehicles and saw subsidies being reduced for oil. Furthermore, China showed their commitment towards their environm

31、ental targets and NEV market on a global scale, by becoming a signatory of the Clean Energy Ministerial Electric Ve-hicles Initiative in 2016. Although certain environmental factors such as Chi-na’s amendment of their En

32、vironmental Protection Law in 2014 and ratification of the Paris Agreement in 2016, weren’t initiated as a means to stimulate growth of the NEV market, they strongly indicate China’s commitment towards their environmenta

33、l targets, hence proving that China’s favorability towards NEVs will continue to increase. Apart from prohibiting emission-based vehicles which don’t comply with the proper emission standards, the manufacturing process

34、 of emission-based vehicles will soon be subject to a standard which highly favors NEVs, through the introduction of the Carbon Credit Trading Scheme. The scheme applies to automobile manufacturers whom meets the Nationa

35、l Development and Reform Commission’s minimum sales threshold and provides them with a carbon credit quota. Manu-facturers can earn carbon credits through the manu-facturing of NEVs, which are needed to manufacture emiss

36、ion-based vehicles; the repercussions of exceed-ing the quota includes a hefty fine worth five times the amount of a carbon credit. Although the scheme has yet to be initiated, it already provides quotas for 2019 and 202

37、0; additionally, the scheme will ensure that a suitable amount of NEVs will be manufactured after the phasing of all subsidies. Additionally, manufacturers of emission-based vehi-cles are expected to suffer the ultimate

38、 blow, as China intends to ban all emission-based vehicles in the fu-ture, as stated by the Vice Minister of the Ministry of Industry and Information Technology, Xu Guobin [Electrek, 2017]; thus, leading to certain manuf

39、actur-ers, such as Ford and Daimler, to start shifting their at-tention towards manufacturing NEVs for the Chinese market.3.3 Foreign branded NEVsForeign branded NEVs have also capitalized on Chi-na’s demand and started

40、 to build a stronger presence in the market; despite having their NEVs priced at a significantly higher rate, due to the high levels of tax-es and customs duties imposed on imported vehicles, resulting in the additional

41、 expense being passed onto the customer. The huge markup placed on imported NEVs places them at a disadvantage compared to their locally manufactured counterparts. In order for foreign NEV manufacturers to circumvent the

42、 issue and build a stronger presence in the Chinese market, they are required to manufacture their vehicles locally; with the current regulations stipulating that foreign manufacturers are required to engage in a joint v

43、enture with a local partner. The joint venture man-date (JV Mandate) for automobile manufacturers im-poses stricter thresholds on foreign parties, compared to the threshold provided in the Law on Sino-Foreign Equity Join

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