China encourages use of fuel-efficient cars

China prepares to release a new policy encouraging development of fuel-efficient, compact cars, in a shift of strategy for a market that until recently was dominated by gas-guzzling sedans.

Liu Zhijie, an official with the National Development Reform Commission, China's top planning agency, told an energy conference in Beijing the new policy would clarify rules on emissions and small engines, according to the Xinhua News Agency.

Liu gave no details. However his comments followed reports China is planning to raise taxes on large engine vehicles as part of efforts to counter surging fuel prices. The central government also has said it wants an end to local restrictions that until recently have discouraged purchases of compact cars.

In cities like Shanghai, mid-sized to large sedans made by joint venture auto factories dominate the roads, due to the tendency of government agencies and companies - the biggest buyers in the past - to favor bigger vehicles as status symbols, the AP reports.

V.Y.