SHANGHAI: The Chinese government, determined to become a world leader in green technology, says it plans to invest billions of dollars over the next few years to develop electric and hybrid vehicles.

The government says a group of 16 big state-owned companies have already agreed to form an alliance to do research and development, and create standards for electric and hybrid vehicles.

The plan aims to put more than a million electric and hybrid vehicles on the roads over the next few years in what is already the world's biggest and fastest-growing car market.

The announcement, analysts say, is another example of how China seeks to marshal resources and tackle industries and new markets. The plan also underlines what China describes as its growing commitment to combating pollution and reducing carbon emissions.

According to some reports by state-run media, Beijing intends to invest nearly US$15 billion (S$20 billion) in the venture, which if true would make it one of the world's most ambitious attempts to develop more energy-efficient vehicles.

The bold plan was announced late on Wednesday by one of China's most powerful bodies: the State-owned Assets Supervision and Administration Commission (Sasac), which operates under China's Cabinet, or State Council.

State-owned companies 'have an overall advantage in developing the electric vehicle industry', Mr Li Rongrong, Sasac's chairman, said in a statement.

Analysts say the government plan bears watching.

'This is the kind of plan the government would like to happen, and they certainly have the resources to put behind it,' said Professor Oded Shenkar, a professor of management at Ohio State University and author of The Chinese Century.

'The government could easily underwrite or subsidise the development costs, and do it at a time when the global car industry is still reeling.'

Few details of the plan were released. But Beijing said that over the next three years, 500,000 energy-efficient vehicles would reach the market each year and that more efficient vehicles would soon account for 5 per cent of passenger car sales in China. This year, analysts expect vehicle sales in China to reach about 17million.

Sasac's announcement said the alliance had been formed with about US$200million. But other reports said the investment was tied to the government's plan to revamp the car industry and promote energy-efficient vehicles with an investment of nearly US$15 billion.

There is some opposition to the plan. The English edition of The Global Times, another state newspaper, said on Thursday that some groups had criticised the alliance, saying it favoured big state-owned companies and had not made it clear who would own the intellectual property.

'Such an association should include all firms strong in the area, rather than only SOEs,' Mr Zhong Shi, editor-in-chief of China Automotive Review, told The Global Times, referring to state-owned enterprises. 'Although lots of foreign firms launched technology agreements, there is no precedent of successful technology exchange in China's auto industry.'

The government said the country's top state-owned oil producers, power companies, several military and aviation companies, and two of the nation's biggest car companies, China FAW Group and Dongfeng Auto, would be involved in the effort.

Whether China can successfully develop electric and hybrid vehicles of world-class standards is still unclear. China has a lot of carmakers. But the country's engine and car technologies lag far behind those in Japan and the West.

But big companies like General Motors and Volkswagen have been in long-term joint ventures with Chinese carmakers. And experts say that some of the technology being developed here by Chinese engineers has advanced.

'What you have here is the confluence of two important things,' Prof Shenkar said. 'The car industry was long ago designated as a pillar industry for China. And the second thing is green technology or high-tech; this is where the action will be, and China wants to be there.'

NEW YORK TIMES

Source - The Straits Times (http://www.straitstimes.com/Asia/China/Story/STIStory_568956.html)