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    Data Response 1

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    Vivian
    - China's goal of promoting cleaner, low-emission vehicles may need to wait as the government prioritizes stimulating the country's largest car market amid falling sales. - While China has set emissions standards, it has not provided the incentives needed to make expensive low-emission cars more affordable for buyers. Subsidies from the government could help boost demand for these technologies. - In response to slowing car sales, the government unveiled policies in January to attract buyers back, such as reducing taxes on smaller engine vehicles and eliminating some road fees. However, more incentives will still be needed to convince consumers to switch to electric vehicles.

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    Data Response 1

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    Vivian
    92 views2 pages
    - China's goal of promoting cleaner, low-emission vehicles may need to wait as the government prioritizes stimulating the country's largest car market amid falling sales. - While China has set emissions standards, it has not provided the incentives needed to make expensive low-emission cars more affordable for buyers. Subsidies from the government could help boost demand for these technologies. - In response to slowing car sales, the government unveiled policies in January to attract buyers back, such as reducing taxes on smaller engine vehicles and eliminating some road fees. However, more incentives will still be needed to convince consumers to switch to electric vehicles.

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    - China's goal of promoting cleaner, low-emission vehicles may need to wait as the government prioritizes stimulating the country's largest car market amid falling sales. - While China has set emissions standards, it has not provided the incentives needed to make expensive low-emission cars more affordable for buyers. Subsidies from the government could help boost demand for these technologies. - In response to slowing car sales, the government unveiled policies in January to attract buyers back, such as reducing taxes on smaller engine vehicles and eliminating some road fees. However, more incentives will still be needed to convince consumers to switch to electric vehicles.

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    © All Rights Reserved
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    92 views2 pages

    Data Response 1

    Uploaded by

    Vivian
    - China's goal of promoting cleaner, low-emission vehicles may need to wait as the government prioritizes stimulating the country's largest car market amid falling sales. - While China has set emissions standards, it has not provided the incentives needed to make expensive low-emission cars more affordable for buyers. Subsidies from the government could help boost demand for these technologies. - In response to slowing car sales, the government unveiled policies in January to attract buyers back, such as reducing taxes on smaller engine vehicles and eliminating some road fees. However, more incentives will still be needed to convince consumers to switch to electric vehicles.

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    of 2

    –2– M11/3/ECONO/HP3/ENG/TZ0/XX

    1. Study the extract below and answer the questions that follow.

    Low-emission cars a future priority

     China’s campaign to bring cleaner, low-emission vehicles to its roads may have to wait as
    the government first tries to stimulate growth and prevent falling sales in the world’s largest
    car market. BYD Ltd, and other Chinese car manufacturers with ambitions to be among
    the first to market all-electric vehicles globally, are hoping for support from the government
    to stimulate demand.

     However, creating a low-emission vehicle market is unlikely to be a priority. While China


    has made much progress in setting standards regulating vehicle emissions, it has not
    gone as far as providing incentives for buyers of these expensive but low-emission cars.
    According to Henry Li, general manager of BYD Ltd, subsidies can help boost the
    quantity of cars demanded, because this is good technology, though expensive compared to
    conventional cars.

     Car sales growth in China slowed in 2008 as consumer confidence fell in a weaker economy.
    This has caused the government to take steps to increase demand. Beijing unveiled a number
    of policies in January to attract buyers back into showrooms, including halving the indirect tax
    on cars with smaller engines.

     The government has also eliminated some road fees. However, given the high cost of
    developing hybrid (partly-electric) and all-electric cars, car manufacturers require more than
    the reduction of road fees and tax breaks to stimulate demand, experts said. “There should
    be some incentives in place to convince consumers to switch to electric cars,” said the
    chief executive officer of EuAuto Technology Ltd, which recently began marketing a small,
    low-emission car, made in China.

    [Source: adapted from http://www.chinadaily.com.cn/china/2009-04/20/content_7695337.htm, 20 April 2009]

    Reprinted with permission.

    (This question continues on the following page)

    2211-5107
    –3– M11/3/ECONO/HP3/ENG/TZ0/XX

    (Question 1 continued)

    (a) Define the following terms indicated in bold in the text:

    (i) demand (paragraph ) [2 marks]

    (ii) subsidies (paragraph ). [2 marks]

    (b) Using an appropriate diagram, explain the effect of government subsidies to


    producers of low emission vehicles, on the market for low-emission vehicles in [4 marks]
    China

    (c) Using an appropriate diagram, explain the effect of the elimination of road [4 marks]
    fees and reduced taxes for electric cars, on the market for petrol/diesel cars in
    China

    2211-5107 Turn over

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