A notification jointly issued by four ministries, including the Ministry of Finance and Ministry of Industry and Information Technology, on March 26 said several technological thresholds for new-energy vehicles (NEVs) will be raised and some subsidies cut to upgrade the sector.

NEVs, credited with promoting green transport, have established a clear direction for the world's auto industry. They are also a backstop for China's independent auto industry innovation. However, compared with conventional vehicles, NEVs are still not so well developed, and to promote them in the market, the Chinese Government has been providing subsidies for their production and sale.

The policy adjustment is intended to regulate the subsidizing. The new stringent subsidy policies will ensure that the money goes to those NEV plants really in need of financial support.

At a time when China's economic growth is slowing down, it's necessary to provide more financial support to NEV plants and the market. However, subsidies to any industry should be based on strict oversight. Big subsidies are not necessarily effective in boosting an industry, and the key is being given to where they are really needed.

After the technical threshold for NEVs is raised, the amount of subsidies will see a decline, but this will not stop the pace of China's NEV development.

(This is an edited excerpt of an article originally published in Beijing Youth Daily on March 27)