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Purchasing Cars in China
China was long known for its abundance of bicycles. In the mid-90s, however, the government began encouraging its citizens to privately own cars. This fact, together with a general growth of the better-off middle class, has made the dream of owning a car come true for many Chinese. In 2013, for instance, nearly 18 million new vehicles were sold!
The market for used cars in China is similarly picking up. As the first big run for cars in China is now a few years past, the number of used vehicles up for sale has increased significantly, allowing even those with less financial means to buy a car.
This is not only good news for the local population! Importing your own car is widely regarded as not worth the time and money it takes and is furthermore restricted to certain types of expats (e.g. so-called permanent representatives). As such, expats are usually better off buying a car in China.
You can find all types of makes and models, both used and new at local dealers or in classified ads. If you do not speak Mandarin, make sure to bring along somebody you trust to translate for you, or try to find a dealership that offers English speaking services. Purchases of cars in China are typically done in cash, with buying on credit the less common option. Keep in mind, though, that you need a Chinese driver’s license to be allowed to drive a car in China!
Mandatory Car Insurance in China
Third-party liability as well as so-called commercial insurance is mandatory for cars in China. These are necessary to cover any harm or damage done to other persons or their property. You will have to show proof of insurance during the registration process for your car.
Since 2012, foreign insurers are allowed to sell mandatory insurance policies for cars in China and further steps have been taken towards the liberalization of the local insurance industry. The market share of foreign automobile insurers is, however, still comparatively small.
You may thus well end up with a local insurance company. Well-known Chinese auto insurance providers are for example the state-owned People Insurance Company of China (PICC) and the Ping An Insurance Group (product information in Chinese only).
The registration of cars in China is not always easy. Depending on where in the country you are hoping to register your car, the money spent on registration and license plates may even surpass the actual price of your vehicle!
License Plate Lotteries or Auctions
The number of cars in China is growing extremely fast, leading not only to problems with smog in the cities, but also severely congested streets. The currently most famous example for the latter is the 12-day gridlock of the China National Highway and the Beijing-Tibet expressway in 2010.
To counteract such congestion and smog problems, a number of Chinese cities have introduced car registration quotas and license plate lotteries or auction systems. At the time of writing in early 2015, this was the case for the following metropolises:
In some of these, you have to put your trust in Lady Luck to win your license plate in the lottery. In others, be prepared to spend quite a bit of money bidding for a plate. In Shanghai, for instance, previous auctions have shown that registering your car here can easily cost you about 90,000 CNY (i.e. around 14,500 USD) if you are willing to go that high. Keep your overall budget and cost of living in mind before you get ready to spend that much.
Registering a Car in China
As the examples above already show, the costs and registration process for cars in China very much depend on the city or region. Similarly, the necessary documents may vary. Typically, you have to bring the following when registering your car:
- valid ID and Chinese driver’s license
- Chinese residence permit (if applicable)
- proof of purchase
- proof of insurance coverage
Some automobile dealers may take care of the registration for you.
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