(Yicai Global) June 22 -- China will ease restrictions on original equipment manufacturers to tackle overcapacity in the automotive industry, according to a government official.

To that end, the country will also promote industrial concentration and curb blind investment and construction, Guo Shougang, deputy director the Ministry of Industry and Information Technology’s equipment industry department, said at the 2021 China Auto Forum in Shanghai on June 18.

The ministry investigates investment, operation and production as well as capacity utilization in the auto industry every year, Yicai Global learned.

Ahead of the forum, the ministry focused on auto industry investment in Jiangxi and Jiangsu provinces as well as capacity utilization in key companies, including Baoneng Group and China Evergrande Group.

China’s passenger vehicle capacity utilization rate dropped from 66.55 percent in 2017 to 48.45 percent last year, indicating severe overcapacity, the China Passenger Car Association said in a report in February. The rate was less than 10 percent at more than 33 automakers.

China had 122 passenger carmakers with a total capacity of about 41.5 million units as well as a capacity of 9.88 million -- mostly new energy vehicles -- under construction at the end of last year, though the capacity utilization rate was lower than 50 percent.

Several new NEV projects are under way. On Feb. 3, Liao Bing, founder and chief executive of Shanghai-based electric auto maker Nio announced the formation of a new NEV firm, Ziyou Motor, in Shenzhen.

Faraday Future will come to China and settle in a southern coastal city, the US EV startup said at the end of January, adding that the city will offer about 1.3 million square meters of industrial land to the company.

Evergrande and Baoneng have bought land in many Chinese cities to build plants with a designed capacity of over 1 million units each, even before they achieve mass production.

Editor: Peter Thomas