By Mark Schaub and Atticus Zhao King & Wood Mallesons’ Corporate & Securities group

China obviously has big plans for autonomous vehicles.   

A major step forward showing the Chinese government’s resolve and its multi-faceted plans it has for this key sector was when on 5 January 2018, China’s National Development and Reform Commission (NDRC) issued a draft Strategy for Innovation and Development of Intelligent Vehicles (“Draft Strategy”) for public comment. [1]

The Draft Strategy was issued just 8 working days after the NDRC released the Three Year Action Plan to Enhance the Core Competitiveness in Manufacturing Industry (2018- 2020). The Action Plan included an Implementation Plan for the Commercialization of Key Technology for Intelligent Vehicles. So they have been busy.

The key points of the Draft Strategy are as follows:

Strategy Situation

The Draft Strategy confirms that intelligent vehicles are strategic for the China auto industry’s development. The NDRC foresees intelligent vehicles as the far reaching platform from which applications of telecommunications, internet, big data, cloud computing and artificial intelligence (AI) all come together.

The NDRC also sees that developing intelligent vehicles is strategically significant for China beyond the auto sector. The rise of intelligent vehicles will boost development of China’s auto related industries including chips, software, information telecommunication, data services and also foster new business models for transportation. However, the strategic nature of autonomous vehicles goes beyond simple economics as the development of intelligent vehicles, internet of vehicles, intelligent traffic systems and smart city infrastructure will reduce car accidents, save lives, ease traffic congestion and save fuel/energy consumption.

The Draft Strategy states that there are currently more than 200 million vehicles in China and it continues to grow with annual sales of new vehicles totaling nearly 30 million. Accordingly the NDRC is very clear as to the massive market in China for intelligent vehicles.

Strategic Vision

The Draft Strategy lays out a 3 phase vision as to how intelligent vehicles will develop in China:

  • By 2020 – a systematic framework for China standard intelligent vehicles will be in place for technology innovation, industrial eco-system, infrastructure network, laws and standards, product regulatory and information security. By this time intelligent vehicles will account for 50% of new cars in China; commercialization of middle and high level intelligent vehicles will have been achieved; and 90% of highways in big cities have been covered with wireless telecommunication networks for vehicles (LTE – V2X).
  • By 2025 – the system for China standard intelligent vehicles will fully take shape with respect to technology innovation, industrial eco-system, infrastructure network, laws and standards, product regulatory and information security; almost 100% of new vehicles will be intelligent vehicles; scalable high level intelligent vehicles will be on the market; new generation wireless telecommunications network for vehicles (5G– V2X) will basically meet the needs to allow for the development of intelligent vehicles.
  • By 2035 – China standard intelligent vehicles will earn its global reputation and China becomes a power house of intelligent vehicles.

The above 3 phases are largely in line with targets set in the Made in China 2025 Policy[2] as well as the Auto Industry Mid- and Long Term Planning issued by the Chinese authorities in April 2017.  There are skeptics that believe it is very ambitious for China to have half of new vehicles (about 15 million) being intelligent vehicles by 2020.

Strategic Mission

The Draft Strategy sets out the goal for China to establish independently controllable technology innovation systems for intelligent vehicles. These systems will include break-through key technologies, testing appraisal technology and development of a cross industrial ecosystem.

In this regard China’s plans includes the development of a network of road and facilities for intelligent vehicles, including infrastructure, wireless telecommunications networks for vehicles to cover the whole enormous country, establishment of a nationwide basic mapping system for vehicles and big data cloud computing platforms for intelligent vehicles. In comparison the UK government has recently announced funds in its budget for autonomous cars including hi-tech projects, research on artificial intelligence, for electric car charging points and to boost clean car sales – but no funds earmarked for the development of the physical infrastructure to enable mass autonomous driving.[3]

Crucially, the NDRC recognizes that not only physical infrastructure is required but also legal infrastructure. The NDRC states China will eliminate legal barriers for market access to intelligent vehicles, issue regulations on autonomous vehicle road testing on public roads and strengthen research for autonomous driving systems and clarify legal liability in respect of traffic accidents, amend China’s road traffic law to allow for intelligent vehicles, adjust China’s laws and regulations to allow for mapping for intelligent vehicles, establish intelligent vehicles safety management system, strengthen vehicle cybersecurity and protect privacy.

What’s Next

NDRC has set 15 days for public comment on the Draft Strategy. This period will expire by 20 January 2018.

The Draft Strategy notes the development of intelligent vehicles is a matter of significance for China and that it is essentially a now or never chance to allow China to overtake global incumbents in the auto industry and taking a leadership role.


[2] It is a PRC national 10-year action plan issued in March 2015 which is designed to transform China from a manufacturing giant into a world manufacturing power.