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China won't force foreign auto parts makers to form local JVs: EU trade body

An employee works at a Chinese automobile factory in Hefei, Anhui province, March 15, 2014. REUTERS/Stringer

SHANGHAI (Reuters) - The European trade body in China said Beijing is not planning to force foreign auto parts suppliers operating in the country to form local joint ventures, dismissing a report last week that had stirred concern among European firms.

Germany's Stuttgarter Zeitung newspaper reported that China had urged three German car parts suppliers to form partnerships with local rivals, citing the head of German parts supplier ElringKlinger AG (ZILGn.DE).

"The European Chamber is confident that these rumors are unfounded and that the Chinese government has no intention to require the formation of joint ventures in the sector," the European Union Chamber of Commerce in China said in a statement on its website dated Aug. 29.

The European Chamber said the JV rumors could be the result of a misunderstanding stemming from existing restrictions dating from 2011 for suppliers in the e-vehicle segment.

The talk of JVs being forced upon Western companies comes at a sensitive time for China's auto industry as the country's anti-monopoly regulators step up their probes into the automobile and auto parts sector.

The trade body added that it had spoken with the companies involved, the relevant Chinese authorities, the country's automotive manufacturers association, and numerous member companies in the automotive sector.

"The European Chamber has been reassured by the Chinese authorities that such a move would be contrary to government intentions to further liberalize the auto parts sector," it said.

Last month, China fined a dozen Japanese parts makers a record $201 million for manipulating prices.

European car brands including Volkswagen AG (VOWG_p.DE), Audi AG (NSUG.DE), BMW (BMWG.DE) and Daimler AG's (DAIGn.DE) Mercedes-Benz have lowered prices for spare parts to appease Chinese regulators who have accused some of them of anti-competitive behavior.

(Reporting by Samuel Shen and Adam Jourdan; Editing by Ryan Woo)