Why did china cancel subsidies on small vehicles?



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    The subsidies were originally imposed in 2010 to increase consumer demand for smaller cars.  The Chinese government announced that it would promote fuel-efficient technologies, but other sources speculate this is part of a larger trade war going on between the United States and China.  

    The criteria for meeting the subsidy was tightened to cars with engines which use less than 1.6 liters.  Chinese auto-manufacturers, who are not very competitive in the small car markets, are impacted the least by the subsidy, while American and European automakers are impacted most.

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