Society

China's Ministry of Finance confirmed that it will end a tax break for purchases of smaller cars that has helped to drive auto sales in the last two years.

The ministry said Tuesday that the purchase tax for passenger cars with engines of 1.6 liters or less will return to 10% from Jan. 1., ending a preferential rate of 7.5% in place this year. The rate had already been raised from a special rate of 5% the government implemented for smaller car purchases in January 2009.

The National Development and Reform Commission, China's main economic planning agency, said on Dec. 9 that the 7.5% tax break would expire at the end of this year.

Expectations of the tax change are one factor that caused analysts and industry executives to predict that sales growth in China, the world's biggest car market, will likely slow in 2011 to around 10%, from around 30% this year.

Top Chinese blogger Han Han confirmed on his blog Tuesday that his magazine Party, of which only one issue has been printed, has stopped “indefinitely.”

“I hereby announce the dismissal of the team of Party,” wrote Mr. Han, a race car driver and novelist known for being outspoken about social reform. Shedding new light on statements from his lead editor Monday, Mr. Han said he tried and failed to work with publishing houses around China but could not find a publisher for his second issue. “After serious consideration, I decided to freeze all Party operations indefinitely, because of my limited capability,” he said, adding that he didn’t want people to waste their time “waiting hopelessly.”

In a text message to The Wall Street Journal, Mr. Han said he didn’t know “where the pressure came from that led almost all publishers and magazines to suddenly express that they couldn’t cooperate with me.” But given the situation, “we had to stop,” he said. Mr. Han, 28, is known for writing bold social commentary from when he was just a teen, including a novel called “Triple Door” that was seen as being critical of China’s education system.

Beijing's municipal government Thursday unveiled sweeping measures to curtail the number of cars sold in the city next year, in a bid to ease traffic chaos that could prompt similar moves in other Chinese cities and deepen an expected slowdown for the auto industry.

Beijing will limit the issuance of new car and microvan license plates in the city to 240,000 in 2011, about one-third of this year's figure, and only registered Beijing residents will be able to obtain one. Cars that don't have Beijing license plates will be barred from entering the main city area during rush hour.

Yale Zhang, an independent auto analyst, said the measures were more stringent than the market had expected. "Auto makers may have to adjust their production and sales plans next year," he said.

Shanghai has had similar restrictions on car sales for almost 10 years, but during that time, Beijing has "insisted it would not do so," Mr. Zhang said.

"The move by Beijing will basically cost auto makers half a million new car sales next year. But Beijing as the capital city can become an example for other cities in the future," he said.

Chinese Premier Wen Jiabao voiced confidence Sunday that his government can contain rising prices, seeking to reassure the public about inflation a day after the central bank raised interest rates for the second time in 10 weeks.

Speaking to listeners Sunday during a visit to state radio headquarters, Mr. Wen acknowledged that recent price increases have "made life more difficult" for middle- and lower-income Chinese. But, pointing to measures the leadership has taken in recent months, he said: "As it looks now, we are completely able to control the overall level of prices."

The remarks, in a session where Mr. Wen was asked repeatedly about prices, reflect the issue's political sensitivity for Beijing.

Accelerating inflation in recent months has been driven largely by increasing prices for food and housing that disproportionately affect the lower-income people Mr. Wen's government has publicly championed.