Speculation rises that China may quash Hummer purchase

Speculation rises that China may quash Hummer purchaseBeijing - Speculation mounted on Friday that the Chinese government might not approve a local car maker's planned purchase of General Motors' Hummer-brand sports utility vehicle unit.

China National Radio said the National Development and Reform Commission was "inclined to reject" the plan to acquire Hummer by Sichuan Tengzhong Heavy Industrial Machinery because of the firm's small size and inexperience, and because of environmental concerns.

The radio station cited no official sources, but its report mirrors several others by state media in recent days.

But the official People's Daily newspaper on Friday quoted Yao Jian, a spokesman for the Ministry of Commerce, which is also involved the approval process, as saying last week that Tengzhong's bid was "rational and normal" given the current global financial crisis.

Yao said his ministry had not yet received an application from Tengzhong, the newspaper reported.

At a forum on June 9, a senior official suggested that he saw the production of the Hummer vehicles as contrary to the government's recent policy of promoting low-pollution, energy-efficient vehicles.

"Buying a fuel-hungry and high-emission brand is directly against the current trend of energy saving and emission reduction," Lu Zhongyuan, deputy director of the State Council's Development Research Centre, was quoted as saying.

Tengzhong General Manager Yang Yi last week said the company planned to go ahead with the takeover and was confident of securing funding.

"We have the financial resources for the Hummer deal from our own sources and also funding from some financial institutions," the China Daily newspaper quoted Yang as saying.

On Thursday, the Chinese website Sina. com cited unidentified sources as saying plans were made for a signing ceremony on Sunday.

But China Daily quoted a "person with knowledge of the matter" as saying the report of a planned signing was "groundless rumour".

Tengzhong, like GM, has refused to give financial details of the deal, which industry analysts have estimated could be worth between 100 million dollars and 500 million dollars. (dpa)