China has said that it will offer as much as a 60,000 yuan (US$8,797) subsidy to buyers who purchase new energy vehicles as it wants to encourage eco-friendly vehicles so that they will become popular.

The subsidies, which are given to plug-in hybrids and pure electric cars, would be initially go on trial in five cities - Shanghai, Changchun, Shenzhen, Hangzhou and Hefei, the Ministry of Finance said in a statement yesterday.

Based on the capacity of the battery packages, a 3,000 yuan subsidy is offered for each kilowatt for green cars, going to a maximum of 50,000 yuan for plug-in hybrids and 60,000 yuan for electric cars.

The money would be given to new energy vehicle producers so that they could lower the vehicle price to benefit buyers or leasing companies.

Also, the central government will offer 3,000 yuan subsidies for gasoline and diesel cars with 1.6-liter-or-less engines that consume 20 percent less fuel than current models, the ministry added.

China plans to invest 10 billion yuan to speed up commercialization of new energy vehicles and it also aims to have 500,000 green cars rolling on the roads by 2012.

Jia Xinguang, an independent auto analyst, said after an earlier trial by government departments last year, the extension of the subsidy scheme shows China is keen on new energy vehicles, especially electric cars. But it doesn't mean it's the right time for a massive application now, he said.

"The market depends on reliable quality of the products, mature infrastructure as well as better understanding among consumers, which takes time," Jia pointed out.

Other analysts also said the measures for hybrid vehicles are not attractive enough and demand may slowly pick up.

General Motors, which already makes hybrid cars in Shanghai, will import its Volt plug-in hybrid into China next year. SAIC Motor Corp will also market its first electric car as early as 2012.

"The subsidies will encourage car makers to pour more resources to industrialize (green vehicles)," said Xu An, an official at BYD Automobile Co Ltd, a battery and electric car producer.