The Chinese government will invest more than 100 billion yuan ($14.8 billion) to subsidize its fledgling environmentally friendly car industry over the next 10 years, the Shanghai Securities News reported on Wednesday.

According to a draft plan worked out by the Ministry of Industry and Information Technology, 60 billion yuan will be invested in the development of energy-saving technologies, the newspaper said, citing unnamed sources.

The remainder is earmarked to fund the construction of infrastructure to support energy-saving vehicles in select cities, among other projects, it said.

The government also wants to foster three to five major makers of energy-efficient cars and two to three parts makers that can supply them, it added.

Beijing unveiled plans in June to offer nationwide subsidies of 3,000 yuan for purchases of cars with 1.6 liter engines or smaller and that consume 20 percent less fuel than current standards.

The programme is estimated to cover more than 4 million such vehicles by 2012, the National Development and Reform Commission, the country's top economic planner, said.

China will also hand out subsidies to buyers of electric cars and plug-in hybrid models in five select cities, including Shanghai.

The move is aimed at raising consumer's interest in cars that use less energy and create less pollution than traditional models, but it is unlikely to jump-start the fledgling industry in the short term due to high battery costs as well as inadequate charging and maintenance networks in the country, analysts said.

($1=6.772 Yuan)

(Reporting by Fang Yan and Ken Wills)

China