China’s Ministry of Industry and Information Technology has tightened regulations on the construction of new factories for the manufacture of traditional gasoline-burning vehicles.

The policy change in the auto market comes as the government cracks down on “zombie” firms and pushes automakers to convert to non-polluting electric vehicles.

China’s top economic planner, the National Development and Reform Commission (NDRC), said on June 12 that private capital is encouraged to flow into new energy vehicle (NEV) production in order to boost the healthy development of the market.

The country will assist conventional automobile enterprises to restructure to use NEVs. Mergers are also encouraged in order to help optimize capacity layout in the oil-fueled auto industry.

The government sees the production of electric vehicles as a way to compete with international companies.

Production and sales of new energy vehicles in China rose in May. A total of 45,000 NEVs were sold, up 28.4 percent over the previous year, according to data from the China Association of Automobile Manufacturers on June 12.