CAAM statistics show that although passenger vehicle sales increased 7 percent to a record monthly high of 1.85 million in January, domestic brands continued to lose market share.

Chinese vehicle brands' total sales slid 5.1 percent year-on-year and 6.6 percent month-on-month in January, to 709,400 units.

That decline took the companies' combined market share down 4.9 percentage points year-on-year and 4.4 points month-on-month.

However, Chinese tycoon Li Shufu, chairman of Zhejiang Geely Holding Group Co Ltd, the best-known domestic car producer, said he welcomes opening the door further to foreign capital.

"The policy only protects State-owned auto companies, not the entire automobile industry. Its persistence is like parental indulgence of children, which is not good for the grown-ups," said Li.

He also said loosening limits on foreign participation will help Chinese automakers compete with foreign rivals face-to-face, "which is good and necessary".

Zhao Hang, director of the Tianjin-based China Automotive Technology and Research Center, said the limit - which has been in place since 1994 - should be adjusted to reflect the developing situation.

"We should have confidence in Chinese automakers' ability. They can survive in the automotive market once they lose the government's protection in joint venture partnerships, even without cooperation with foreign capital," said Zhao.

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