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China's environmental rules threaten GM, VW parts supply

Beijing shuts down plant that produces parts for Germany's Schaeffler

SHANGHAI -- China's crackdown on polluters could threaten the operations of carmakers such as General Motors and Volkswagen, as a supplier to a leading auto components maker was shut down due to a violation of the country's stricter environmental laws.

Authorities recently ordered the supplier of German parts maker Schaeffler to halt operations, according to Chinese media reports. In response, Schaeffler filed a petition to the Shanghai municipal government last week, saying it will also be forced to stop production if supply from the metal-processing company is cut off.

In China, Schaeffler supplies autoparts to Chinese joint ventures of U.S. and European carmakers such as GM and VW, as well as local automakers. The German components maker said Monday the impact is currently "manageable," but with its parts used in over 200 car models, problems could emerge later.

Chinese authorities have been ramping up environmental regulations in an effort to tackle the country's severe pollution. Regulators also ordered paper producers to halt production, leading to a surge in cardboard box prices.

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