Drivers in mainland China who trade in an old car for a newer model are eligible for a subsidy of up to 10,000 yuan (HK$10,800), the commerce ministry has announced.

China is the world's biggest market for cars, and the most competitive in the electric vehicle sector, with more than 100 homegrown companies racing to make the clean car of the future.

To boost demand, Beijing is offering the subsidy to drivers who trade in an electric or hybrid vehicle registered before 2018, or a gasoline-powered car that doesn't meet certain national emissions standards.

Those who replace a vehicle purchased after 2018 will be eligible for a subsidy of 7,000 yuan, the commerce ministry said in a statement.

The measure, in force until the end of the year, applies to all purchases of new electric or hybrid vehicles.

Its announcement coincides with the China Auto Show, where Chinese brands are stealing the show from foreign manufacturers struggling to make the transition to electric vehicles. (AFP)