A worker checks a pure electric car at a workshop in Jianghuai Automobile Co Ltd in Hefei, capital of East China's Anhui province, Aug 19, 2014. [Photo/Xinhua]

China will extend subsidies for new energy "green" vehicles to 2020, according to draft rules published on Tuesday, extending the current incentive program which expires at the end of 2015.

The policy represents China's latest effort to fight severe pollution and snarling traffic and is a boon to firms such as Warren Buffett-backed BYD Co Ltd, the country's biggest maker of electric vehicles.

Subsidies will be granted to buyers of pure electric, highly electrified plug-in hybrid and fuel-cell vehicles, with the amount of subsidies gradually scaled down during the period from 2016 to 2020, according to the draft rules posted on the Ministry of Finance's website.

China has rolled out a series of policies to encourage sales of green vehicles, hoping the industry can help China fight pollution and reduce the country's reliance on imported oil.

Production of such vehicles in China has jumped five-fold during the first 11 months of this year compared with 2013, but the industry still far lags Beijing's goal of putting 5 million new energy vehicles on Chinese roads by 2020.

China will still only subsidize purchases of locally manufactured green vehicles, excluding imported cars by foreign companies such as BMW, Tesla Motors Inc and Nissan Motor Co Ltd.

Buyers of pure-electric cars will initially be able to receive subsidies of up to 55,000 yuan ($8,834) under the draft rules, while buyers of pure-electric busses will be eligible for up to 500,000 yuan.