I want to thank everyone for all the advice on this issue (and especially moondog for generously offering to potentially "lend" one of his WFOEs for this purpose). These suggestions have definitely helped point me in the right direction!

After spending entirely too many hours on the phone with various Chinese bureaucracies and Baidu-ing for info, I believe I've worked out how to do this. I'm going to share what I've found here, in the hopes that others may eventually find it useful. Much of this is in Chinese, however, as I don't make the best translator when it comes to regulations...

The official law governing the temporary import of foreign-registered motor vehicles is entitled 临时入境机动车和驾驶人管理规定 (something like "Provisions on Administration of Vehicles and Drivers for Temporary Entry"), which is 公安部令第90号 (Ministry of Public Security Decree #90). The full text of this is on a bunch of various provincial PSB websites, but the cleanest version can be found on Baike here.

There are a number of things required under this regulation to drive the foreign vehicle in China:

• Original Vehicle Registration (w/ Chinese translation)
• Customs Entry Approval
• Valid Chinese Driving License
• Insurance
• Vehicle Inspection Certificate
• Temporary License Plates

I ultimately ended up speaking with a young woman at the Xinjiang PSB Traffic Management Bureau, who clearly found the idea of a Mandarin-speaking foreigner driving from London to Mongolia via her province to be the most fascinating thing that had ever come across her desk (she spent nearly an hour asking me questions about the whole thing out of pure curiosity). She assured me that this initially daunting list of requirements wouldn't be nearly as bad as they may appear.

Apparently, the first hoop of getting customs entry approval is straightforward: show up at the border and fill in a few extra forms. This goes into a computer somewhere, and if I try to leave China without the car, I'll have to pay the standard import duty. There is apparently an office at the border to buy temporary insurance if you don't already have valid liability coverage for China.

Because I already have a valid Chinese driving license, I am then allowed to simply drive straight into China with my car. However, I'm not allowed to leave the municipality closest to the border until getting 1) the inspection certificate and 2) the temporary plates, which I have two days to do.

There is a form (临时入境机动车号牌、行驶证申请表) to fill in (available online here) and turn in at the local PSB, which will collect a fee (she thought 200RMB) and issue a set of paper temporary plates valid for up to three months. Assuming I stay within Xinjiang (which I plan to do), there's nothing else required; there's more mess to deal with if driving through multiple provinces, but I didn't get into this since it doesn't apply to my scenario.

At first, I thought that this couldn't be right (just drive around without plates for two days?) but the law confirms:

Apparently, this is all that needs to be done. Supposedly, my new friend from the PSB is going to dig around for the specific customs regulations and get back to me with a link detailing the exact laws applicable to that portion of the process as well. Also of note was that people living in countries bordering Xinjiang can seemingly apply for permanent black plates like those used for HK/Macau-registered vehicles.

IF this whole thing turns out to work as described above, I might just be able to pull off this crazy scheme! I'll definitely post back if I do!

I'd certainly agree with you (within cities), but even for those not trying to participate in crazy adventures like the Mongol Rally, a car can provide real value when it comes to exploring interesting, off-the-beaten-path destinations, such as the Tibetan areas of Sichuan or Qinghai. While Chinese driving may be rather bad compared to the US or UK, it's really not (in my opinion) that abysmal by global standards.

Nice to see more potential Ralliers for 2013! What route were you thinking of taking? I'd love to go via Iran, but as a US citizen this is, unfortunately, quite impossible.

To the OP, if you do decide to do the 2012 Mongol Rally, you might be interested to follow our adventures as we take on this year's event. We're not going via China - it's just too expensive and too bureaucratically difficult, and believe me we're dealing with plenty of both those things thanks to our own visa-intensive route, through Iran and all the 'stans of Central Asia - but there will hopefully still be something of interest. Let me know if you have any questions!

I'll attempt to update our trip report thread from time to time, or you can read about it in more detail at our team website or follow us at our facebook page. I still can't believe I'm really doing this...

PS: We're also raising money for two very worthy charities, and we'd love your support. Find out more here.