Braking Beijing’s car addiction

Ben Garside's picture
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20 January 2011

Driven by subsidies for small cars and an ever increasing middle class, the Chinese year of the tiger saw a ferocious increase in the car industry — a whopping 18.1 million vehicles (including 13.8 million cars) were sold in China in 2010, up by a third from the previous year. But will new efforts by Beijing combat both the booming economy and the grid-locked streets? And is this another example of China setting a new course for a greener future?

In August last year a traffic jam along the Beijing-Tibet highway spanned 60 miles and lasted for 10 days. And China set a new world record in vehicle sales, selling over 50 per cent more than the United States for the same year. But a change of direction that came into effect on 1 January 2011 is set to cut the number of new cars joining Beijing’s crowded streets by a third by limiting new Beijing license plates to 240,000 a year. Critically, driving in the city during peak times requires a Beijing licensed vehicle.

Although not directly targeting car manufacturers, the new law will effectively curtail local demand. And if the model is replicated elsewhere in car-hungry China, it may reduce the number of cars produced for domestic use. Combined with other measures, such as removing subsidies on small fuel-efficient cars, the growth of the car industry is predicted to slow to 10 per cent in 2011 — still significant but similar to that of the United States in 2010.

Macro factors

This decision to combat increasing congestion in Beijing will not have been taken without a wider view of the impacts on the macro-economy and most likely with an eye to China’s CO2 emissions (which were discussed in a recent blog post. Indeed moves to slow the economy and combat inflation, such as raising interest rates and appreciating the Yuan, have been introduced at the same time. In 2010 the Chinese government also stepped up efforts to reduce industrial emissions, closing the worst polluting factories.

More equitable urban planning

For city dwellers, the macro-economic considerations are less of an issue than the daily commute. What will be the effect on the populace of limiting the number of cars in Beijing? How does this compare with efforts elsewhere in China and in other emerging economies? Beijing is not the first city in China where restrictions on vehicle licenses have been introduced.
Shanghai has had strong restrictions since 1994, issuing a limited number of car licenses on an auction basis each year. The result has been high bidding prices for the privilege of driving in the city — currently a number plate, at US$6,000, can cost more than a car! Investment in Shanghai’s public transport has benefited, with nearly all of the money raised ploughed into transport infrastructure — with a target of 500km of subway lines by 2012.

Elsewhere in emerging economies, Delhi — the world’s second most polluted city — introduced a congestion charge zone (pay to enter during peak times) during the recent Commonwealth Games to improve air quality and reduce congestion. Delhi intends to keep the system in place in central areas on an ongoing basis.

One advantage of the Beijing model is that, unlike Shanghai, it is relatively equitable. Licenses will be issued on a lottery basis to anyone who applies. The outcomes of this remain to be seen — it is easy to imagine the incentive for poorer groups to apply to the lottery even if a car is unaffordable so as to sell the registration on the black market.

It would not be the first time that informal markets and perverse incentives have resulted from congestion regulation, reducing their effectiveness and equity. Athens introduced a system of odd and even registrations, which could only be used on alternate days. But those who could afford it bought two cars to avoid any restriction on their motoring, thus compounding the congestion problem.

In principal, restricting the supply of registrations — and in an equitable way — might be a more effective and just way of tackling pollution and congestion problems than ‘pay to enter’ congestion charges or ‘1-0’ number plate systems.

Car lock-in

Beijing’s urban planning is based on a circular ‘pancake’ model. The city sprawls over a huge area with commercial areas separated from residential, which creates an over-reliance on access to the central area. As a result, huge numbers of people need to cross large distances every day.

Significant investment in public transport and other factors such as park and ride schemes help in the short term to an extent. But the car will always be desirable unless there is a change in urban planning — and some have criticised the ‘car lottery’ as too little too late for Beijing’s problems. One suggestion for Beijing is to move away from a single central business district, creating more densely populated satellite centres with a better mix of local commercial and residential property.

Of course better urban planning would benefit many big sprawling cities — from Los Angeles to Lagos. China is perhaps in a better position to make more radical changes given the top-down nature of planning and the booming economy. It remains to be seen whether China will move from reactive to proactive solutions to the rapidly growing urban areas. And if it does will the equitable nature of the ‘car lottery’ model be replicated elsewhere — in Beijing’s broader urban planning, in other cities in China, and beyond?


Ben Garside is a researcher in the Sustainable Markets Group at IIED.

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