At 9 p.m. on June 30 last year, the city of Guangzhou caught car sellers and buyers by surprise. The municipal government hastily called a press conference and announced, without warning, that starting the following day only 10,000 cars could be sold per month. The move would be an effort to unclog the city’s roads and clear up its skies, both of which were being choked by a boom in vehicle sales.
The announcement immediately sparked an overnight car-buying bonanza. Dealers called in their off-duty salesmen and last-minute tire-kickers rushed to dealerships to outrun the clock.
Over 200,000 cars were sold in Guangzhou in the 12 months before the restrictions took effect. That may sound like a lot, but this city of 12 million still only has around 150 cars per 1,000 residents. If Guangzhou’s car sales are allowed to soar unfettered, that figure could triple as the city reaches car ownership penetration on par with Beijing or New York. The environmental concerns associated with so many cars are particularly conspicuous as smog becomes a crisis-level issue for some Chinese cities. Just last week, schools and airports in the northeast city of Harbin were shut down by a blanket of thick, gray smog caused by coal-burning heating systems firing up for the winter.
Guangzhou’s new policy has made it a poster-city for regulating car sales. In September, China’s central government announced that other eight major cities will implement similar rules of their own. There has even been talk that a total of 25 cities will launch car-sales restrictions by the end of 2015. The spread of these new regulations is a sign that the government is finally recognizing the impact of skyrocketing car sales on China’s cities.
According to the World Health Organization, Guangzhou is the eighth most polluted city in the world, and the third worst in China after Beijing and Chongqing. While data for Guangzhou is not publicly available, nearly a quarter of Beijing’s PM10 (particulate matter that is 10 micrometers or less in diameter) comes from car exhaust, and 30 percent of these dangerous pollutants are dust, dirt and other particles kicked up by moving vehicles. Assuming the numbers are similar for Guangzhou, that means about half of the city’s PM10 is due to cars alone.
Further, traffic jams are potentially costing the city billions of dollars in economic waste. In Beijing, which suffers traffic jams comparable to Guangzhou’s, congestion causes around $2.2 billion in economic losses per year — over four percent of the city’s GDP. Commuters spend an average of 48 minutes on the road each day. And the traffic may be scaring away workers – a study by Kent Hymel of UC Irvine shows that major cities that halve their congestion over the course of a decade can see an increase in employment of as much as 7.5 percent.
But whether Guangzhou’s efforts will enhance the city’s resilience in regards to pollution and traffic congestion is far from clear. If anything, there is a growing consensus that the city did not enact the right measures to best address the issue.
Smog has become a major concern for many major Chinese cities, and Guangzhou is no exception. Photo credit: Robert S. Donovan via Flickr
“The policies are unfair, unreasonable and unsustainable,” wrote Zhao Jian, a transportation expert at Beijing Jiaotong University, in a widely-circulated op-ed for Caixin magazine last year. “The costs for causing the traffic jams are not borne whatsoever by people who already own a car — they are only borne by the new buyers and those not lucky enough to win the auction… Further, while fewer new cars have hit the road over the past year, nothing has been done to limit the use of cars purchased before the regulations.”
Many others appear to share Zhao’s opinions. In a poll conducted this year by Gaishi, a Chinese auto research firm, only two percent of over a thousand transportation experts recommended car-sales regulations as a way to reduce congestion and auto-related air pollution.
“This policy may be effective in curbing the growth of new car ownership in the short run,” says Xiamen University’s Shihe Fu, a leading urban economist. “However, it is likely to be ineffective in the long run as people adjust their behavior to avoid the restrictions. More importantly, there will be no effect on the driving behavior of car owners because they still pay no cost for creating congestion and pollution on the road, so this policy has a very weak effect in curbing congestion and pollution.”
Governments across China have tried a wide array of approaches to dealing with traffic problems. Beijing prohibits car owners from driving one day per week. Xiamen has reduced bus fares to 15 cents per ride. Chengdu has instituted temporary widespread restrictions to facilitate subway construction. And the capital has also attempted to stagger government employees’ work hours. But, says Fu, “None of these have been effective. All of these policies have either changed or distorted peoples’ behavior, or have been completely offset by the large increase in car ownership.”
The government has not directly answered any of these criticisms, so analysts have been forced to speculate about the rationale behind the car-sales restrictions. An editorial in the China Commerce News, a major Chinese business publication, didn’t hold back its critique: “Clearly a better distribution of the country’s resources, particularly in the form of urban infrastructure spending like subways and buses, would be a more impactful solution to the traffic problem. Unfortunately, the government has chosen the car-sales restrictions because they are easy to implement and don’t require much expense. Building subways, on the other hand, costs time and money.”
But some analysts believe that the government will eventually find a solution. Jun Ma, chief economist at Deutsche Bank in Hong Kong, authored an in-depth study this summer on how China can address its traffic and air-quality issues over the coming decades. One of the major policy recommendations in Ma’s report was supported by all of the transportation and economics experts interviewed for this article: a congestion toll levied on cars using certain roads at certain times of day.
“Road pricing has two advantages over command-and-control policies such as bans on driving and restrictions on the days when a vehicle can be driven,” according to a 2011 study published in the Review of Environmental Economics and Policy by Alex Anas of SUNY-Buffalo and Rob Lindsey of the University of British Columbia. “First, it induces adjustments in trip frequencies, destination, mode and time of day and route, as well as in long-run location decisions. Second, road pricing can be varied with the magnitude of the congestion externality according to place, time of day and type of vehicle.”
These tolls have already been levied with considerable success in places like Singapore, London and Stockholm. And as Anas and Lindsey concluded in their study of traffic management policies, tolls look like they might be Guangzhou’s — and China’s — best hope for car-related resilience: “Only road pricing has the potential to manage congestion in an economically efficient way.”