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Beijing traffic planning revisited

I wrote a brief note earlier this year on how Beijing should resolve its traffic problems. The interesting news over the past few days is that the Beijing administration has announced a whole set of anti-traffic congestion policies.  The Vice-Mayor of Beijing in charge of traffic ‘resigned’ the day the measures were introduced and is off to western China – I am an uneducated foreigner in China but it looks to me that someone was upset with his performance.

Many of the proposed policies I really like. Some I don’t like much.  Overall the policies are a dramatic determination of the administration in Beijing to address looming terrible traffic concerns in the city and I congratulate them for adopting that sense of urgency. 

  • The main policy is to restrict the number of new car licenses to 240,000 per year by means of a quota.  Cars under this quota will be issued by a lottery system.
  •  There will be a 5 year ban on official cars although I did not understand how this was consistent with the report that official cars would get up to 10% of the quota.
  •  Car numbers will be limited on basis of odd and even number plates.  This was the policy adopted during the Beijing Olympics. 
  • Parking fees will be increased and will be highest in congested zones.  
  • Congestion pricing will be introduced at an ‘appropriate time’.  
  • Bicycles will be publicly-provided to make free short trips from 200 locations in the city.  
  • Extra trains and buses will be provided 
  • Park-and-ride facilities will be provided at subway stations at low cost.  
  • A whole set of new roads and tunnels will be built.

The big policy is the car quota which will cut growth in car numbers by more than 50%. 

 The policy will have an impact. Note that the quota is not being auctioned so the gains from the policy will accrue to those who get a number plate. Gains will also be conferred on existing car owners since the resale value of their vehicles will increase. If the cars can be resold these will be real capital gains to some. You get some measure of efficiency but it is imperfect since the price here is related to car ownership not congestion-causing travel.

 Having got a car there will be triple convergence incentives to use it a lot.  In simple terms once you get a car you will have enhanced incentives to use it given that there are fewer other drivers on the road.  Depending on the size of these ‘rebound’ effects (and ultimately on the scale of latent demands for travel) these effects can range from insignificant to effects large enough to destroy any advantages from the licensing scheme.

 Of course too this scheme will only slow the growth of new cars.  Unless the quotas are tightened there will still be catastrophically large numbers of vehicles in Beijing but it will take longer.  This extra time is an interim solution which permits introduction of a more efficient longer-term scheme such as congestion pricing.

 Of course I would have liked congestion pricing now which directly targets the externality in an efficient way.  Those with high-valued journeys will pay for them.

Presumably the park-and-ride policies will involve very large subsidies to those using these services. The subway stations in Beijing are in areas where property values are very high.

The supply options are inevitably subject to triple convergence problems.  My guess is that most will work short-term but fail longer-term.

It will be interesting to see how this scheme works out. I asked my BEDA students to keep me posted!

2 comments to Beijing traffic planning revisited

  • ken n

    When I began to go to China private car ownership was, for practical purposes, prohibited. In the south the roads were starting to resemble Saigon with motorbikes everywhere. I think they were worse than cars.
    Traffic in Beijing was still mostly bicycles.
    I would guess that the new restrictions might slow down growth in car ownership but nothing more. I think the want for the flexibility and privacy you get with a car is so strong that the demand will continue to grow as affluence increases.
    Does Singapore still have a restriction on the total of cars so you need to dump one to buy a new car?

  • hc

    Ken, Yes Singapore has a quota although it has shifted the vweight of policy more towards congestion pricing.

    I agree cars are convenient and not, themselves, a problem. Its congestion that is the problem which is why I favour congestion pricing solutions.

    Beijing now has 4.7 million vehicles, faces about the worst congestion anywhere and is adding 700,000 vehicle annually. Hence among the most drastic policies ever undertaken anywhere.

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