22 March 2019

Local govts have mixed feelings about car curbs

Beijing’s car number was close to 5.2 million as of the end of last year, according to the Beijing Daily. The massive fleet of private vehicles can comfortably carry the capital city’s entire population of around 20 million if all the cars were four-seat sedans. Meanwhile, Shanghai now has more than 3 million cars running on its slightly over 7,000 kilometers road grid.

A recent report from the Chinese Academy of Social Sciences has pronounced that China is well on the way to an era of automobiles. It noted that the nation’s car parc ratio, a gauge of car population in a territory, has already climbed to almost 20 percent as of 2012, a year in which 19.3 million new cars hit the road. A decade ago, the country had just about 4 million cars coming onto the road annually.

But the skyrocketing car ownership has caused a whole lot of problems – from traffic congestion and parking lot scarcity to environmental damage.

This has prompted Beijing, Shanghai and Guangzhou to put a cap on new cars in their cities through measures such as quotas and license plate auctions and lotteries. Several other places, particularly provincial capitals and coastal cities, are mulling similar policies despite opposition from car buyers.

It is worth bearing in mind that these moves, and many other measures to be rolled out soon, run counter to the central authorities’ stated aim of giving a push to the auto sector, a backbone of the country’s manufacturing industries.

Since 2004, the State Council has promulgated guidelines thrice to fuel the auto sector. The most recent set of significant policy initiatives, gazetted in 2010, were seen as a vital route to grease the wheels of the economy which had suffered a significant slowdown amid global headwinds.

As part of efforts to shore up economic activity and boost domestic consumption, the central government directed local authorities to formulate necessary measures to enhance household car ownership, with an aim to lift the nation’s annual car sales to 25 million by 2015.

Defying central authorities’ mandate can be risky. Analysts believe the three tier-one cities will put fewer teeth into rules that would limit car purchases. Such move makes sense as the cities would not want to see a big dent in revenues generated from the auto sector.

Beijing has a substantial stake in Mercedes-Benz and Hyundai plants in the city through Beijing Automotive Industry Holding Corp., while Shanghai is one of the key bases for General Motors and Volkswagen. Guangzhou, meanwhile, derives a quarter of its industrial output from the several franchises of Japanese auto giants.

This has already led to some well-calculated measures that appear to be curbs on the surface, but in fact contain some hidden boosters. Compulsory periodic replacement of existing cars, a policy adopted in Guangzhou, is an example. Under the new regime, a vehicle owner there will have to change to a new car within a decade from the issuance year of his license plate. Otherwise, he will risk losing the license, as the Southern Metropolis Daily noted.

Some other initiatives also provide a glimpse of how officials try to walk a fine line between opposing interests.

Media reports have said that Guangzhou has turned to the Guangdong provincial authorities in the hope that the latter can wield its influence to request Shenzhen and Dongguan, backyard markets of Guangzhou carmakers, to think twice before announcing car curbs. Meanwhile, a proposed policy loosening in Shanghai, which involves scrapping the limit on license plates for cars registered in its suburban districts, has been linked to Volkswagen’s plans to build assembly plants in neighboring provinces.

– Contact the writer at [email protected] 


EJ Insight writer

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