By Jim Taylor, Editor MACS ACtion Magazine
Since you haven’t been under a rock for the last five years, you’re certainly aware of the explosive double-digit growth seen in China’s economy. A fair portion of that growth comes from the transport sector, and it’s beginning to have undesirable effects within the country.
As car sales and ownership increases China’s metropolitan areas, particularly Beijing, are suffering congestion on an epic scale. That city holds almost 20 million people and nearly five million cars, both using an ancient road network that it being updated but not quickly enough. Industrial and tailpipe pollution compound the daily problems.
The Chinese government has avowed its intention to become in all ways a modern, clean and efficient nation. They are taking many steps to clean up construction, manufacturing and transport sources that contribute to both bad air and congestion.
The Ministries of Commerce and Finance recently restarted their version of our Cash for Clunkers, by which an owner receives a reasonable sum for getting an old car off the road.
They’re looking to get vehicles 6 to 15 years old off the road, and they think the plan will appeal mainly to those in rural areas. Observers wonder if they’re slicing a bit too close to the bone, as many vehicles in that age range are still quite serviceable and operate cleanly. The same criticism has been applied to other parts of the plan which will pay to be rid of 8-15 year old busses and 10 to 15-year old heavy trucks.
Either way, it may all be part of a greater plan to goose new car sales. Although sales numbers in previous years have been remarkable, new car figures for the current year are best described as flat. They want you to buy new.
Even so, watch out if you live in Beijing. New car sales were so strong a few years ago that the government stepped in before gridlock became permanent. Right now, you can’t buy a new car in the city unless you already have a license plate. You get one of those by entering the city lottery that allots 17,600 plates per month. Recently 530,000 citizens entered the monthly draw, thus setting the odds of hitting at about 1 in 30. If you win a plate you can’t sell or transfer it.
Government programs anywhere are always noted for their unintended consequences and this one was no different. While the planners foresaw control of supply and demand, they overlooked status and stockpiling. According to reports, of the 17,600 winners in April, fewer than 4000 lottery winners actually bought a new car. And that’s more than previous months.
It turns out that having a plate—even without a car—has become a status symbol: “No, I don’t have a car now, but I could buy one any time I wanted.” If it’s not on a car, the plate expires after six months but the holder can re-enter the lottery.
The government is now officially concerned about what to do. Should they bar these players for a longer period? Disqualify them if they win again? How do you force somebody to buy a car?
China remains a land of puzzles, including some homemade ones.
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