New cars are being put on the road in Chinese cities at an unprecedented rate, causing new traffic congestion challenges across the country.  Furthermore, Chinese cities are typically denser than their Western counterparts, the driving skills of newly licensed motorists are often poor, and illegally parked cars clog shoulders and sidewalks.  All of these factors give Beijing in particular the dubious distinction of the world’s worst commute.  They also add to the city’s traffic-related woes as smoggy skies hinder visibility and contribute to respiratory health issues for residents.

In addition to improving commuter infrastructure by making roads wider and building public transportation, the Beijing government has implemented traffic bans (2008) and instituted sales lotteries (2011) for one-month license plates to counter these issues.  Other cities have begun to pass similar policies, such as Guangzhou’s recently-announced vehicle sales restrictions.

Still, despite these measures, traveling the two kilometers between the third and second ring roads in Beijing is often faster on foot than by bus, compelling Beijing to explore further options.  Soon, Beijing may be the first Chinese city to implement congestion pricing.  While in theory this practice may alleviate the issues, congestion pricing may be just a band-aid to the city’s traffic woes.  Beijing and other cities should look first to improving the enforcement and management of their existing policies before putting another restriction on plagued commuters.

Beijing’s traffic bans date back to the 2008 Olympic Games. The bans allowed only odd-numbered license plates to drive on odd dates and even-numbered license plates to drive on even dates, with some exemptions such as taxis and transit buses.  After the Olympics, however, Beijing allowed 80% of vehicles to drive each work day by banning just one pair of license plate digits each day.  Ideally, this policy would reduce the number of cars on the road by 20%, but the fine for unauthorized driving is only about 15 USD – a minor penalty for flouting the law.  Furthermore, because the schedule is fixed, affluent drivers have simply purchased a second vehicle (and license plate) to circumvent the ban.  It is unclear why the regulations are not more strictly enforced: is it an absence of political will or a lack of enforcement capability that has doomed this policy?

More recently, Beijing also capped the number of license plates available for new vehicle owners, limiting vehicle sales accordingly.  Only 20,000 Beijing license plates are lotteried each month and vehicles with non-Beijing license plates are banned from the city during rush hour.  The policy has successfully reduced vehicle sales in Beijing by about a half between 2010 and 2011, but it is important to note what effect this policy may have in the long term. If the growing demand for vehicles and license plates greatly outstrips supply, Beijing may have to curb demand by implementing a cost for the license plates.  For example, Shanghai has limited license plate distribution through monthly auctions for nearly two decades; a plate currently costs nearly 10,000 USD.  However, driving without one garners only a 30 USD fine, and so it is common to spot unauthorized cars driving in Shanghai.

If cities are unwilling to implement and enforce higher fines for unauthorized driving, congestion pricing may indeed be an effective solution.  Congestion pricing would require authorities to cordon off a central area of the city and charge vehicles to enter.  This could reduce the number of drivers on the road, raise revenue for the city, and increase the benefit of public transportation.  Congestion pricing has been successfully implemented in cities such as Singapore, London, and Stockholm.  Historically, the success of these policies has depended on extensive, reliable public transportation options as well as buy-in from the public [1].  Densely populated Chinese cities may have sufficient public transportation systems, but local governments will have to carefully communicate with the citizen community the possibility of congestion pricing.  For example, a serious concern for citizens is that collected funds might be misappropriated.

Congestion pricing is often criticized as being regressive, because it adversely affects poorer vehicle owners for whom the fees are greater as a percentage of income.  This argument lacks bite, however, because the current policy is also not immune to class bias.  Wealthy vehicle owners can purchase a second vehicle to use on banned workdays, and the fine is also a relatively smaller portion of their income than for middle class car owners.  Designing an entirely non-regressive policy is difficult indeed; if one cannot buy a car in a free license plate lottery, the rich could simply rent that vehicle instead.

In London and Singapore, a congestion pricing policy reduced the number of vehicles in the central city area by 45% and 33% respectively [2].  Meanwhile, the academic literature is divided on whether or not congestion pricing loses its effectiveness over time.  Citizens may become accustomed to paying for the right to drive or the total number of vehicles on the road may actually increase.  The latter reason also holds for traffic bans, however.   Compared to traffic bans, congestion pricing can more flexibly adapt to future conditions because the restriction –  price – is simpler and more easily adjusted.

Lack of public buy-in is one factor that killed congestion pricing policies in both New York and Edinburgh [3].  It may be the Chinese government’s top-down structure that ultimately allows this decision to be taken, even if transparency about funneling revenue from congestion pricing into transportation infrastructure, improvements, and identifying health and environmental benefits will help maintain the policy’s legitimacy with the public.  As it becomes more evident that local Chinese governments are burdened by debt, additional revenue from congestion pricing will help to pay for planned and needed infrastructure expenditures.  For example, money could be directed to expanding dedicated bus lines along heavily trafficked routes where residents will seek alternative transportation.

Beijing and other Chinese cities should reform their existing traffic ban and license plate policies before resorting to congestion pricing.  As cities such as Guangzhou and Hangzhou begin to implement traffic control policies, they should learn from Beijing by ensuring that pairs of banned digits rotate from week to week and making fines large enough to discourage breaking the law.  Such measures must also be accompanied by sufficient enforcement.  If Beijing decides to create congestion pricing, intelligent implementation will determine whether it is indeed the correct policy solution, beginning with transparency and a serious commitment to reliable public transportation.