Beijing New Car Licence Registration System

On the 24th of December 2010 the Beijing municipal government introduced a new lottery system for the allocation of car licence plates to new car buyers in an effort to control the cities growing traffic congestion problem. A 2010 global study by IBM (2010) of commuters in 20 large global cities placed Beijing equal first with Mexico City on its Commuter Pain Index. The index is comprised of 10 issues:
• Long commuting time and time stuck in traffic;
• Agreement that:
o Price of gas is already too high;
o Traffic has gotten worse;
o Start-stop traffic is a problem;
o Driving causes stress;
o Driving causes anger;
o Traffic affects work;
o Traffic so bad driving stopped; and
o Decided not to make trip due to traffic.

The IBM study also showed that 25% of Beijing commuters that were surveyed would choose to work more if their commute time could be significantly reduced.


Beijing authorities have for some time being attempting to reduce traffic congestion within the city. Previous traffic congestion and vehicle control policies have included a rotating system that bans passenger cars from being driven in the city one day a week based on their number plate, ban on cars not registered in Beijing from driving in the city during rush hour, the introduction of quality bus corridors, increased parking fees and bike sharing scheme. In addition, since the China held the Olympics in 2008 Beijing authorities have continued to invest steadily in the public transport infrastructure. December 2010 saw the completion of 5 new subway and rail lines. 

However, such initiatives have failed to suppress the demand for and use of the private car. The Economist (2011) notes that at the end of November 2010 Beijing’s vehicle population stood at 4.7m vehicles with this figure representing a 6% increase between August and November alone. According to the Los Angeles Times (2011) Beijing’s public transport infrastructure is not efficiently designed citing how Shanghai which has a larger population has just one-third the number of cars. Failure of existing traffic congestion policies has resulted in the Beijing government introducing the lottery system for new car licence registration. This new traffic policy measure will restrict new car registrations in Beijing to 240,000 per annum from 2011 onwards. According to the Economist (2011) this level of new car registrations will be a third of the 2010 level. 

 

Implementation of the Beijing car licence registration lottery system commenced when the Beijing municipal government officially announced the policy on December 23rd. Under the lottery system authorities will allocate 20,000 new drivers registrations licences every month with the first lottery scheduled to take place on January 26th. In preparation for the first lottery all car sales were banned in Beijing from the 24th of December until January 25th. In order to be eligible for the lottery applicants must have paid tax and social insurance in Beijing for a minimum of 5 years. The Economist (2011) identifies that compliance with these criteria will prevent 10m potential car buyers from entering the market. The Christian Science Monitor (2011) cites Beijing officials as claiming that as of January 5th 100,000 people had already registered for the lottery. Under lottery rules registration is permitted up until the 25th of each month with the lottery taking place the next day. This annual monthly lottery cycle will cap the number of new Beijing licence plates at 240,000. 

Existing cars owners, who want to trade in their car, have had their cars stolen or destroyed are exempt from entering the lottery in order to purchase a new car. These people are able to directly buy a new car. Purchases of new cars by these existing car owners are expected to reach 160,000 over the course of 2011. 

 

This policy will impact on the number of new cars allowed to be registered in Beijing on a monthly basis. The Costs and Benefits entry for this measure details the potential impact.

The principal cost associated with limiting the number of new cars registered is the impact that will be felt by Beijing’s car sales industry. With substantial falls in new car sales relative to previous years this sector of the Beijing economy can expect a significant fall in sales revenue. 

The principal benefits associated with the lottery system will be seen with traffic congestion and air quality. While this policy will not lead to an improvement in traffic congestion and air quality it will at least limit the degree to which traffic congestion and air quality could further deteriorate were new car sales allowed to continue with no restrictions.  

 

Christian Science Monitor, 2011. Want a new car in Beijing? 

http://ca.news.yahoo.com/want-car-beijing-sorry-theres-just-too-much-20110105-064154-608.html
 

IBM, 2010. Global Commuter Pain Survey. New York.
 

Los Angeles Times, 2011. In Beijing car ownership rules drive auto sales. Article from January 24th edition.

The Economist, 2011. Beijing Traffic Woes – Hitting the brakes. Volume 398, Number 8714. Pp 37.

 

1. Demand Factor
The introduction of the lottery system will have a principal demand side affect of dramatically reducing the number of new cars entering the vehicle stock. 

2. Switch Factor
Since the lottery system limits the number of new cars that are permitted to be registered, the lottery system cap ensures that large numbers of people will remain excluded from owing a private car. In the absence of private car ownership these people will be forced to either continue using the public transit system or start using it.