Traffic Policy in Beijing, China

Beijing, the capital of China, is a biggest city in China. Due to fast development of Economic, more and more Chinese young people want to work in China and have their own house in Beijing , in China, we call these young people ”Adrift in Beijing”, because they think there are more opportunities in Beijing than other cities in China. Therefore, Beijing now suffers from massive traffic congestion. Traffic jam can often happen more than one hour per day when the rush hour. In 2009, the net increase of vehicles reached 515,000 in Beijing; this is a very huge number. How to solve traffic problem is a biggest challenge to Beijing city government.

 If you have already been to Beijing, Beijing’s subway system must be giving you a deep impression, in Beijing, we have 16 subway lines. And in Beijing, you can see elevated anywhere. These Transportation systems are all the ways to reduce traffic congestion. Beside these, Beijing city government also establish some other policies to solve traffic problem in Beijing, I will introduce these policies in the next several parts.

 In Beijing, Beijing city government uses many polies to try to solve traffic problem, but among these policies, I will introduce the main two plans to reduce traffic volume

 NO 1. Odd-even license plate system during workdays (From Monday to Friday)

Odd-even license plate system will be rotated every 13 weeks within 5th ring road in Beijing (in Beijing, areas outside 6^th ring road is the suburbs).  It looks like a direct way to reduce traffic volume in Beijing, but it is not. Beijing city government imposes this system to reduce the number of cars every day, for example:(From 2013.1.16 to 2013.4.10)

•   Every Monday, if your tail number is 0 and 5, you can’t drive your car;
•   Every Tuesday, if your tail number is 1 and 6, you can’t drive your car;
• Every Wednesday, if your tail number is 2 and 7, you can’t drive your car;
• Every Thursday, if your tail number is 3 and 8 , you can’t drive your car;
• Every Friday, if your tail number is 4 and 9, you can’t drive your car;
• Every weekend, everyone can drive car. [1]

After this policy, at first, Beijing’s traffic volume is reduced, after a while, many rich people in Beijing choose to buy a second car to make sure they can drive car every day. Nowadays, although this policy still has a positive effect, if most people in Beijing choose to buy a second car, obviously, traffic situation will become more serious than before. In other hand, rich people can drive their cars every day through buying a second car, but poor people not only face a bad traffic problem, but also can’t drive their cars every day. Therefore, in my opinion, this is not a very useful way to solve traffic congestion problem, this policy just can alleviate traffic problem in a short run.

No 2. License quota system

How to reduce traffic volume in Beijing is a biggest problem that Beijing city government should be solved. Except the odd-even license plate system, there is another important system we should to know, it’s called license quota system. Beijing city government tries to use license quota system to reduce car sales in Beijing, if you buy a car and can’t get a license, you can’t drive your new car outside, and this is a direct way to reduce car quantity in Beijing area. “Ernst & Young estimates license quota restriction likely to reduce 2011 car sales in Beijing by 43% to around 500,000 vehicles – first-time and additional car buyers significantly affected”[2]. From the estimation from Ernst & young, if this system can work successfully, traffic situation will become better.

But in other hand, if this system can work successfully, the quantity of automobile sales will be decreasing than before; this is a bad news for local automobile industry in China. Local automobile industry has many disadvantages in China, for example, the quality problem, gasoline consumption problem, technical problem and so on. Because there is a huge demand for automobile in China, some local automobile companies still can sell their products in China market, but after establish this system, it will be a risk to local automobile industry. More people will choose to buy globe brand to get high quality cars. Therefore, globe brand will get large market share in Beijing automobile market.

There are some other ways in Beijing to reduce traffic volume; solving traffic congestion is a long-time program to meet a desirable result.

References:

1. Beijing Traffic Management Website:

http://www.bjjtgl.gov.cn/zhuanti/10weihao/index.html

2. Impact of Beijing’s License Quota System on the Chinese Automotive Industry Paper

http://www.ey.com/Publication/vwLUAssets/Auto_Beijing/$FILE/Auto_Beijing.pdf

3. Controlling millions of vehicles Beijing, China’s traffic policy package

https://docs.google.com/viewer?a=v&q=cache:eyqec5GyOJYJ:www.unescap.org/esd/environment/lcgg/documents/roadmap/case_study_fact_sheets/Case%2520Studies/CS-Beijing-China-traffic-policy-package.pdf+Controlling+millions+of+vehicles+Beijing,+China%E2%80%99s+traffic+policy+package&hl=zh-CN&gl=cn&pid=bl&srcid=ADGEESjziyX9z3ENFFblnnyBwiqJF9ymNCvtkeDyg_-akrl2R9tt5udC-uGoKCDjb6VQYOFhJsSrDxVOI2TODvDt9X1Bd9ZCgtDClRiHGH62oaUBpQGDHX-v-qmsYqn7BslnF338fC2H&sig=AHIEtbRoXyOsCw_pWII-t_vh2s-wklr0SQ

In this website, I can find data, news and analysis report. It is useful for me to make a decision. I really like the articles in this website, it is very easy for me to know what going on in future market.

http://www.wikinvest.com/futures/Soybean_Futures

The second website is the agrimoney website, in this website I can find the commodities and market information.

http://www.agrimoney.com/1/commodities/

According to the situation of this week, heavy selling and large inventories will leading the soybean price decrease. Also, form the CME website, I get soybean bar chart, I think the recently trend is like head and shoulder pattern, therefore, I think next few weeks, the soybean price will decrease, next week I will choose short position soybean contract. In addition, I will pay my attention on soybean news in the next few days to make a final decision.

(Bar chart link:  http://www.cmegroup.com/popup/mdq2.html?code=ZSF3&title=January_2013_Soybean&type=p)

References:

1.http://www.cmegroup.com/popup/mdq2.html code=ZSF3&title=January_2013_Soybean&type=p

2. http://www.brecorder.com/markets/commodities/america/89849-us-soy-crop-up-4pc-supply-strain-eases-.html

Soybean always my attention object in trading game. This week, I still pay my attention on soybean. This week, I get 3 soybean long contracts price in $1515, cause soybean demand is expected bigger than the supply, this is a very significant factor. In addition, drought influenced American soybean harvest. It leads to the shortage supply. Through the technical analysis, I expected soybean price will increase. Therefore, I choose long position.

Date in       Contract      Position   Price in      Gain/Loss

2012-11-07     S2X         Long       1515       -3150*3=-9450

Unfortunately, I lost a lot of money. Then I search the Internet and want to know what happened in soybean market. I get some information, The US soybean crop is much larger than expected, thanks to late-season rains that blunted the impact of the worst drought in half a century, and the corn crop also is marginally larger, the government said on Friday (09 November 2012). Another factor is that I choose the November soybean contract, while November contract is going to the end and expected stock appeared different, heavy selling force the price decrease.

1. http://farmfutures.com/

Farm Futures is a very professional website, in this website, I can find the market snapshot , market movement and different kinds of charts in this website. In this website, I can also get weekly analysis, news, weather information.

2.http://www.soygrowers.com/

American soybean association is authoritative website in USA, I  can get new information about soybean form this website.

Due to the high soybean price, many farmers will choose to plant soybean, this means from 2012 to 2013, in the world market, the soybean production will be increase. In other hand, soybeans got a boost from data showing private sector factories in China were at their busiest in eight months in October. The data followed other signs in October of economic revival in the country and could signal stepped-up demand for soy. “The economic data was interpreted favorably, leading to some ideas that they are going to import more beans,” said Jerrod Kitt with the Linn Group, a Chicago brokerage. China’s soybean needs improving ,  farmers also intensify the soybean planting. So we must to know the proportion between expand grew and China’s expanding demand . From last week’s trend, I think soybean price will be decreasing this week.

References:

http://www.brecorder.com/markets/commodities/america/88606-soybeans-rise-for-third-session-on-china-economic-data-.html

http://www.brecorder.com/markets/commodities/america/88128-soy-slips-for-second-day-on-exports-south-america-prospects-.html

Last week, I still pay my attention on the soybean market. I choose two long position soybean contracts. In my opinion, China, as the biggest importing soybeans, it is necessary to consider. China recently is preparing for 18th CPC National Congress, this is a very important conference in China. Therefore, in this special period, China will tied to encouraging economic data and hope everything looks better in this period , So as to enhance public confidence.

In other hand, from the Internet I get a information that China will harvest a smaller soybean crop this year than in 2011 because of fewer plantings in a key province.

I think these two factors will lead to the big demand in soybean market , in the world market, the demand is larger than the supply, the soybean price will be increased. So I choose long position soybean contract last week.

Time in      Time out    Contract   Position   price in    Price out   Gain

10-31-2012   11-01-2012   S2X        long      1534       1536       99*2=198

The website that I usually go to is the CME GROUP website, this is a very authoritative site. I can get the price data, different kinds of charts and many agricultural market information.

http://www.cmegroup.com/

The other website I usually go to is the brecoder website, you can get some new policies, weather reports and some forecast information there.

http://www.cmegroup.com/

And if I want to know the weather information more specific, I will go to the weatherchannel website.

http://www.weather.com/

This week, I will still choose long position soybean, because of the demand is bigger than the supply. We know that global soy prices have risen almost 30 percent since the start of the year. No other productive activity can compete with soy at these prices. So, I think in a very short term, soybean price will not decrease until people find a new way to solve this demand. Also, China’s soybean imports is always increasing ( China is a big soybean import country) this year, the increasing in demand from China leads to a high soybean price.

References:

http://www.brecorder.com/markets/commodities/america/87001-soy-prices-lure-uruguay-farmers-to-record-plantings-.html

Last week I still focus on the soybean market. I get information that more farmers want to plant soybean in the next period. If more farmers are plant soybean, it means that the supply will be bigger than the demand, at last the soybean price will be decreasing. In other hand, despite the soy boom of recent years, a shortage of suitable land means growth prospects are limited. So, there is no many suitable land to plant soybean, in short term soybean price will still go increase, because in recent market, the soybean supply is less than the demand, the relationship between supply and demand determine the high price of soybean.

Last week, I choose two November long soybean contracts in October 23th and offset in October 27, 2012.

Contract      Position      Price in    Price out      Gain

S2X         Long          1532       1565      1649*2=3298

Therefore, in last week, I still gain money in soybean market. It is so exciting. Good luck next week~~~~