Overview

If you often drive in Beijing, you are not supposed to feel surprised if your car gets stuck in the street for more than 2 hours almost everyday. However, traffic in Beijing was not that terrible in the past. This problem showed up in 1990s and became serious after the city entered 21^st century. There are many factors leading to this problem, including historical and economic reasons, etc. Bejing has been planning to alleviate the congestion for a long time. In 2011, a series of new policies were put into effect. But it looks like these policies are not very effective when looking at Beijing’s traffic today.

The Story

Origin

All of these orginated from the rapid growing ecomomy in China. During 1990s, the yearly growing rate of vehicles in Beinig had been kept between 10% to 15% . According to the research from other countries, it is common for normal families to have private cars when GDP per capita reaches $3000. Since GDP per capita in Beijing already reached $3000 in 2001^[1]，there is no surprise that the number of cars in Beijing has been continuing increasing at an explosive rate since the beginning of 21^st century.

Compared to the rate of car increase, the speed of road construction is apparently slower. Besides, the road distribution, in many parts of Beijing, is not well designed. The blog is usually so big that a car has to go a very long distance before hitting a cross. Moreover, the public transport in Beijing is not well distributed. Some bus routes are largely overlapped, while some others, where there are great needs for public transport, have only a few buses go down. Hence, the undisirable public transport in Beijing has been pushing people to drive by themselves.

As the congestion became more and more serious, the government gradually realized they must do something different to solve this problem. I use “something different” instead of “something”, because there was one method that had been used all along by the government: Build more roads. Obviously, this method can not prevent the situation from becoming worse. After successfully got selected as the host of Olympic of 2008, to solve traffic congestion in Beijing was officially put on the government’s agenda. Several corresponding policies were made before the 2008 Olympics. In the end of 2010, the government made some new policies and revised the original ones at the same time. These new policies officially went into effect at the very beginnin of 2011. And they are what I am going to introduce to you on this blog..

What Policies and how they are supposed to work

These policies all fall into three categories. The government mouthpiece used three words to conclude them: Establishment, Management and Restriction^[2].

Establishement

Not only should more roads be built, but also more infrastructure, like schools, hospitals, super markets, would be constructed correspondingly in satellite towns of Beijing, which, the government believe, would share population and vehicle pressure with Beijing city. At the same time, buses and other public transport would be upgraded.

Management

Parking fees in different areas of Beijing would be adjusted to reflect the traffic flow and parking management would be improved as well. Artificial Intelligence equipment would be largely used on public transport. And the performance of each level of government in traffic management would be incorporated into the official performance assessment. Congestion fees might also be charged if necessary.

Restriction

There would be no increase in the quota for government-use vehicles and these vehicles would be more strictly managed. A monthly quota would be set up and people or organizations that were willing to have new cars should apply for a candidate number first. Under the strict supervision, these candidate numbers would be randomly chosen by computer monthly until the maximum of the quota is reached. Moreover, when there were big events or festivals going on, or the weather condition was severely bad, whether a car can hit the road or not would depend on the parity of the last number on its plate board. The government also called that non-native cars would not allowed to enter inside the 5th Ring Road during rush hours (7:00-9:00am and 17:00-20:00pm)

(The picture is sceenshoted from Google Map. The red circle is the 5th Ring Road in Beijing.)

Effects

As you can see, these policies are all correlated. Theoretically, this policy package would alleviate the traffic congestion. Since the policy package has just been implementated for 1 year, I cannot find any corresponding effectiveness analysis articles. However, according to my friends in Beijing, they told me the condition now seems a litter better, but just a litter. One possible reason they told me is that these policies are only effective to the not-rich people. Those who have big money don’t care to pay extra 10 RMB for parking. What is more, rich people can always get ways to have new cars as long as they want. Many families have more than one cars, so they can drive everyday despite of the parity of the plate number restriction. For the not-rich people, they usually live in the suburbs because they cannot afford the rent in the city center. Since the public transport is not attractive to them, they have to be the car commuters. These fees and restrictions may change nothing but just to make their situation worse. Another reason I can think of is that it may take a longer time to construct the satellite towns of Beijing. Most of the infrastructure cannot be built up just in one year time. Hence, if things go well, we should expect to see the congestion alleviated in 5 years, because, after all, the population pressure is the root of the traffic congestion in Beijing.

Conclusion

What Beijing did may take more time to show the effect. Perhaps the government needs to consider more about the social welfare distribution effect of such policy package.

Reference:

[1] The Analysis of The Policy of Traffic Congestion Alleviation in Beijing. Available at http://wenku.baidu.com/view/ff78c07702768e9951e7387c.html

[2] Some Suggetions for Traffic Congestion Alleviation in Beiing. Available at http://www.gov.cn/gzdt/2010-12/24/content_1771947.htm

Overview

Just like the title of this article implies, technically, up until now, China doesn’t have ecotax. The absence of ecotax directly results from China’s old planed economy system and is also largely affected by the China’s current economic and political situation. However, to levy such tax is an indispensible part of China’s free market reform and is an essential step to keep China’s deteriorated environment from worsening further.

The government of China has been doing research on ecotax for a long time. According to the premier Wen’s Government Work Report of 2011, China is going to offically levy ecotax during its 12^th Five-Year Plan (2011-2015).

The Story

Origin

The government of China started planing to levy ecotax since 2005. This work has been in research stage for a very long time until 2011, after premier Wen announced in his Government Work Report that China was going to have ecotax in the next five years, which was a symbol that China’s ecotax plan had come into the legislative stage.

As you may already know, China is a country where govenment power is highly concentrated in one party and all the other parties and organizations have to cooperate with the government. So it is not difficult to understand that the government of China is the absolute major designer and implementor in this entire process of levying ecotax. As an essential part of the free market reform and an necessary step to protect the not optimistic environment in China, the government has to learn from the developed countries in the western world and make its own ecotax policy.

What It Was in the Past

It is not true that China never asked polluters to pay for their pollution before 2011. Actually, instead of tax, China has been using the method of charging fine for almost 30 years. As you can see, it is more like a administrative mean than economic mean. In addition, this method only charges the discharges that exceed national or local standards, which makes the base of fine very small. Besides, the charege rate is very low—much lowering than abataement cost. And a large portion of the revenue collected is given back to the polluter companies to help them install abatement equipment. Off cource, these measures do not have a strong effect on polluter. The environment in China continues going worse.

But like other developing countries, China seems to have no other options, beause worry always exists on politicians’ mind that a stricter and larger charge on pollutes would have a good change to make domestic companies less competitive and impedes the development of domestic industries. Hence, to some degree, it is a tradeoff between the evironment and economy. And the government of China chose the latter one.

What Is Going To Happen

Well, to be honest, everything is still uncertain now. The detailed policy has not published yet. However, a thing that we have already known is that the news of this upcoming ecotax has been causing many concerns and arguments. There are four aspects that have been paid most attention to.

1) Tax Base

How will the pollute be measured? Will the tax be put on input level, output level or directly on the pollutes? Who will be the designer of this base, State Administration of Taxation or Ministry of Environmental Protection?

2) Tax Rate

The best tax rate should be equal to the marginal damage per unit of pollute made to the environment. However, since China’s domestic industries are still not fully developed and the levels of development across China is highly imbalanced geographically, a high tax rate probabily would have a suppressing effect on development of many industries and companies, while a low tax rate is likely to be ignored by the polluters.

3) Tax Range

Take car industry as an example. Will the tax be imposed on producers or consumers? Will official vehicles and private vehicles have the same tax standard? Will the standard be based on quantity or mileage?

4) Revenue Allocation

Will the revenue be accumulated as earmarked fund for environment protection or be counted into general budget? Will the finance department be in charge of all of the revenue collected or the revenue will be shared with other departments?

Conculsion

Although the ecotax has not been imposed yet, it is well known that the government of China has been doing its research on ecotax for a long time and is determined to levy such a tax within five years. Tax base, tax rate, tax range and revenue allocation are four things that have been mostly concerned.

Reference:

1. China is going to levy ecotax in its 12^th Five-Year Plan. Here
2. The Ture Cost of Coal in China. Here
3. Environmental Taxes in OECD Here