Government should not restrain the automobile development

Since 2011, the automobile sales in China have exceeded the one in the USA. At present, with annual automobile sales of about 20 million, China becomes the largest automobile sales market in the worldwide. However, a dozen percent of year-on-year growth of automobile sales stops abruptly in 2015 and automobile sales accelerates its decreasing, which make the dealers stir up the “most horrifying” price war in the domestic automobile history—as the insider called, since the second quarter.

Since the social opinion, industry and other supervision policies become more and more negative towards the automobile sales, this situation is not that surprising. The biggest shock came from purchase restriction policy and traffic control taken by most cities. Up to now, many large cities such as Beijing, Shanghai, Guangzhou, Tianjin, etc. have controlled the purchase quantity of automobile in their cities and controlled the increase of plate license registration by compensable auction or free lottery. For example, Beijing starts to control the plate license since 2011—the annual plate license registration reduces from 0.24 million to 0.15 million currently.

What’s more, urban planning becomes less friendly to the automobile—wayleave right is in favor of public transportation and some cities with heavy traffic and serious pollution begin to handle this situation with odd/even number of plate license control and regional traffic control; fast increasing of automobile is not considered into urban planning; and the equipped parking space cannot catch up to the owning quantity of automobile, which seriously restrains the resident’s application of automobile.

Besides, the government increases the operation cost of automobile with policies like increasing tax rate of petroleum. At present, the comprehensive tax rate of petroleum has reached the standards of some countries in Europe, which is far higher than the one in the USA. Comparing with the developed countries, the premium rate, annual inspection procedure, etc. of automobile improve the operation cost of auto owners euphemistically. Charging fuel tax that is no less than the one of the USA, the owner in China bears the motorway tolls that are not borne by the owner in the USA.

Nowadays, governmental decisions regard automobile as a luxury of which development and scale shall be restrained and this is the background of issuing of most policies. However, this is a wrong idea. Currently, China has almost 0.25 billion people owning driving licenses. In the first/second-tier city, the owning rate of driving license is about 30%-50%, while in Beijing and other cities, half of families own cars. Automobile is no longer the toy of rich people, it becomes necessities for middle class families and the ones for the majority in city of China. Restraining the development of automobile deprives the right of the aforesaid families.

Moreover, the automobile industry makes a big contribution for tax revenue. In accordance with data issued by State Statistics Bureau, the tax revenue of domestic automobile manufacture industry is 347 billion RMB in 2013; the one of petroleum is 384 billion RMB; the vehicle purchase tax is 259 billion RMB; the revenue of wholesale automobile and parts is 54 billion RMB; and vehicle and vessel tax is 54 billion RMB. All of the aforesaid tax is over 1,100 billion RMB, taking 10% of the sum of tax revenue in the same year.  

However, the automobile’s contribution to economic growth and society is not limited to the tax revenue. The annual domestic property insurance is over 700 billion RMB, among which, 500 billion RMB is auto insurance, taking the share of 70%. And one-year freeway toll is near 400 billion RMB. Besides, there are a large scale of petroleum consumption, parking expense and auto maintenance expense, which affords the living for so many people.

Comparing with the international auto owning, every a thousand of people owns only 50 automobiles in Chinese mainland, which is far lower than the average level of 150 in global. Therefore the Chinese automobile industry has a large development space. Although the economic and population gathering causes many problems such as heavy traffic, atmospheric pollution, etc., it does not mean that these problems could be solved by restraining the automobile development. Take Japan for an example, the population in Japan is also dense, but the automobile owning rates in Tokyo and other big cities in Japan is far higher than the one in big cities of China. All in all, urban governance in China still has a long way to go comparing with the one in New York, Tokyo, etc. What we need is to improve urban governance rather than restraining the automobile development.

Published on Southern Metropolis Daily | 2015-9-22