MCLC: Guangzhou moves to limit cars

[Denton, Kirk]

MCLC LIST
From: kirk (denton.2 at osu.edu)
Subject: Guangzhou moves to limit cars
***********************************************************

Source: NYT (9/4/12):
http://www.nytimes.com/2012/09/05/business/global/a-chinese-city-moves-to-l
imit-new-cars.html

A Chinese City Moves to Limit New Cars
By KEITH BRADSHER 

GUANGZHOU, China — It is as startling as if Detroit or Los Angeles
restricted car ownership.

The municipal government of Guangzhou, a sprawling metropolis that is one
of China’s biggest auto manufacturing centers, introduced license plate
auctions and lotteries last week that will roughly halve the number of new
cars on the streets.

The crackdown by China’s third-largest city is the most restrictive in a
series of moves by big Chinese cities that are putting quality-of-life
issues ahead of short-term economic growth, something the central
government has struggled to do on a national scale.

The measures have the potential to help clean up China’s notoriously dirty
air and water, reduce long-term health care costs and improve the
long-term quality of Chinese growth. But they are also imposing short-term
costs, economists say, at a time when policy makers in Beijing and around
the world are already concerned about a sharp economic slowdown in China.

“Of course from the government’s point of view, we give up some growth,
but to achieve better health for all citizens, it is definitely worth it,”
said Chen Haotian, the vice director of Guangzhou’s top planning agency.

Nanjing and Hangzhou in east-central China are moving to require cleaner
gas and diesel. Cities near the coast, from Dongguan and Shenzhen in
southeastern China to Wuxi and Suzhou in the middle and Beijing in the
north, are pushing out polluting factories. And Xi’an and Urumqi in
northwestern China are banning and scrapping cars built before 2005, when
automotive emissions rules were less stringent.

“There’s a recognition finally that growth at all costs is not
sustainable,” said Ben Simpfendorfer, the managing director of Silk Road
Associates, a Hong Kong consulting firm.

Facing public pressure to address traffic jams and pollution, municipal
governments from across China have been sending delegations to Guangzhou.
But the national government in Beijing is pushing back against further car
restrictions because of worries about the huge auto industry, said An
Feng, a senior adviser in Beijing to transportation policy makers.

“This has really become a battle,” Mr. An said.

Beijing’s municipal government started limiting new license plates at the
start of last year when the economy was in danger of overheating, but
Guangzhou is the first city to act during the current slowdown. Faced with
public dissatisfaction over traffic, Guangzhou has also built an extensive
subway system in the last few years, along with large parks and a renowned
opera house.

The local government initiatives are not the main cause of the Chinese
economy’s difficulties. The government clamped down on credit a year ago
in a successful bid to rein in inflation, but starved many small and
medium-size businesses of credit in the process.

Other broad economic problems have been building for years. These include
industrial overcapacity and the monopolistic grip of many state-owned
enterprises, as well as the inefficient allocation of loans.

But for now, the growing regulatory burden on business is reinforcing a
trend toward slower growth, economists say.

“That’s why I think the slowdown is likely to be a trend, instead of just
a short-term cycle,” said Xiao Geng, the research director at the Fung
Global Institute in Hong Kong.

Polluting factories being pushed out of increasingly affluent cities in
southeastern China are being turned away by poorer cities in western and
northern China unless they install costly, extensive equipment to control
emissions, said Stanley Lau, the deputy chairman of the Hong Kong
Federation of Industries, a trade group representing manufacturers that
employ nearly 10 million workers in mainland China.

“There is no hint that these costs will be lowered because of the market
slowdown,” he said.

Some executives in China complain about rising regulatory costs,
particularly as new rules at the local level coincide with rising wages.
Critics in the business community say that an economic slowdown may not be
the best time for China to turn away from the largely unrestrained dash
for prosperity of the last three decades.

But while the local measures may limit short-term growth, they are part of
a broader transition. China is no longer just a developing economy that
has pursued a particularly raw form of capitalism, while remaining
Communist in name. It is becoming a modern, industrialized economy whose
leaders increasingly listen to public opinion and seek to balance the
environment, social welfare and many other issues against economic growth.

The question is how much short-term pain will China endure, in the form of
slower growth and higher costs, to achieve a more balanced and sustainable
economy.

Ma Jun, the director of the Institute of Public and Environmental Affairs,
an environmental group in Beijing, said that local officials had become
more interested in the environment in the last year after large street
demonstrations against polluting factories in cities like Dalian, Shifang
and Qidong. In each case, local officials agreed to halt construction of
the projects or close them after becoming the targets of local and
national ridicule.

Bernadette Brennan, a senior lawyer in the Beijing office of the Natural
Resources Defense Council, said that after three decades of experience in
China, she had seen change in the last year. Instead of resisting pressure
to address pollution, she said, municipal officials have begun contacting
her office to seek advice on how to improve.

Measuring the environmental benefits of the changed policies is difficult.

A series of typhoons makes it hard to compare air quality data in China
this summer with previous years, said Alexis Lau, the director of the
atmospheric research center at the Hong Kong University of Science and
Technology. In Guangzhou, emissions of a wide range of pollutants peaked
in 2007 and 2008 and receded in 2009 and 2010 because of weaker economic
growth. Emissions started to rise in 2011 as growth returned, but did not
match 2008 levels.

Pollution per dollar of economic output has clearly declined, Mr. Lau
said. Emissions of sulfur dioxide, a top priority in China in recent years
because of its role in acid rain, have declined across China but
particularly in Guangzhou, a city of 15 million people, including migrants.

The financial dependence of local governments on the sale of land leases
to new developments may limit the extent to which some cities confront
businesses. But city governments also own many of the businesses within
their borders, making these businesses think twice about challenging
policies like license plate restrictions.

“The car companies are owned by the government,”said Mr. Chen, who drives
a Toyota Camry built in Guangzhou. “The car companies must obey the
government.”

He added, “What do we need gross domestic product for if we don’t have
health?”