Scenario Analysis of Chinese Passenger Vehicle Growth

I. INTRODUCTION As personal incomes rise, China is rapidly becoming more dependent on personal vehicle, highway-based, passenger transportation. Among current developing countries, China represents the largest potential modal shift for passenger transport from rail to highway. Figure 1 highlights an increase in personal transport by highway between 1990 and 1997 from 262 to 554 billion passenger-kilometers, based on data from the China Statistical Yearbook (CSY; 1998). Total distance traveled increased 93% (64% of which was by highway) between 1990 and 1997. Sinton (1996) reports per capita passenger-kilometers traveled by highway in 1992 were 272 in China, compared with 6985 in Japan, 10,645 in the United States, and 2230 in the former Soviet Union. Recent accession to the World Trade Organization is expected to magnify this trend. This modal shift of China's transport sector is similar to that experienced in Taiwan, Republic of Korea, and Japan, the key distinction being the path the latter countries took and the path Chi na has yet to find. Resulting traffic congestion, regional air pollution, and dependence on foreign oil plague each of China's Asian neighbors. Ownership of the vehicle fleet has also changed rapidly. Averaging 17.7% growth per year during the 10-year period from 1984 to 1993, much of this new vehicle ownership is private, compared to past growth primarily through state ownership (Sinton, 1996). In many of China's urban areas, the car has become a status symbol. Between 1990 and 1997, private ownership increased from 14.8% to 32.9% of total ownership (CSY, 1991, 1998). As with many Asian countries, more private vehicles on a capacity-filled road network presents a balancing act for space between bicycles, passenger vehicles, and public transportation (Greene and Santini, 1993). Passenger vehicles, defined here as small passenger cars and buses, already provide the majority of highway passenger kilometers in China compared to motorcycles and other motor vehicles. (1) Although the number of Chinese passenger vehicle sales is small relative to the world automobile market, the potential exists for rapid expansion driven by steady per capita income growth. As evidence, several large automobile manufacturers have located in China, including Peugeot, Volkswagen, Chrysler, and General Motors. General Motors alone recently invested $2 billion to open a factory in China (Fortune, 1999). Growing passenger vehicle ownership raises three primary concerns for both China and the international community. First, increased car and bus stocks will exacerbate local air pollution problems. Chinese cities are already among the world's most polluted cities. The World Resources Institute (1998) reports that ambient concentrations of sulfur dioxide exceed the World Health Organization's recommended guidelines for more than half of the 88 Chinese cities monitored, and 85 of the cities exceed the guidelines for total suspended particulates. Second, as a net importer of oil since 1993, automobile growth will continue to increase China's oil import demand. A study by Sandia National Laboratories (see Conrad et al., 1998; Drennen and Erickson, 1998) forecasts that China's total oil import requirements could rival current U.S. imports, reaching as high as 7.1-8.1 million barrels per day (mbbls/day) by 2015. Lacking proven domestic reserves, the China National Petroleum Corporation has begun to secure oil conces sions in Sudan, Venezuela, Iraq, and Kazakhstan and develop oil and gas pipelines from Russia and Central Asia to China (Rashid and Saywell, 1998). The potential magnitude of Chinese oil import requirements has serious implications for global geopolitics. Finally, increases in the vehicle fleet will contribute to ballooning carbon emissions. The per capita emissions for China are low relative to developed nations, but China emits about 14% of total world carbon dioxide, ranking China as the world's second largest emitter after the United States (Drennen, 2000). …