A while ago I wrote about China's ride on the Environmental Kuznets Curve. If the EKC hypothesis holds, we would expect that continuing increases in GDP per capita will eventually cause decreases in environmental degradation. Has China reached the top of the curve?
From the AP via the Environmental News Network:
China's government has ordered an end to restrictions on sales of smaller cars in an effort to clean up worsening smog and rein in surging oil use, state media said Thursday.
The order issued Wednesday also calls on Chinese manufacturers to spend more on developing smaller cars and other cleaner vehicles powered by diesel and alternative fuels, the reports said.
"It will help alleviate energy shortages and protect the environment, as well as foster brands in China's automotive industry," the newspaper China Daily quoted the notice as saying.
China's big cities are among the world's smoggiest, and pollution has worsened in recent years as growing prosperity has fueled an explosion in sales of private cars.
Cities have tried to control surging traffic congestion with heavy vehicle taxes, licensing bans and other measures that hit potential buyers of small vehicles hardest.
Guangzhou, the country's southern business center near Hong Kong, bans licensing for vehicles with engines smaller than one liter, according to the China Daily.
The order this week tells local governments to encourage sales of smaller cars by scrapping license bans and by cutting taxes and parking fees for them, the reports said.
Despite rising congestion and smog, China's central government is eager to encourage private car sales in order to spur the growth of the Chinese auto industry.
Beijing and other cities have tried to slow the deterioration of air quality in recent years by replacing public buses and taxis with vehicles that burn cleaner natural gas.
The latest government announcement didn't say whether it also would order an end to such anti-congestion measures as Shanghai's ban on the use of bicycles in the city center.
While it may be an attempt to move down the Kuznets curve, an interesting paradox arises. To encourage investment in smaller cars, the central government is asking local governments to, essentially, lower the price of small cars. But how many new car buyers will enter the market? No one knows, but conceivably the increase in emissions caused by new drivers could outweigh the reduction in emission from a switchover to more fuel-efficient cars by existing drivers. Are policies to reduce the cost of owning a car really the best choice for a country that has a relatively low proportion of car owners and already suffers from severe congestion?
