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Licence auction violates rights
By Xiao Jiao (China Daily)
Updated: 2004-06-09 10:14

One question seems to have outweighed oil prices and the quality of new models among car buyers in Shanghai in recent weeks: Is the government justified to auction licence plates?

The puzzle was highlighted by Assistant Minister of Commerce Huang Hai late last month, who said the auction of automobile licence plates violates the Law on the Safety of Road Traffic, and suggested that local government review the practice.

Shanghai began implementing the auction policy a decade ago and is so far the only city in the country in which private car buyers are required to bid for a licence plate.

Rising personal income and the mania for driving has dramatically increased the price of a licence in Shanghai in recent years. It now costs local drivers up to 45,000 yuan (US$5,440) to win a bid at the weekly auction, which limits the quota to several hundred plates each time. The licence, as some joke, may have become the most expensive metal product in the world.

But experts point out the auction system is not justified by legal standards.

Although the policy was designed to curb excessive growth in private car numbers and prevent traffic jams, the effect has run counter to the purpose for public good as only a minority of car users can afford to procure licence plates.

It also in a sense makes driving a privilege of relatively wealthy citizens, which is unfair as every taxpayer is supposed to have equal right to use the road.

 "The auction of licence plates is equivalent to creating extra-law obligations for car users," said Yu Lingyun, a law professor at Chinese People's Public Security University.

The policy should be annulled now that the new traffic safety law has come into effect, he said.

The law, effective as of May 1, stipulates that local public security bureax, the agencies in charge of vehicle administration, should register and issue licences to new cars as long as applicants submit required invoices and documents proving the validity of their cars.

Shanghai's licence plate auction is authorized by a local vehicle administration regulation passed by the city's congress a decade ago. But China's legislation code stipulates that any articles in a local regulation are void if they contradict existing national laws or decrees made by the central government.

The legislation conflict has thrown the legitimacy of Shanghai's long-standing auction system into question.

A Shanghai municipal government spokeswoman defended the local practice at a recent press conference, on the grounds that licence plate auctioning is a "transitional measure" to keep the city's road system working.

Although emphasizing Shanghai has been adhering to national laws and not excluding future changes in the auction policy, the spokeswoman insisted the auctions were legitimate because they followed that a market-oriented practice and everything in the process was transparent.

But that argument seems to satisfy few.

The abnormally high cost to bid has virtually ruled low-end automobiles out of the Shanghai market, as it makes little sense to buy a cheap car and spend more than half the purchase price to acquire a plate.

Official data show that less than 5 per cent of all the licensed private cars have a value of less than 100,000 yuan (US$12,080).

The restrictive auction policy is obviously at odds with the central government's line to encourage car buying and in particular, foster domestic automakers who are mostly struggling for the low-end market. Many see this as the main reason the Ministry of Commerce made the unprecedented warning regarding Shanghai's practice.

Many Shanghai residents opted to turn to agencies which can manage to licence their cars in neighbouring cities such as Suzhou and Hangzhou. Despite various restrictions on cars licensed outside Shanghai, these licences have become a big lure to Shanghai people because the cost is mere peanuts compared to that of the local licences.

It is estimated that more than 2,000 cars owned by Shanghai residents have been licensed in the neighbouring town of Kunshan alone, not to mention other bigger cities. For each of these cars, Shanghai losses about 12,000 yuan (US$1,449) in road tolls and other charges each year.

Yu Hui, a researcher with the Institute of Industrial Economics of the Chinese Academy of Sciences, said the licence auction is a passive method that has curbed private consumption, whereas the local government should review its administration in the planning and management of the road system.

"The auction is by no means a sustainable practice," he said.

However, Shanghai's dilemma may have underlined a question troubling almost every major city in the country: Is there a way to maintain a balance between car consumption and smooth traffic?

Local traffic administration's statistics show the length of roads in Shanghai has doubled over the past decade, while the number of automobiles, including private cars and vehicles purchased by public agencies, increased by 470 per cent.

"The traffic systems in many cities are like dykes riddled with holes which go out of shape once the water surges," said Yang Xiaoguang, Dean of the Transport Engineering Department of Shanghai's Tongji University.

Conceptual rather than practical decision-making, lack of details in road planning and poor daily administration are three fundamental problems that have led to the bad traffic situation in many cities, Yang said in general terms.

"The first job is to fortify the dykes rather than attempt to block the water," he added.

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