It’s the rickshaw again: New frugality in China could spell trouble around the world

 

The answer to clogged streets

The answer to clogged streets

Tomorrow, the Beijing Auto Show will open its doors to media, VIPs, and anyone who could finagle a pass that will enable car viewing unencumbered by the toiling masses. 800,000 visitors are expected during the one week event, and that number is the only one that has not grown since 2010, most likely because the exhibition center near the airport can’t take more people. An expansion might not be such a good idea, because China’s car market is about to hit the limiter.

In Beijing, car buying has been rationed in 2012, license plates need to be won in a lottery with odds worse than in roulette. Instead of getting relaxed, rules were tightened again this year. Nearly all of China’s megacities have restrictions in place, smaller ones are following the trend.

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Ostensibly, the restrictions are there to improve the air quality. Beijing’s air hasn’t improved, it is getting worse. Today, the air in China’s capital officially has been declared unhealthy, which it is most of the year. Amongst locals, “unhealthy” is regarded as a lucky day, it’s the all too common “hazardous” days that make Beijingers gasp.

The rules are ostensibly for a greener Beijing, because the real problem is traffic that has collapsed. Two years of rigorous rationing have not eased Bejing’s vehicular constipation. This brought back something thought extinct: They bicycle rickshaw. For 20 yuan ($3), the rickshaw will deliver its passengers fast and reliably while taxis are blowing smoke in stopped traffic. Three-wheelers are a huge business in China, estimates say that China’s car sales would double from 20 to 40 million if rickshaws would be counted. Beijing’s rickshaws are electrified, and they are the only EVs that are built and bought in large numbers in China. There had been rumors for years that car buying restrictions would be relaxed or lifted completely for EVs, but it never happened. It would have made sense if cleaning up the air would be the goal. It doesn’t make sense when EVs jam the roads just as much as regular cars.

China has been a paradise of conspicuous car consumption, and a dreamland for sellers of upscale conveyances. This is about to change. Since the beginning of the year, “a growing list of new rules requires government officials to downshift their lifestyles by reducing public money spent on cigarettes, banquets, cars and travel, and fully eliminating perks like fireworks and private-jet travel,” wrote the Wall Street Journal.

Yesterday, a pie chart was thrown up on China’s state TV, showing how China’s central government bureaucrats spent more than a billion dollar last year on trips, cars and receptions. About half of that was spent on trips abroad, the other half equally on parties and automobiles. This year, it will be less, because the budget has been cut by 10 percent. The new frugality will take its toll.

The WSJ noted that “military officers, once able to ride high in imported SUVs, were recently told to drive only domestically made vehicles.” Journalists who visit Beijing’s formerly frolicking nightlife before getting up early for the show will not lose much sleep. Many clubs are boarded up, just like many of Beijing’s car dealerships are. Scribes who plan on peeling off from factory tours in Guangzhou to visit Changping, China’s capital of the illicit trade, will find it closed, some say forever. “Business is way down,” says a usually reliable source in Beijing’s entertainment sector, “many girls went back to Ulanbataar, or work in Hong Kong.” When driving to interview the source late at night, the streets were jammed, but the bar was empty.

What really could gum up the works of the Chinese car market is a slowdown of the economy. “China’s economy grew at its slowest pace in 18 months” in the first quarter of the year, says Reuters. State planners say not to worry, but Germany’s Spiegel magazine already discovered “an end of the China miracle.” Carmakers around the world have placed big bets on continued growth in China. Volkswagen and GM are doubling capacity in China. A sustained slowdown in China could spell big trouble around the world.