Shanghai's plate auction takes drivers for a ride

PUBLISHED : Saturday, 23 October, 2010, 12:00am
UPDATED : Saturday, 23 October, 2010, 12:00am

Rob drivers to pay cadres. That is the saying private car owners in Shanghai use to vent their anger towards the worsening traffic situation.

The irate drivers have reason to grumble, as a vehicle number plate costs them the equivalent of one year's savings for the privilege of getting repeatedly stuck on the bumpy streets of the mainland's most wired city.

Last year, a car owner had to spend 42,000 yuan (HK$49,000) for a plate to qualify his four-wheel vehicle to clog the streets. At one point not long ago, the price broke 50,000 yuan. Still, the traffic is as bad as in any metropolis in the world.

Shanghai is the only mainland city that embarks on a controversial monthly bidding system for plates, in what the city government describes as an efficient method to limit the number of vehicles.

The officials claimed that the proceeds would be used to maintain the streets and upgrade traffic conditions.

But it's not working because of the breakneck growth of China's auto industry. What's more, the city government came under fire for not making the use of the funds public.

Ever since 1994, when the bidding system was created, it has been speculated that the city government used the proceeds to distribute bonuses to civil servants.

Officials denied it bluntly. Yet the balance sheet has never been published.

Mayor Han Zheng said early this year that the details would be publicised in the future, but he did not give a timetable.

Shanghai, the city that aims high with its ambition of transforming itself into a global financial centre, has been a mere copycat of first-class metropolises such as New York and London when it comes to urban planning.

The bidding system was touted as being on a par with international practices - using market forces to ease the heavy traffic.

Most owners of private cars disagreed. They didn't see the system as transparent and fair. Car buyers would consult with auto dealers - insiders who had the knowledge of the prices of winning bids - before submitting their bids.

The 'inside information' always proved correct. Anecdotal evidence showed that dealers offered the tips based on directives from authorities.

When the winning bid in late 2007 soared to over 50,000 yuan, largely denting would-be car buyers' interest, the city government publicly criticised the dealers for providing misleading information.

In January 2008, the lowest winning bid for a plate dropped more than 80 per cent to 8,000 yuan, before rebounding to nearly 30,000 yuan in the next few months.

Shanghai puts nearly 8,000 plates under the hammer each month. In September, they made 336 million yuan for the city government.

The auto licences have been dubbed the most expensive steel products in the world.

The controversial auction triggered concerns by the central government in 2004, when Huang Hai, then vice-minister of commerce, urged Shanghai officials to study the system in light of mainland laws and regulations.

City officials said the system would be temporary but offered no clear-cut timetable for ending it.

Speculation heightened recently that the auction system would be phased out after the World Expo closes on October 31. There is even talk of giving free plates to new car buyers.

Apart from the furore that would cause among the owners who have already paid dearly to drive their vehicles on the packed roads - imagine thousands of them flocking to city government headquarters, demanding their money back - why would the city be willing to give up a cash cow that nets it some 4 billion yuan a year?

City officials may say they want to control traffic, but it's not about gridlock. It's about the money.

Don't expect the auction system to end any time soon.