The economy is also taking its toll on the “green” decisions of many local administrations. The Chinese city of Hangzhou, one of many large Chinese cities that restrict transit permits for new fossil-fuel cars to reduce pollution and traffic congestion, is loosening restrictions on eligibility for car ownership in an effort to boost consumer spending and the economy, as reported by the economic news agency Caixin Global. They decided to concede more plates to ICE cars to sell them more and increase consumer buying in the city.
Hangzhou, along with Beijing, Shanghai, Shenzhen, and Guangzhou, has had such restrictions for nearly a decade. Hangzhou city authorities have granted only 80,000 new license plates for gasoline and diesel cars per year through a lottery. For comparison, in February 2023, more than 800,000 residents registered to enter the lottery to win fewer than 5,000 license plates, Caixin notes. In China, to limit cars, registrations of certain cars in certain areas are precisely restricted.
This year, the government began easing restrictions, allowing residents who have not won the lottery more than 72 times to apply directly for a license plate for a gasoline or diesel vehicle.
The goal of easing restrictions is to stimulate consumer spending and the economy. This year, China has had a bumpy road to recover from COVID-related restrictions that lasted nearly three years. The crisis in the real estate sector and the uneven recovery in manufacturing have weighed on China’s economy and its near-term outlook.
While sales of electric vehicles (EVs) in China continue to increase, the car market as a whole is struggling, partly because of license plate restrictions in large cities, wrote Cui Dongshu, secretary general of the China Passenger Car Association, in an article earlier this year, Caixin noted. Consumers, of course, don’t buy cars; they can’t register, but this drops sales, and the government can no longer afford it.
Cui called for the nationwide lifting of licensing restrictions on fossil-fueled passenger vehicles. According to Cui, if the restrictions were lifted, passenger car sales in China would increase by about 10 million units in five years.
Increased sales of gasoline and diesel will lead to increased demand for fuel in China.
Sooner or later, many European urban centers will similarly find themselves having to revise bans on ICE cars in order to appeal to consumers.