JTRF Volume 56 No. 3, Fall 2017Private Vehicle Ownership in Provincial China

Abstract

Private vehicle ownership has rapidly grown with China’s economic development and increasing incomes. This paper analyzes China’s provincial demands for private vehicles during the post-opening period 2000 – 2012. Based on estimates from pooled, fi xed effects and Hausman-Taylor models, private vehicle ownership during this period grew at an average annual rate of over 20%, all else constant. The study focuses on the roles of economic, spatial, investment and regulatory factors in shaping private vehicle demands. The study fi nds that increases in GDP per capita and vehicle use cost reinforce and constrain, respectively, the strong trend toward increased ownership. And absent changes in population density, higher percentages of the population in urban areas increase the demand for private vehicles. But increasing population density provides stronger incentives for reducing vehicle demands. Municipal restrictions aimed at reducing the congestion and environmental effects of vehicle ownership and use are effective in reducing provincial demands. A separate analysis of provinces that are at least 60% urbanized identifi es important differences. Vehicle demands are income elastic and infrastructure investments have stronger effects in the most urbanized provinces than in less urbanized provinces.