China's Hangzhou to restrict car ownership

East China's Hangzhou City announced on Tuesday that it will restrict issuance of new car licenses, making it the sixth Chinese city to clamp down on car ownership in a bid to ease traffic congestion and combat air pollution.

The city government will issue new plates via auction and lottery from Wednesday, according to a press conference on Tuesday evening.

The government will restrict the number of plates issued every year to 80,000.

Eighty percent of the quota will be decided by lottery and the remaining 20 percent will be auctioned with a starting price of 10,000 yuan (1,628 U.S. dollars) each.

"The split between lottery and auction is intended to maintain fairness and efficiency at the same time," said Zhu Yunfu, deputy secretary general of the Hangzhou municipal government.

About one in 30 applicants is expected to be successful in the lottery, said Fan Jianjun, head of the municipal transportation bureau.

Fan did not specify how often the lottery will be held.

Meanwhile, the city government will also ramp up an existing quota system that allows cars access to the city on certain days depending on the last digit of their plates, with two numbers banned each workday.

Hangzhou introduced the traffic restriction scheme on Oct. 8, 2011, keeping 20 percent of vehicles off the road between 7 a.m. and 8:30 a.m. and 5 p.m. to 6:30 p.m. on workdays. From May 5 this year, the banning period will be extended to run from 7 a.m. to 9 a.m. and 4:30 p.m. to 6:30 p.m.

Rumors of the car ownership restriction pushed up car sales in Hangzhou.

Automobile sales revenues reached 12.4 billion yuan in the first two months this year, up 29.8 percent year on year.

"We have collected cars from nearby cities for the buying surge before the official restriction," said a saleswoman from a Ford sales center on Monday.

Hangzhou had about 2.6 million motor vehicles registered by the end of February, with 276,000 added in 2013 alone. The average speed of vehicles during the morning and afternoon peaks is below 20 km per hour, an international warning level for traffic congestion.

"The deteriorating traffic reflects the conflict between increasing numbers of vehicles and construction of roads and parking space," said Yang Jianhua, a researcher with the Zhejiang Provincial Academy of Social Sciences.

Air pollution is another factor leading to the restriction.

Hangzhou, a top tourist destination, has frequently been hit by smog. According to municipal environmental protection authorities, vehicle exhaust emissions constitute 39.5 percent of PM 2.5 particles in the city.

However, the new restriction is not a panacea, warned Yang.

"The effect on easing traffic and air pollution has not been significant in cities which already have the measures in place," he said.

Beijing, Shanghai, Guangzhou, Guiyang and Tianjin have already limited the number of vehicles registered each year.

Beijing and Guiyang issue plates through a lottery, while Shanghai uses a bidding scheme. Guangzhou and Tianjin adopt both systems.

"The key solution is to transform the model of urban development and use the market approach, instead of administrative means, to tackle the problem," said Yang.