Note: Vehicle density covers private vehicles, including passenger vehicles, trucks, and other.
Oil demand and have increased significantly as private passenger vehicle sales and use have increased. Sales of private passenger vehicles have grown by 29% annually over the past 13 years, which has increased gasoline consumption in China. China is currently the world’s second-largest oil consumer, behind the United States. Increased sales have mainly been focused in China’s wealthier, eastern provinces, where some provinces have now instituted policies to limit vehicle ownership. In other parts of the nation, the central government has encouraged policies to increase incomes, which will likely lead to increased vehicle use and energy consumption.
The distribution of China’s current vehicle market generally reflects the regional differences in household and disposable incomes across the country. As of 2012, per capita disposable income in eastern provinces was more than 40% higher than it was in central, western, and northeastern provinces. Within that disposable income, per capita expenditures on transportation and communication in eastern provinces were more than 60% higher than those in central, western, and northeastern provinces (see graph below).
The eastern provinces have higher rates of vehicle ownership than the central, western, and northeastern provinces, and this trend is intensified in China’s large cities. In eastern China, Beijing had 183 vehicles per 1,000 people (as of 2011), while Chongqing in the west had only 28 vehicles per 1,000 people, the lowest among China’s major cities. Even in Beijing, vehicle adoption rates remain below those of the United States (more than 800 vehicles per 1,000 people) and Europe (around 600 vehicles per 1,000 people).
The Chinese government has several longstanding programs aimed at addressing the income disparity between eastern coastal provinces and other parts of the country. These programs have focused on expanding the economies of the western inland provinces by investing in transportation, telecommunications, and other infrastructure projects and taking advantage of lower labor costs by promoting reallocation of labor-intensive manufacturing industries to these provinces. Since the implementation of these initiatives, the western provinces have been among the fastest growing in China.
China’s economic development and transportation policies continue to broaden and evolve, and these policies will have regionally different effects on future motorization. Recent national policy focuses on curbing vehicle-related emissions and promoting growth in fuel-efficient and alternative vehicles, while regional policies attempt to stimulate economic development by supporting local vehicle manufacturing and other related industries. In the long term, growing urbanization, more efficient transportation, and labor migration likely mean that income disparity between provinces will continue to decline, and motorization growth is expected to continue shifting toward western parts of the country.
Principal contributor: Victoria Zaretskaya, Mark Schipper
