Congestion Pricing in China

Over the past two decades, China has seen worsening traffic congestion in all major cities. Like almost all other countries, China has relied on supply-side and regulatory instruments to mitigate urban congestion, including expanding road capacity and forcing private vehicles to stay off roads. However, such instruments could be often ineffective. This paper has three purposes. First, it proves that congestion pricing helps to internalize traffic externalities and reduce travel level. Second, the paper presents successful international experience in congestion pricing. Last, the paper discusses why China should implement congestion pricing. This paper attempts to promote demand-side policies in China, particularly congestion pricing.

Keywords: People’s Republic of China, Development, Economics, Growth Management, Planning, Public Policy, Transportation