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Will Differentiated Tolls Benefit Drivers and the Economy at Large?
Differentiated tolls are to be adopted to defuse traffic jams
 NO. 36 SEPTEMBER 8, 2016


Drivers will pay different expressway toll rates depending on the time of day, according to a new policy by the Ministry of Transport. In a recently released document, the ministry vowed to explore a differential pricing system for China's expressway network. During rush hours, for instance, the charge will be set higher than during off-peak periods. The policy is aimed at easing traffic jams in rush hours and cutting the costs of logistics for businesses and individuals.

China's controlled-access highway network totaled more than 125,000 km at the end of last year. Currently, drivers are charged on a by-distance basis. During the National Day holiday in October and the Spring Festival holiday in January or February, however, the expressways can be used free of charge, usually causing heavy traffic jams.

Although a detailed plan has yet to be made public, the recent announcement of the proposed new policy has triggered debates. Some believe it will effectively reduce traffic on expressways, as more people will choose to drive at off-peak times. Meanwhile, differential pricing may help to save costs for cargo trucks that crisscross the country. Others, however, are worried that the new policy will generally increase the cost of driving on expressways.

A well-intentioned change

Zhou Yun (Guangzhou Daily): The policy of differentiated expressway tolls is designed to cut logistics costs, a decline of which may trigger a chain reaction for the better. We can also expect to see smoother traffic flows, even during rush hours.

Under this new policy, people will have an incentive to drive during off-peak hours, and in fact, cargo truck drivers tend to travel during the night. In this sense, the new policy will help them save costs, which in turn cuts their businesses' operational expenses. It seems to be a good policy in various aspects.

However, it's still too early to celebrate, as the authorities have not specified the new standards. In practice, the strategy may not be entirely viable—while truck drivers are used to moving at night, ordinary drivers may not deliberately choose to drive at off-peak hours just to save money. Even cargo truck drivers may experience diminishing returns as the benefits they receive from driving at night could be offset by tolls they go through during peak hours.

The good news is that there is an official recognition of the relationship between the costs of logistics and tolling. Although this new proposal may not solve all problems, still it's believed to be a starting point.

Hong Ji (Yangcheng Evening News): Logistics costs account for about 16 percent of China's GDP, 5 percentage points higher than the world's average. About 30 percent of a cargo load's total value is eaten away by logistics. These costs are driving up the price of goods. Lowering the costs will not only cut economic burdens on businesses, but will also make daily commodities cheaper for ordinary people.

Wang Changlian ( Expressway traffic is mainly a problem during important holidays and festivals—not on ordinary days. That's why a toll-free policy set in place for holidays is now being questioned for its side effects.

Expressways quickly become overcrowded during the holiday season. This problem has been around for many years, so it is surely not the result of the toll-free policy, which was adopted in 2012. This policy has been cherished by drivers as a holiday benefit, but it also throws roads into a state of paralysis.

Expressways are built to serve the public. It's better to charge lower tolls on ordinary days than to limit benefits to festivals and holidays. In my opinion, higher tolls should be charged on holidays and festivals to curb traffic flows, and tolls should be kept low at other times. Gradually, expressways will be relieved of huge traffic during special events, while on other days, drivers can pay less for the use of expressways than before.

Public concerns

Feng Haining (Legal Daily): The public feels as if the new policy is a prelude to overall expressway toll hikes across the country. They are worried that cuts to tolls will be limited. Expressways are mostly built by borrowing from banks. Local governments or companies engaged in road construction tend to be heavily indebted, so they may want to charge more while reducing a little during less busy traffic hours. This will just add to the public's economic burden.

There are many reasons for expressway congestion, such as flawed designs, bad weather, or even traffic accidents. There should be different methods to deal with traffic problems stemming from different reasons, rather than applying this new system that some may find hard to swallow. A differentiated toll policy is welcome, but it's important to pay more attention to the public's feelings and how to increase efficient road usage instead of revenues.

The new policy should center on cutting costs by reducing tolls during off-peak hours while slightly increasing them during peak hours. Although local governments and companies operating expressways may at first suffer from losses, in the long run, this will promote economic growth and stabilize the prices of daily commodities by putting a lid on logistics costs.

Yan Yang (Yanzhao Evening News): This policy means to steer some of the traffic flows to off-peak hours by using price leverage. Some drivers may benefit from a lowered toll. The authorities have just put forward the idea, and a lot more needs to be done to put it into practice. But regardless of how the toll system is readjusted, the hope is that the tolls will be reduced on the whole, rather than the opposite.

Actually, we already have differential pricing systems for the use of water and electricity. However, it's a pity that in many regions, this pricing method has not really benefited consumers. For example, a larger consumption of water and electricity will surely end up with greater charges, but a decline in the use of those utilities does not lead to reduced expenses. As a result, the so-called differential pricing method has become almost synonymous with a price hike.

We hope that this is not the case for the new expressway toll policy. We expect to see that tolls are kept at the current price level during rush hours, or only a bit higher, while during off-peak hours, they are cut sharply. As a result, the overall cost for vehicles running on expressways should witness a drop, instead of a rise. This is designed to cut logistics costs and improve the efficiency of businesses. From this perspective, if the new policy turns out to be a toll hike, it would not be serving its purpose effectively.

Various statistics point to the fact that in China, high expressway tolls have added too much pressure on businesses, and it is even seen as a factor hampering economic growth. The policy of differentiated expressway tolls should be focused on reducing overall costs.

Copyedited by Bryan Michael Galvan

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