Central government struggling to control tollroads in China - market forces dominant
By Peter Samuel
Beijing's Xinhua news agency reports attempts by the central government of China to assert control over provincial government initiatives in building tollroads. It reports that the National Audit Office (NAO) as estimating that "illegal" tolls amounted to $3.1b (Y23.1b) per year - comprising $2b (Y14.9b) from 158 "illegal" toll points and $1.1b (Y8.2b) from increases in toll rates above that allowed by national regulation.
By "illegal" the national authorities mean provincial tolls out of line with national permits and regulations.
The office reports that 34 people have received criminal or disciplinary penalties.
The national auditors surveyed 86,800km (54,000 miles) of tollroads in 18 provincial jurisdictions. There were 4,328 toll points, one every 30km (18mi) on average. The survey covered about two-thirds of the estimated tollroads of the country. There are 22 provinces, 5 major metro area jurisdictions and 4 other provincial level governments.
Auditors went through the books of 53 provincial level departments and 433 subsidiaries.
There were 133,100km (82,700 miles) of tollroads in China about 30% of them expressway standard, the rest surface arterials.
The auditors' survey year was 2005!!!
The audit report complains that many provinces engaged in "road building sprees in violation of national guidelines."
That is a beautiful understatement, and an eloquent commentary on the collapse of socialist central planning.
National plans are window-dressing
The Chinese economy, nominally communist still, has an elaborate planning apparatus and national regulations, but in practice regulatory power is heavily decentralized and market forces assert themselves over national planners. This is especially true of roads, where about 30 provincial, large metro areas and other local governments are in charge.
There is insignificant national-level funding of roads in China. Efforts by national government officials to introduce a US style national gasoline tax and highway trust fund have so far failed to be adopted by the National Peoples Congress, and it has been left to provincial governments to raise the money for roads.
These provincial governments compete for economic development and popular support so national plans mean little. The pace of highway construction is driven by the pace of provincial permitting and by the number of financially viable projects put out to concession. Virtually all expressways are fully funded by investors under toll concessions bid by provincial level governments.
Major surface arterials are funded by a mix of tolls and provincial tax monies. Most of the taxes raised from road users go to upkeep and sub-expressway roads.
Expressway construction began 1989
Expressway construction only really began in China in 1989 with the liberalization of the economy to allow investors and devoution of control of concessioning to the provinces.
So almost all the country's expressways have been built in the past 18 years - an average of 3,000km (1865mi) per year over the whole period.
At the end of 2007 there were 53,600km (33,300 miles) of expressway, entirely tolled.
At current exchange rates (Yuan=14c) roadbuilding costs are very low expressed in US$s. Expressways are built for an average $280k/km or $450k/mile by concessionaires.
Tolls on toll expressways are mostly levied by trip with tickets. They vary between 4.2c/km and 10c/km (Y0.30/km and Y0.70/km) for cars - 7c to 16c/mile. NOTE J CORZINE: Even the cheapest tollroad in China is twice the toll of the Garden State Parkway!
8,300km (5,160 miles) of new expressway financed by concessionaires in 2007
During 2007 8,300km (5,160 miles) of new expressway were built, Li Shenglin, the national Minister for Communications is quoted as saying this week in wire service reports. This is a decent increase on the average 5,600km (3,480 miles) opened annually in the previous five years. The national government estimates this year an additional 6,000km (3,730 miles) of expressway will be opened to bring the total close to 60,000km (37,300 miles).
It is clear the central authorities have little control. You still see their "national plan" for an 85,000km (53,000 miles) expressway network by 2020, but at the recent pace this will be passed in about 4 years time, in 2012.
Market forces unleashed by local governments determine China's real roadbuilding program.
At the present pace of construction China will surpass the mileage of the US expressway network in about 2014, though of course actual construction could be faster or slower than the present pace, depending on the economy and the pace of motor vehicle purchase and consequent demand for roadspace.
408,000km needed to match US intensity
China has a population of 1,320m, 4.4x the US 301m. In order to have the same coverage as the present inadequate US expressway network of 92,800km (57,684 miles) the Chinese will need to build over 408,000km (255,000 miles) of new expressway.
At the end of this year the Chinese will be 350,000km short of an American expressway intensity and at 8,000km a year they would take 44 years to make up the difference. Of course they may well step up the pace of construction.
SOURCE of US data: hm35.xls at http://www.fhwa.dot.gov/policy/ohim/hs06/roadway_extent.htm gives the 2006 count of US expressways at 57,684 miles, the FHWA classification being "divided highways 4 lanes or more with full access control"