Out of Control Policy Blog

China's Demand for Car Travel Outstrips Economic Growth

The positive relationship between automobile demand and wealth is well established, but trends in China suggest this connection is stronger than previously thought. Automobile ownership is rising faster than economic growth, according to an article in the Journal of Transportation and Land Use by Wei-Shiuen Ng, Lee Shipper, and Yang Chen (Winter 2000). Current levels of auotmobile use in China are equivalent to the levels in the US during the 1920s, but its level of economic development is still lower. Moreover, despite China's massive investment in highway infrastrcuture, capacity still lags demand by significant margins.

All this suggests that mobility, and automobile ownership in particular, is what economists call a "superior good": As income rises, the consumption of mobility rises with income. I've discussed this phenomenon at Planetizen.com, but I may have to revise my thinking about mobility and income even more.

Samuel Staley is Research Fellow


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