Thomas White Global Investing
China Stamp
August 30, 2010
A Postcard from Asia Pacific
China: The World’s Longest Traffic Jam?

A smog-ridden street in Beijing

Beijing has 4.36 million cars on its roads as of June 29 2010.

It’s been called the traffic jam of the century, the world’s longest and biggest traffic jam, and it has left the Chinese government red-faced. As vehicles crawled soporifically on the Beijing-Zhangjiakou highway, and trucks lined up together for days on one of China’s busiest expressways, apart from the overwhelming frustration of it all, the question that arises is: just how good are China’s roads?

Over the years, the Chinese government has spent billions in upgrading its infrastructure. (For more, please read our new China BRIC report). And the country’s expressway network spans more than 40,000 miles, next only to the U.S. So why this mammoth jam? Although the majority of the Chinese and Western media have reported a traffic jam that has lasted for 11 days now at the time of writing this report, there have been conflicting versions of the details of the story. The gridlock apparently spans 60 miles and is caused by road construction happening on an expressway that stretches into Inner Mongolia – a region of rich coal reserves that helps fuel the world’s second largest economy. Evidence of that economy’s resourcefulness was on view when makeshift vendors set up shops selling noodles and tea to weary stranded truckers along the highway. At a premium.

Traffic jams in Beijing are not new – China’s capital is reputed to have the worst commuter traffic in the world, according to a recent IBM survey. The city adds 1,900 new cars to its already choking roads every day. Its grey smog-covered skies are testimony to a city’s colossal growth and its accompanying effects. And a desperate Chinese government even undertook the unusual step of forcing cars to stay off on alternate days depending on an ‘odd and even’ system. That is, cars whose license plate ends in an odd number run on one day, and the next day, cars with license plates ending with an even number are allowed to be on the roads. It was this sort of car rationing that helped keep a fifth of Beijing cars off the roads during the Olympics. But this massive traffic jam of the past 11 days is not about Beijing’s choked streets.

The Beijing-Zhangjiakou highway narrows into a two-lane road as one inches further away from China’s prosperous north and into its less developed western frontier. Economically, these regions are just taking baby steps into the kind of prosperity that China’s developed Eastern and Northern provinces have known in the past few decades. There has been a clear drive by the Chinese government to develop these hitherto neglected areas and utilize their resources. Small wonder that much of the vehicles stuck on the expressway are mammoth coal trucks making their way to China’s booming Eastern provinces. Crucially, for all the expressways it has built, China has not managed to efficiently connect its interior provinces to its highly populated East by rail. As a result, this expressway remains congested most of the time, and to a great extent by dilapidated coal trucks, hence the construction work to try and repair and expand the road.

There are wider issues that can emerge from this unprecedented traffic jam. Concerns about China’s infrastructure, for one. Concerns about the extent to which it can absorb a one billion plus population and the demands it entails. Concerns about the growth of its economy. And really, one immediate concern: to transport all that coal in a better way.

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