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Hangzhou Joins Growing List of China Cities With Limits on Cars

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March 26 (Bloomberg) -- Hangzhou, the Chinese city famous for its West Lake and tea plantations, will cut the number of new vehicle license plates issued a year by more than 70 percent to combat worsening air pollution and congestion.

The capital of eastern Zhejiang province will cap the number of new license plates at 80,000 a year, compared with the record 276,000 new vehicles added in the 12 months ended February, according to a statement by the municipal government posted on its website.

Hangzhou joins Beijing, Shanghai, Guangzhou, Guiyang and Tianjin in imposing quotas on new vehicles, as local governments step up efforts to support Premier Li Keqiang’s declaration of war on smog. China’s main car association has forecast that vehicle sales growth will slow this year as anti-pollution and austerity campaigns spread.

“Two years ago, when Beijing started, people were expecting more of this to happen,” said Yale Zhang, Shanghai-based managing director of researcher Autoforesight Shanghai Co. “This will be a driver to accelerate people’s purchases of cars in other cities.”

Like many major cities in China, air quality has deteriorated in Hangzhou as the number of vehicles increased. Traffic has also slowed to under 20 kilometers (12 miles) per hour during morning and evening peak periods, according to the city government.

License Plates

Hangzhou will distribute 80 percent of the license plates by lottery and the rest through auction, and details of the system will be released by the end of April, according to the statement.

Premier Li said earlier this month that fighting air pollution is one of the government’s top priorities. A report by the World Health Organization released this week found air pollution caused more deaths worldwide than AIDS, diabetes and road injuries combined. WHO Director-General Margaret Chan called China’s situation a regional health issue that harms the nation’s economy.

China, which in 2013 became the first country to see domestic motor-vehicle sales surpass 20 million units a year, will see deliveries rise as much as 10 percent in 2014 after last year’s 14 percent growth, the state-backed China Association of Automobile Manufacturers said in January.

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net Chua Kong Ho