As a graduate student at the NYU Wagner School of Public Service, I had the pleasure to spend three weeks attending Professor Zhan Guo’s Urbanization and Sustainable Development course in Shanghai. My personal focus is on the transportation policies that will make China’s plan to move nearly the entire U.S. population, over 250 million people, to cities in the next 20 years feasible.
Besides dodging the electric scooters that have usurped the bicycle’s position as China’s two wheeled transportation mode of choice, and eating half my body weight in dumplings, most of my time was spent picking my jaw off the floor. The scale, speed, and audacity of development in this city of 23 million are all awe-inspiring. It boasts the world’s largest bus system, the world’s second largest tower, and soon the largest Metro system by track length.
By 2020, only 27 years since its first lined opened, Shanghai will have completed 877 kilometers of track, surpassing in less than 3 decades what the New York City Subway and the London Underground took over a century to build.
Everything is bigger in Shanghai. Except transit fares.
The Shanghai Metro uses distance-based fares. A single trip starts from 3 RMB for trips under 6 kilometers or around $0.50 and 1 RMB, or $0.16 for every additional 10 kilometers. Compare that to the London Underground, which starts at a $3.77 base peak fare and around $1 for every additional zone.
Shanghai has not increased the Metro fare since 2005, and has communicated no plans to raise it.
In addition, comprehending the magnitude of the system’s financial situation is notoriously difficult due to the multiple enterprises that own, operate, and finance it. Put succinctly in 2012 by Yang Di, a manager at Shanghai Shentong Metro Company, owner of the Metro,
“I doubt there are more than five people in our company and the local government who know how much money the Shanghai metro loses every year. The problem is that it’s not a simple mathematical question of adding the government’s yearly subsidy and subtracting the metro’s annual operating costs”
Without additional fare revenue, Shanghai may struggle to support a metro this size without threatening the long-term quality of a system that 6.8 million riders rely on daily, or the financial health of the city and region.
As median incomes rise and inequality grows, Shanghai could follow the advice of Rohit Aggarwala at Columbia University by instituting higher fares paired with more targeted subsidies to improve the system for all riders while supporting those who rely on the system most.
Shanghai already has in place a subtle infrastructure that gives it the opportunity to take advantage of major changes in how riders pay for mobility. Contactless payment readers for the city’s Shanghai Transportation Card, its version of the London Oyster Card, are pervasive. Signified by its lighting bolt logo, they appear in every taxi, bus, ferry, expressway toll booth, minimart, and parking garage creating a network of contactless readers that reach all across the city. As cities like Helsinki plan to move to a pay by the kilometer system for their entire transportation network, Shanghai already has the near field communication infrastructure in place to make a policy like this possible.
Shanghai has quickly caught up with a 21st century transportation system, but now it has the opportunity to be a leader in developing a 21st century way to pay for it.
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