Traffic officials in Shanghai don't know how to react to an announcement that nearby Hangzhou will begin issuing car license plates free of charge - a situation that could see local car buyers getting their plates in Hangzhou to avoid the staggering costs of buying one in Shanghai.

At the beginning of this month, Hangzhou decided to abolish the quota and bidding system used to issue plates, making them free for any Hangzhou natives or temporary residents who have lived in the city for at least one year.

With the price of a plate dropping from around 10,000 yuan (US$1,200) to zero overnight, more than 2,000 people applied to get a plate during the first 20 days of the new system. That is more than 30 times the usual number of applicants.

Some 200 kilometers away in Shanghai, plate prices remain high. The lowest successful bid during the city's plate auction in April was 16,000 yuan.

The staggering price difference means some Shanghai residents are asking friends and relatives living in Hangzhou to buy a plate for them to use in Shanghai.

The loophole works well now as there are no restrictions on driving a car with an out-of-city plate on Shanghai's streets.

"If I want to purchase a second car, I will consider the Hangzhou policy," said Zhu Shucheng, 45, who paid 14,000 yuan for his car plate in Shanghai in January.

But Zhu is worried local officials will adopt regulations that make it more difficult to use a Hangzhou plate in Shanghai.

He might be right.

Officials in several government departments, including the Shanghai Land Transportation Administration Office and the Shanghai Traffic and Patrol Police Team, are discussing what measures they should take.

"We are discussing the issue, but no conclusion has been made yet," said Sun Guofu, from Shanghai Traffic and Patrol Police Team.

Shanghai uses quotas and fluctuating plate prices to control the number of privately owned cars on the city's crowded streets. If car buyers are able to sidestep those rules, some officials fear local traffic will become much worse.

"For streets outside the Outer Ring Road, I'm not worried about the possible increase in traffic flow. But it may be difficult for roads in downtown areas, where traffic jams are already a problem," said Zhang Kuihong, chief engineer of the Shanghai Highway Management Department.

Currently, there are 800,000 vehicles registered in Shanghai, plus another 50,000 cars from outside Shanghai that use local streets every day. More cars won't just cause more traffic jams, officials said, but also make it even more difficult to find a parking spot in the city - a difficult task already.

(eastday.com May 23, 2002)