Hat tip to Ryan aka “Lost Laowai” for Hao Haoing Adam Minter’s must read post at the always great Shanghai Scrap, self-evidently titled “The Rising Cost of Everything: Perspectives from the Back of a Shanghai Taxi (Fare),” where Adam takes a moment to chronicle the rising cost of hailing a Shanghai taxi:
In 2006, the city fathers, under pressure from the taxi companies, taxi drivers, and – most important – oil prices, raised the flag-down rate to RMB 11, or US$1.35. The per kilometer charge also rose, by RMB .1, or roughly US$.01/km. As I recall, most of the Shanghai taxi riders I knew were more annoyed at the coins they’d receive in exchange for handing over RMB 20 notes to taxi drivers, than they were by the actual bite of the fare increase.
Two years later, . Put differently though: the price of getting into a Shanghai taxi had gone up 20% in two years. By then, the RMB had appreciated significantly against the dollar, lifting the dollar-adjusted fare to $1.76 – or more than 30%.
Which brings us to Friday, and a new rate hike – RMB 1 was added to the flag-down fee, along with an RMB 1 fuel surcharge (a fuel surcharge that doesn’t, the government says, come close to covering the increasing cost of fuel). So, in Shanghai, the cost of a taxi rose RMB 2, or roughly 17%. In five years, that’s a 40% hike if you go by the local currency.
Official government statistics peg Shanghai’s average montly salary at under four thousand RMB, so it is not difficult to understand why a four RMB increase could be perceived as an unwelcome development for many Shanghai residents. It is more difficult to care.
Because I am not a Shanghai resident with an average Shanghai salary, my life is not going to be affected in any noticeable way by Shanghai’s taxi fare increase. What is need to bring this impact home is a good analogy. Adam’s is to note how Shanghai’s taxis may soon be competing with New York taxis in price:
…if, like me, you are unlucky enough to measure your income in dollars, [the taxi flag-down rate in Shanghai] is a real whopper: $2.15, or up roughly 80% since 2006.
Now look at it this way: the flag-drop rate for a New York City taxi is US$2.50. And if, as looks likely, the Shanghai government continues its every-two-years policy of taxi fare increases, and China’s government continues its revaluation of the RMB against the dollar … then, by 2013, it’ll be more expensive to sit down in a Shanghai taxi than a New York City taxi (and yes, taxi riding friends, I’m aware that the incremental distance charges are still significantly more expensive in NYC and other American cities). Already, Shanghai is on the verge of it.
Whoah. I spent most of my time in Beijing where the flag-down fare in 2009 was still ten RMB. Admittedly I took the taxi quite a bit (most often in summer when trying to walk in Beijing is like trying to swim in a bowl of meat pudding), and our restaurant even delivered pizza’s by taxi. At 14RMB I’m not so sure that I’d be able or willing to do any of those things because $2.15 gives me pause, particularly if I’m thinking about taking the taxi to and from work.
Adam posits that the taxi fare increase is part of a more fundamental shift in the China price. I agree and I don’t think anyone would seriously dispute the assertion. I will add, however, that the taxi fare may be a canary for one particular group of China residents: expats who have built comfortable lives around jobs that pay in the range of 5000RMB to 14000RMB per month, jobs in the teaching profession and in the fairly self-contained expatriate dining and entertainment industries (think City Weekend Magazine, club promoters, etc.). Specifically, the rise of the taxi fare may signal a rise in the price of relatively luxurious perks and services that this group of people has been able to comfortably pursue for the better part of three decades. Might this not also lead to a decrease in the level of healthcare that expats are able to afford?
My question for the comments section: how high will the taxi fare in China’s cities have to get for expat residents to start budgeting their luxuries, and start cutting back on their healthcare needs?
it would have to be 25 yuan….but I’d still probably take it…lol
I dont know though cuz i make a lot for beinga teach so i can afford it, but i can see how other people couldn’t
The equivalent of this would be cab fare in Chicago being 25$ just to get in.
Most cabs would be packed when they were being used at all. A price this high would have the beneficial effect of cutting down the number of rainy days that no one can catch a cab.
1. I ought to sue you for a copyright violation. I believe I own all rights to start a blog post with the word dude.
2. You admitted that you spent work time on this blog post, so it belongs to us.
3. So taxi cab prices have increased. Is that a new thing or is that something that has been happening everywhere in the world since taxi cabs first came into existence? In fact, I would bet that what you have written here I could have written about liveries back in the 1800s.
4. What does this have to do with Asian health care? Really.
Dan,
Wherever, whenever. I work in a law firm, too, and I know for a fact that there are a couple of summer associates there chomping at the lips for a go at a summer bonus.
Also, taxis have everything to do with healthcare. If you get run over by a car and need to get to a hospital in a Chinese city you will be taking a taxi unless you want to wait an hour for the ambulance. If you are the type of person who gets hit by a car once or twice a day, the increase in cab fare adds up quick. Think about that next time you wish to mock the quality of penmanship on AHCB.
Dan,
Inflation is a significant problem in China, food prices in particular. But I think for most consumers, unless they take notes each time they go shopping, it is hard to pinpoint an exact change in price. They are just aware that prices are rising.
But with taxis, the change is obvious. One day the starting fare is RMB 12 and the next day it is RMB 14.
Interestingly, the city of Beijing has kept the starting fare at RMB 10 while adding a mandatory 1 yuan fuel surcharge if the ride exceeds 3 km. In Beijing, subway and bus tickets are also cheaper than Shanghai.
Shanghai added about 4,000 new cabs to its fleet for the World Expo last year as the city anticipated an uptick in demand for taxi rides.
From what I have seen, these are all still in service except for the 350 Buick Lacrosse Hybrids.
Taxi drivers have told me many times that the increases in price and supply have damaged their business.
As far as expatriates here go, I think many of us not at the executive level take the subway regularly, the bus less frequently.
Taxis remain an affordable option though, especially late at night and for destinations with poor subway access.
Shanghai has done a superb job of expanding its subway lines over the past few years, but there remain many locations in the downtown area which are easiest accessed via the roads.