- October 24, 2018 Case Studies
The Rise, Fall, and Restoration of the Kingdom of Bicycles
This is the second of several historical case studies that illustrate how important aspects of the Chinese political economy have evolved over the first 40 years of the country’s Reform and Opening policies. The first case study, on how KFC changed China and how China changed KFC, can be read here. Later this year Two Fen will publish a series of in-depth examinations of China’s economic transformation to commemorate this 40th anniversary.
Toward the end of the Qing dynasty in 1898, the most influential newspaper at the time predicted that “bicycles will prevail in the future.” It was not wrong. Invented in France, the two-wheel pedal bicycle reached China in 1868. In the decades that followed, the bicycle enjoyed steady uptake by Western expats, cosmopolitan elites, postal authorities, and armed forces, but remained an expensive curiosity for ordinary Chinese.
When the Chinese Communist Party (CCP) came to power in 1949, however, it embraced the bicycle as a symbol of proletarian progress. Chairman Mao Zedong’s government merged local bicycle producers into national champions—such as the iconic Flying Pigeon company of Tianjin, founded in 1950—that enjoyed privileged access to scarce materials. The first Five-Year Plan (1953-1957) set ambitious goals for bicycle production, which resulted in China doubling its 1949 bicycle stock to one million by 1958. The bicycle was also touted as a sort of bride-price: Together with a watch, a sewing machine, and a radio, it constituted the “three rounds and a sound” that bachelorettes of the CCP elite looked for in prospective marriage partners.
China today has over half a billion bicycles, a colossal feat of manufacturing attributable to the policies of Reform and Opening. The boom and bust cycles of the bicycle market have closely reflected the dramatic changes in the Chinese economy over the past four decades.
Bicycles dominated the streets of fast-developing Chinese cities in the 1980s and 1990s, causing a production boom as the market opened to entrepreneurs. In the mid-1990s, amid rising incomes and rapid urbanization, the Chinese government threw its weight behind the automobile industry, coinciding with declining bicycle usage and a surge in exports. But horrific traffic, coupled with the rise of environmental and health consciousness, caused urban Chinese and their governments to reconsider their choices, helping to spur today’s bike-share startups.
The humble bicycle has returned in force to China’s cities—this time not as a symbol of socialist glory but as a proxy of wealthy elites yearning for a post-material sharing society.
Bicycle Boom Time in the 1980s and early 1990s
While the phrase was first coined in the Mao era, China became widely known as the “kingdom of bicycles” in the 1980s. That’s when throngs of bicycles filled the epic boulevards of Beijing and left indelible impressions on the Westerners who came to witness China’s Reform and Opening.
Avenue of Eternal Peace (Chang’an Jie), Beijing, 1986
From journalists to mayors, foreign observers were mesmerized by the rivers of cyclists that snaked through Beijing’s concrete jungles. Pulitzer-winning China correspondent Nicholas Kristof remarked in 1988 that riding a bicycle in the city “was exhilarating, in that I was joining the proletariat, communing with the masses of cyclists pulsing through every major artery in the capital.” The Chinese capital’s bicycles even inspired New York City mayor Ed Koch to trial six-foot-wide bike lanes in Manhattan in an attempt to relieve congestion, though the experiment ended after a month for lack of use.
Bicycles exploded across China in the 1980s and early 1990s primarily because of economic growth and the unbridling of market forces. In the early days of reform, when central planners still controlled most of the economy, buying a new Flying Pigeon bike not only cost many months’ wages for an average urban worker but also required “good guanxi” (connections) to get on a multiyear waiting list. In other words, it was the Tesla of the Chinese command economy.
To make bicycles more attainable, the government ended production quotas and price controls in 1978, and approved policies to “vigorously develop” bicycle manufacturing in 1981 and 1984. Even so, bikes were still heavily rationed—a factory with a thousand workers might only receive four or five coupons for bike purchases. The rationing system was finally abolished in 1986, marking the end of explicit central planning of the bicycle market.
The state’s receding hand allowed the industry to capitalize on huge demand and abundant labor to basically establish a vertically integrated production system by the end of the 1980s, with 60-plus bicycle factories and over 1,000 component suppliers. China’s opening to the world also enabled domestic firms to benefit from “technology transfer.” Factories in Tianjin, for example, used advanced heat treatment equipment from abroad to gain a competitive edge in the assembly of chains, pedals, and flywheels. Flying Pigeon alone ramped up production to 4 million bicycles per year and employed 10,000 workers in the 1980s. More efficient manufacturing and competition from new market entrants saw China’s annual bicycle production balloon from 8.5 million in 1978 to 41 million in 1987.
Beyond market forces, China’s urban geography also favored bicycles. Public transport was meager and cars were scarce and unaffordable, so bicycles became the essential vehicle for commuters and leisure-seekers. Most urbanites also belonged to a danwei, or “work unit,” where state employers provided housing, food, and social services to employees who lived in compounds close to their workplaces. This arrangement made for relatively short commutes that favored travel by foot or bicycle. Starting in the Mao era, urban planners had deliberately built roads that accommodated “bicycle mass transit systems” with three-lane carriageways that featured dedicated bike paths—many of which survive today. Beijing alone had around 242 kilometers of such roads by 1991.
As the supply of bicycles increased significantly, rising real incomes meant that more Chinese could afford to buy one. In just seven years from 1981 to 1988, the number of bikes in China tripled from 77 million to 225 million. Beijing, an especially bike-friendly city, had 76% of its road space taken by cyclists in 1988, including busy intersections that saw 20,000 bicycles an hour. By 1995, the city had 8.31 million bicycles on its roads.
Bicycles also became a symbol of national and individual progress, similar to owning a television or a refrigerator. China’s paramount leader at the time, Deng Xiaoping, even defined prosperity as “a Flying Pigeon bicycle in every household.” One Chinese commentator claimed that, back then, “riding a Forever bicycle [a close competitor of Flying Pigeon] gave you as much face as driving a Mercedes-Benz.” The Flying Pigeon was so iconic that when President George H. W. Bush and First Lady Barbara Bush visited China in February 1989, Premier Li Peng gifted the couple two Flying Pigeon bicycles (the couple had left an impression by posing with bikes in front of Tiananmen when Bush headed the US Liaison Office in the 1970s).
“Independence starts with a Phoenix Bicycle,” undated advertisement, likely from the 1980s.
While the bicycle was embraced as a state symbol and a measure of the success of Reform and Opening in the late 1980s, pedal power would fall from grace in the mid-1990s. New economic priorities and changing social attitudes would drastically reduce domestic bicycle usage, prompting Chinese manufacturers to focus on the global market, particularly the United States.
Chinese Consumers Upgrade to Four Wheels
In March 1994, the State Council issued the “Automobile Industry Production Policy,” which kickstarted auto manufacturing in China and presaged a fundamental shift toward auto-centric urban planning, road construction, and traffic management. The Ministry of Housing and Urban-Rural Development declared soon after that bicycles were an “inferior” mode of transport and “the growth of bicycles in cities is not a [desirable] direction of urban transportation development.”
The rise of cars in China over the past three decades, tied directly to a period of intensive urbanization, has had a tremendous impact on China, affecting everything from energy security and air pollution to commodity demand and traffic congestion. The decline of the work unit system and the growing influx of internal migrants into large metropolises in the 1990s created enormous demand for new housing and new lifestyles, which led to urban sprawl. The urban area of Beijing, for instance, increased from 397 km2 in 1990 to 4,144 km2 today—larger than the state of Rhode Island.
Today, not only is China a majority urban country—with the urbanization rate growing from just 18% in 1978 to 58% in 2017—it is now the world’s largest producer and consumer of automobiles, with car ownership reaching 185 million in 2016 (see Figure 1). Urbanization and its attendant sprawl produced lengthier commutes and greater need for long-distance transport such as cars, buses, and subways. In response, the Chinese government built massive urban rail systems in 31 cities that stretch a total of 4,400 kilometers and also expanded bus routes. These investments in infrastructure made public transport the most popular means of commuting for Chinese citizens.
Figure 1. Car Ownership Skyrocketed in the 2000s (in millions)
Source: National Bureau of Statistics.
It was cars, though, that became the new status symbol of urban modernity. This consumer evolution is a familiar story across developing countries: As people make more money, they start to buy cars. Bicycles came to be seen as “for the poor” and a car became the new “bride-price” necessary to guarantee a middle-class marriage and a professional reputation. Borrowing a well-known concept from the economist Simon Kuznets, as GDP per capita grew, bicycle ownership in rural China first shot up before falling and stabilizing at a lower level as soaring incomes altered households’ consumption preferences toward more expensive goods like cars (see Figure 2).
Figure 2. Kuznets Curve of Bicycle Ownership in Rural China (1978-2012)
Sources: WIND; World Bank.
The proliferation of automobiles also came at the expense of bicycles because authorities had to get bikes off roads to accommodate millions of new motorists. Many cities began to discourage bicycle use. Guangzhou, for example, aimed to decrease bicycle usage from 33.8% of trips outside the home in 1992 to 13.3% in 2010. Dalian even declared itself a “bicycle-free city” in 2000. China’s first Road Safety Law, introduced in 1994, contained a provision that allowed local governments to reassign bicycle lanes to cars, a process that severely disrupted the existing network of bike paths. Even in cities like Beijing, where cyclists are separated from drivers by traffic islands, it is commonplace to see cars driving through or parked in bike-dedicated lanes.
Traditional pedal bikes fell further out of favor with the development of e-bikes, encouraged by the government from the early 1990s to improve traffic and energy efficiency. Aided by continual advances in motor and battery technology, e-bikes became popular with working- and lower-middle-class Chinese because they are faster than bicycles, cheaper than cars, and less regulated than motorcycles, which are restricted in roughly 180 cities. China now boasts 200 million e-bikes, 1,200 manufacturers, and around 90% of the global market share.
None of these trends boded well for the domestic bicycle market, which reached its height in the mid-1990s. The number of bicycles in China had exploded from 74 million in 1978 to 523 million in 1996, and bicycle ownership peaked at 197.2 bicycles per hundred urban households in 1993 and at 147 bicycles per hundred rural households in 1995. In Beijing
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