Spring Festival travel rush

With the Chinese still sticking to the tradition of family reunions during Spring Festival, causing a sudden spike in traffic and sprouting the largest travel demand in the world, it would be unrealistic for the railway company to fill the supply gap in the short term.

Without major social changes, in which social mobility diminishes and more people are able to live with or near their families, making long-distance travel unnecessary, there won’t be any good solutions to the travel tension.

Not pure economics

As always, Chinese economists have not hesitated to suggest cures for the travel disorder. Veteran economist Mao Yushi, for example, claimed only price hikes can solve the problem, citing the economics law of supply and demand. Higher train ticket prices, he argued, would automatically reduce people’s mobility and force them to stay put instead of traveling during the peak period.

In a well-operated market, price hikes are certainly effective in adjusting demand. In China’s railway passenger market, however, the elasticity of demand is very low, meaning people would buy the train tickets home to see their families during the festival even if prices were raised by 20 percent or 30 percent.

Suppose the ticket prices were raised, it would only deepen the pockets of the railway company without solving the problem of crowded carriages, thus leading to more public discontent.

Price hikes could be an effective tool in balancing supply and demand in a free and fully competitive market. But in the real world, especially in China’s mixed economy, things are often much more complicated, and pure economic theories can be misused when applied to reality.