Bus transit subsidy under China’s transit metropolis initiative: The case of Shenzhen

Abstract

Transit services are subsidized in various cities. Our article reviews bus transit subsidy in Shenzhen, one of China’s mega cities undertaking tremendous effort to strengthen transit service under the national transit metropolis initiative. The operational data of Shenzhen’s bus transit reveals that the past subsidy policy, which guaranteed 6% of profit, led to significant increase in operational cost per passenger kilometer. The recent switch toward a ridership-based subsidy helps to reverse this trend, but could risk service quality. Shenzhen’s experience has significant implications while China’s city governments implement transit-priority strategies. The gain of social benefit and the loss of operational efficiency have to be carefully balanced when designing subsidy programs.

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