An elegant irony of globalisation is that China produces most of the world's bicycles yet does little to encourage cycling, while Europe manufactures most of its cars yet is pushing to increase the use of two wheels.

Take Paris. Life has few experiences so delightful, or dangerous, as flying on a bicycle through the city streets: speeding across a bridge on two spinning wheels, glimpsing the golden evening sunlight upon the waters of the River Seine. It is such exquisite moments that have prompted 24 million Parisians, tourists and day-trippers to head for the stands of Vélib, the city-wide bike rental scheme that sprang up around the capital last summer.

So successful is the scheme that Mayor Bertrand Delanoë is pushing ahead with Autolib, placing 4,000 electric cars on Paris' streets as early as next year, prompting some critics to claim that he'll merely exacerbate Paris' already notorious traffic congestion.

Whatever happens, it's all good news for advertising giant JCDecaux, which is responsible for running the bike scheme, and Europe's largest bike manufacturer, Dutch Accell Group, which manufactures the Vélib bicycle at a factory in the Hungarian village of Tószeg, 110km south-east of Budapest.

Of course, public bike rentals have been around for years: Vienna blazing a European trail in 2003, followed by the Spanish city of Cordoba in the same year, and central French city Lyon in 2005. Over in Germany, train operator Deutsche Bahn has successfully run its own scheme for five years. But it took the Paris Vélib programme and JCDecaux to grab the attention of city fathers, town planners and advertising executives all over the world.

So how on earth did a capitalist advertising agency end up running a socialist bike scheme? The Vélib - the word derives from vélo (bike) and liberté (freedom) - scheme arose from the city's putting out to tender a 10-year exclusive contract for outdoor advertising. The socialist-led council made it a condition that the winner provided a network of affordable rental bikes. Previously, councils had tied advertising contracts to the provision of public toilets or other services, but the novelty in Paris was adding the bike to the mix, says Ronan Mullet, product manager for Starbike, Vélib's rival scheme offered by American company Clear Channel, which competed with JCDecaux for the tender.

In the end it was the home team that won. From a single bus shelter contract for the city of Lyon in France, JCDecaux has grown over 40 years to become Europe's largest out-of-home advertising company, and the second largest in the world. Vélib was merely another feather in its cap, but one that delighted cycle campaigners. It also delighted the company, who in exchange for fixing punctures, mending wheels and oiling chains, won sole rights to book advertising on 1,628 electronic rolling billboards scattered across Paris.

The money that JCDecaux makes from advertising underwrites the cost of the network, which helps keep rental rates low and allows a free first half-hour of use. "This is part of our business," says Agathe Albertini, a JCDecaux spokeswoman. "This is a new activity in our core activity of urban advertising."

JCDecaux uses a credit card technology, which may have contributed to keeping theft of its bikes low (although 3,000 bikes have reportedly gone missing so far), while rival Clear Channel uses online registration and call centres to furnish riders with a unique code to release a bike.

JCDecaux refuses to disclose how much the advertising contract is worth or the cost of maintaining the bikes. "It is commercially sensitive information," Albertini said; council officials were unavailable for comment.

Under the Paris contract, JCDecaux supplies and maintains 20,600 bikes at 158 stations. A clue about costs can be gleaned from the €1,500 per bike that Barcelona pays Clear Channel annually to maintain the fleet of 6,000 cycles for 10 years, a total spend of €65m. The Spanish city granted the bicycle contract to the American company without an advertising concession.

Paris may be more high profile, but Barcelona is more successful in terms of use of bikes, Mullet claims. The Spanish city counts 150,000 registered users among its 6,000 bikes, compared to 200,000 enrolled for 20,000 bicycles in Paris. That makes for a higher utilisation rate for Barcelona.

The users, incidentally, include one of King Juan Carlos's daughters, La Infanta Cristina, who was recently photographed riding one of the rental bikes by a Spanish celebrity magazine. However, the photos also showed the royal cyclist in breach of the strict safety rules governing use of the bikes.

The safety angle is a serious one, as anyone who has cycled in Paris knows. Car drivers will cut up a cyclist on the road, while rogue pedestrians represent a real danger.

On 23 June, a lorry driver knocked over and killed a woman cyclist using a Vélib bike. She was the third Vélib user to be killed in a year. Deputy mayor Annick Lepetit said she wanted "to get a strong message to all road users about the sharing of public space."

The town hall plans to launch a safety information campaign in the autumn in cooperation with the police and to change road layouts to make them more bike-friendly. Lepetit points out that between 2001 and 2007, the number of cyclists on the roads has almost doubled but they still account for only 2%-3% of road users. One of the possibilities, if Delanoë is re-elected, is to extend the bike lane network to 600km from 400km, bringing it in line with Berlin.

Notwithstanding the fatalities, other cities have set tenders or are looking at setting up similar schemes. In France, small- to medium-sized cities such as Besançon, Amiens and Rouen are getting bike programmes, while provincial centres such as Marseille and Toulouse have already established networks.

In fact, Vélib has successfully focused a range of issues that are present in almost every large city in the world. Climate change worries, frustration at the cost of public transport, and the tedium of congestion are driving commuters onto their bikes.

Washington DC has awarded a landmark cycle contract to Clear Channel while Chicago is in the process of setting a competition. Some interest has been expressed by officials in Guatemala City, recently the recipient of an award for implementing Latin America's first rapid bus transit system.

Closer to home, Luxembourg's scheme began in March, while Sweden's Malmö region recently launched a campaign called 'No ridiculous car journeys'. In Germany the governing CDU party has converted to the cause, while AOK, one of Germany's largest health insurance companies, is currently running its eighth 'Bike to Work' campaign.

Even car-wedded cities in central and eastern Europe are starting to come round to the bicycle in the face of record oil prices and rampant congestion. While Vélib isn't likely to find converts in Moscow, Budapest's deputy mayor Miklós Hagyó is supporting a culture shift towards the bicycle in his native city. "Bicycles could improve the car situation," says János László, head of the Hungarian Bicycle Club, adding that, although large cars remain huge status symbols in the former outposts of communism, "biking is starting to be seen as cool here as well".

The one to watch is London, says Starbike's Mullet, who hopes an award will shift the focus from Paris. Its newly elected Conservative mayor, Boris Johnson, has vowed to have a Vélib-style scheme underway by 2010.

According to figures from Transport for London, published in June 2008, the number of cycle journeys per day in London has risen over the past 10 years from 265,000 to 500,000, a 91% increase.

Tom Bogdanowicz of the London Cycling Campaign (LCC) says things are looking up for urban cyclists, not least because of the Congestion Charge set up by then-mayor Ken Livingstone in 2003.

"Boris Johnson is supportive of cycling, and has committed himself to introducing a bicycle hire scheme," says Bogdanowicz. "He is in the process of looking at the options. Transport for London is talking to all the big players, including JCDecaux and Clear Channel.

At this year's Sustainable Transport Awards, London and Paris won the two top awards, London being cited for its Congestion Charge scheme, Paris for Vélib.

London has also led the way in making cycling attractive, driving a single-speed revolution in bike choice based on a flourishing courier culture, and spawning bike-themed fashion shows.

Mimicking Paris, however, the safety issue has erupted in London. Five cyclists have been killed in just two years in a single borough, Hackney: all were killed in collisions with lorries; some of which were trucks connected with the nearby 2012 Olympic site.

London's bike rental scheme is expected to be based on that of Paris, yet there remain questions about where the stands will be, given London's narrower streets compared to Paris' broader boulevards. "London has a different population distribution," says Bogdanowicz. "There are fewer people living in the centre."

But, he adds: "We have a lot of people arriving at stations and then using public transport, so there will be more bicycles located at stations. The principle of a stand every 300m is one that has been shown to work in Paris. The stands need to be within walking distance of where people are trying to get to."

Even China, which makes 73 million bikes out of an annual, global total of 100 million, is slowly starting to see that a Los Angeles-style car policy is unsustainable in the face of congestion, high fuel prices and poor air quality. Shenzhen is currently exploring a congestion charge, while Beijing restored some bike lanes for the Olympics having previously destroyed them in favour of the car.