Fri, Oct 28, 2011 - Page 9 News List

China’s building binge could be a future debt bomb

New airports standing empty and highways without traffic have drawn criticism from many academics, while others say the bigger problem is the debt incurred to build them

By Keith Richburg  /  Washington Post, BEIJING

In tiny Boao, on China’s southernmost Hainan Island, the sleek new glass-and-steel train station rises above the town like a modern-day version of New York’s Grand Central Station. The inside is cavernous, shiny and pristine. The sleek white bullet train whisks passengers along the island’s coast to the airport in Haikou in less than an hour.

Except on a recent journey, there were hardly any passengers.

The high-speed Hainan train, built at a cost of about US$3 billion and traversing just 306km along the island’s coast, is in many ways a metaphor for China’s infrastructure building boom of recent years — efficient, super-modern, costly and so far vastly underused.

Since late 2008, when China enacted a fiscal stimulus program to avert the contagion effects of a global economic slowdown, the country has embarked on a building binge, including highways, high-speed rail lines, bridges, municipal subway systems, terminal buildings and nearly 100 airports.

A new rail line cut travel time between Beijing and Shanghai to just five hours. The world’s longest bridge over water opened this year in the city of Qingdao, spanning 42km across Jiaozhou Bay. China is on track to soon surpass the US in the number of highway kilometers built.

To many who have looked on with envy, this amounts to investing in the future.

“Building a world-class transportation system is part of what made us an economic superpower, and now we’re going to sit back and watch China build newer airports and faster railroads?” US President Barack Obama said in a speech to a joint session of Congress last month.

However, this building boom has raised questions in China.

How much infrastructure building is too much? Has the country taken on too much debt to build the world’s fastest trains, longest bridges and most expansive highway network?

Furthermore, in light of two major accidents — a deadly collision of two high-speed trains in Wenzhou in July and a crash on a subway line in Shanghai last month — is the race to build coming at a cost to safety?

“High-speed rail became a holy grail for progress,” the investigative news magazine Caixin wrote in an editorial last month.

Recalling the language used during former Chinese leader Mao Zedong’s (毛澤東) disastrous Great Leap Forward, the editorial said the grandiose expressions used to rally support for the bullet trains “were designed to elevate China’s high-speed rail system as the epitome of the nation’s rise to greatness in the globalized world.”

An even harsher commentary came after the Wenzhou train crash, which killed 30 people, from of all places the newspaper People’s Daily, the mouthpiece of the Chinese Communist Party.

The paper warned that China did not need “blood-soaked GDP.”

The Chinese government’s centralized planning system has faced much tougher scrutiny, particularly from the media. Most of the big-ticket infrastructure projects were designed and implemented from the top down, with virtually no public input. The result has been a series of “white elephants” — such as a “ghost city” of empty office buildings in Ordos in Inner Mongolia, or huge airport terminals in isolated western cities with few passengers.

One longtime critic of the government’s infrastructure spending is Zhao Jian (趙堅), an economics professor at Beijing Jiaotong University, the country’s leading transportation school. He has argued that while the developing nation needs infrastructure, it does not need the most modern and expensive infrastructure — because most average citizens cannot afford it.

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