x Abu Dhabi, UAE Friday 21 July 2017

Full steam ahead for China's infrastructure plans

Building Brics: Beijing is rapidly expanding its infrastructure, with highways, airports, railways and metros all being built or planned. However, there are concerns about the commercial viability of the projects.

China's infrastructure expansion continues at full speed after two high-speed trains crashed in July. AFP
China's infrastructure expansion continues at full speed after two high-speed trains crashed in July. AFP

From roads that span the wide plains of Xinjiang province in the west, to subterranean railway networks beneath the cities of the coastal regions, the building boom in China is starting to take shape.

Highways, airports, undergrounds and cross-country rail lines are all opening up as Beijing seeks to spread the fruits of development across the country.

"If China can keep up this pace, it's definitely the fastest [in the world] in recent years," says Barbara Siu, a planning and transport specialist at Hong Kong Polytechnic University.

"The development of high-speed rail is remarkable, really fast. I guess the speed of transport infrastructure development is to meet the speed of economic development in other areas."

About 1.5 trillion yuan (Dh860.9 billion) of the 4tn yuan stimulus package announced in late 2008 was earmarked for infrastructure, more than half it involving railways. Much of the work was controlled by government-backed companies and financed by state-owned banks.

Yet the high-speed train crash at Wenzhou, south of Shanghai, in July in which 40 people died raised concerns over whether these projects were being completed with sufficient safety checks.

There was a furious reaction from the public and press, with many voicing the opinion that safety was being compromised by corruption and a headlong rush towards developed-nation status.

Until the crash, China had planned to double its high-speed rail network to 16,000 kilometres by 2020.

This year alone, the country had aimed to invest 745.5bn yuan on railways. The accident has prompted a rethink and officials have cut the speed of many existing lines and halted, at least for the moment, the approval of new schemes.

Concerns about commercial viability had been raised even before the crash. There were suggestions the network was growing faster than the demand for services, with companies under the supervision of the railways ministry taking on heavy amounts of debt, and some lines failing to attract as many passengers as expected.

"If high-speed rail has been built without careful planning, it may bring about adverse effects that may offset the [economic] benefits," says Ms Siu.

She says there have been indications that some stations may be poorly positioned, serving areas with little demand. In the long-term however, she believes even a high-speed rail network developed in advance of demand will help to promote economic development in the areas it links.

Yet it is not just with high-speed rail that some have indicated too much is happening too fast. China is building more than 20 underground networks in its major cities, despite the fact that some are forecast to lose vast amounts of money because ticket prices have to be set low to attract users.

The underground in the southern boom town of Shenzhen, for example, could lose 22bn yuan between next year and 2016, according to some predictions. Meanwhile, many existing metros are being extended, with new lines added.

Then there are the airports that are losing money, with 130 out of the country's total of 175 failing to break even last year. Despite this, more than 40 airports are planned by 2015, with the focus being on the less-developed parts of the country.

Again, it seems to be a case of "build it and they will come". This month the American aircraft manufacturer Boeing predicted China would need 5,000 more aircraft over the next two decades as domestic and international air travel takes off.

Non-transport infrastructure is also developing apace. State media said this month that China's second west to east natural gas transmission line was forging ahead. This 142.2bn yuan project will be able to carry 30 billion cubic metres of natural gas annually, Xinhua reported, with 400 million Chinese set to be recipients.

Perhaps most dramatic, alongside high-speed rail, is the vast road-building programme, which has been given partial credit for the way in which China's growth has outpaced that of India, where road links are less well developed.

By the beginning of this year, China had 74,000km of expressways, almost half built in the past five years. The authorities are planning to add at least 10,000km more to expand a network that consists of a dozen major highways running from north to south and east to west. Since 2005, more than 4.7tn yuan has been invested on road and water transportation, according to reports.

Again, concerns have been raised that roads are being built in areas that lack demand for them.

Yet the counter argument is that vast infrastructure spending is required to promote economic growth, especially in regions that lag behind.

Even in poorer parts of the country, such as central China's Ningxia region, which has many Hui Muslims, there are now wide expressways, although traffic often appears light.

Improved road networks are credited with stimulating growth by reducing transport costs and times, and connecting markets that were previously separated.

Professor Li Siming, the director for the Centre for China Urban and Regional Studies at Hong Kong Baptist University, says that in terms of major roads, China is "way ahead of what it really needs".

He points out there are roads in areas "where demand for traffic is quite low".

"Investment in highway infrastructure has been kind of excessive and not commensurate with the increase in demand, but on the other hand, there could be other concerns that the Chinese authorities may have in mind," he says.

In particular, Prof Li says the importance of a good transport network for the military in the western regions, and of promoting development in poorer areas in the interests of national cohesion, are factors behind the road-building spree.

"China is a large country and there are huge areas which remain quite backward, especially in the mountainous south-west and the arid north and north-west," he says.

"There are ethnic minority problems … in that sense China does have national security, national integrity to preserve."

Prof Li says that growth in many of the less-developed parts of the country has become more rapid in recent years, with infrastructure spending likely to have stimulated growth.

"There's a saying that when you build roads, the investment will come."