Infrastructure: As Competitors Upgrade

By February 19, 2008Infrastructure

The Economist examines China’s infrastructure splurge, “Rushing on by road, rail and air.” The monster projects — like Beijing’s new 1.8 mile long airport terminal — are the attention grabbers, but it’s in the daily upgrades and expansions the larger economic impact may be felt. Consider railways.

In the past couple of years investment has grown considerably. This year’s target is $42 billion, compared with a total of $72 billion in the preceding five years. World Bank officials call it the biggest expansion of railway capacity undertaken by any country since the 19th century. China had 78,000km of track at the end of last year. The original plan, published in 2004, was to increase this to 100,000km by 2020. Last October this was revised to 120,000km (and officials now say the target will be met by 2015). Even sticking to the 2020 target, this will mean laying 60% more track in the next dozen years than was built since the start of the economic reform programme 30 years ago. Huang Min, the Ministry of Railways’ chief economist, says that by 2020 the railway system’s freight-handling capacity should be greater than demand. At present, he says, it can handle only 40%.

Mr Huang reckons that railway expansion will bring down logistics costs, which he says amount to 18% of GDP in China compared with 10% in America. It will also help reduce pollution, he says, since fewer polluting lorries will be needed.

A nicely done review of the big infrastructures issues affecting China, and by extension, the rest of the world.

Today, by the way, NAM President John Engler is participating in a daylong conference, “Infrastructure: A Pathway to Prosperity,” sponsored by Terex Corp. at Iona College in New Rochelle, N.Y.

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