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Qingdao’s New Bridge As Symbol Of China Infrastructure.

Posted in China Business, China Travel, Events
We're on a road to nowhere, come on inside
Taking that ride to nowhere, we'll take that ride
Feeling okay this morning, and you know
We're on a road to paradise, here we go, here we go
From the song Road To Nowhere, by the Talking Heads

 

I could not resist asking co-blogger Steve Dickinson to write of his trip last weekend over China’s newest engineering marvel: Qingdao’s new Jiazhou Bay Bridge. Here goes.

By Steve Dickinson

The opening of the bridge across the Jiaozhou Bay was achieved in Qingdao on July 1, just in time for the 90th Anniversary of the founding of the Communist Party.

At 41.58 km, this bridge is the longest ocean span bridge in the world. On the same day, the undersea tunnel from Qingdao to Huangdao opened. At 9.47 kilometers, this is the longest undersea tunnel in China. Qingdao is rightly proud of these engineering achievements. See the China Daily for a report.

The completion of the bridge and tunnel fulfills the long term dream of the Qingdao government to fully integrate the two shores of the Jiaozhou Bay. Qingdao has long been troubled by the fact that modern development is centered on the Huangdao side of the bay while government and banking is centered on the Qingdao side.

In honor of the opening, I took a trip with a local group last Saturday. The trip suggests that more work needs to be done to achieve the full potential of the bridge and tunnel. Here are some of my observations:

1. There is already a high speed highway that rings the Jiaozhou Bay. The bridge is built across the very widest part of the bay, quite close to the shoreline. It runs pretty much parallel to an existing highway. As a result, local reports have indicated that the bridge will reduce the travel time by only ten minutes. Locals wonder why $US2.3 billion was spent for a ten minute reduction in travel time.

2. I took the bridge from Qingdao to the Qingdao container port in Huangdao. Normally, this trip takes about 1.5 hours. The trip across the bridge was smooth. However, upon exiting the bridge, we were confronted with a massive line at the toll booth. Three lanes of bridge traffic dumped into three toll booths. On most bridges of this size, one would expect six to eight toll booths. The resulting back up at the toll booth caused a three hour delay. As a result, our 1.5 hour trip turned into a hellish 4.5 hour trip. There is no indication that this issue will be resolved, since there seems to be no room to build additional toll booths at the exit area. I see this as another instance of China doing well with “hard engineering” but neglecting the soft stuff like the user’s overall experience.

3. Private vehicles must pay a 50RMB (~USD$8) toll for the bridge and 30RMB (~USD$5) for the tunnel. The toll for our bus was 90 RMB for the bridge and 100 RMB for the tunnel. These fees are quite high. Considering that in the best of circumstances only 10 minutes is saved in using the bridge, locals have indicated that they do not plan to use the bridge for normal transportation purposes.

4. We took the new tunnel to return home from the port. The experience was quite different. We were greeted by eight toll booths at the mouth of the tunnel and there was only a five minute delay in entering the tunnel. The tunnel is quite modern and was a pleasure to use. However, the tunnel connects the beach portion of Huangdao with the downtown area of Qingdao. It is therefore not really useful for cargo transport needs. Locals also indicate the the high toll will discourage private car use. It is anticipated that the main use will be for bus traffic across the bay. The big problem with the tunnel is that it links to slow local roads, so this route took us three hours. 

Nobody is even sure why either the bridge and the tunnel were built, much less the two of them. The bridge seems to be mostly aimed at connection by highway for goods from the ports and airport and tradezones. The tunnel does not provide access to any of this. The high toll for the tunnel means that it will not be used for normal surface transport (private cars and taxis). So why was it built? No one has ever been able to provide me with an explanation. Why was the bridge built at the WIDEST part of the bay? Why was it built when it only provides a 10 minute improvement in travel time? Why was it built with no attention to access and exit? Why were the connecting highways not improved? Who knows

It appears that these two massive projects are typical of so much of the infrastructure being built in China. Liittle attention was paid to the human element in actually putting the infrastructure to work. Our group of 40 was disappointed that our outing was ruined by the long delay on the bridge. However, I have to say that no one was surprised.

  • Mike

    Why why why…. Rhetorical questions, right? Or do you really want to hear the answers? Naaah….!
    But on a positive note, at least there actually were on- and off-ramps… And you get charged for actually using the things, not like blokes being forced to be insured for maternity type fees, being forced to pay for somebody to sleep, or to not clean your street, etc, progress all around…!

  • http://Www.inpraiseofchina.com Godfree Roberts

    Surely it is obvious why it was built: Because China is run by engineers.
    It’s a form of techno-corruption, I suppose, but probably better than our use of those billions of dollars: bombing the bejesus out of the world’s poorest people…

  • Bill Rich

    We may not know why these were built. But who it was not built for is obvious: Not the people, and not for making the trip quicker, and not for reducing the transportation costs of goods and services. We may have to look for those reaping benefits from these projects to figure out why they were built.

  • Chris

    Agree that there’s the usual waste in some infrastructure projects. But much else is going on… The kindergartens, schools, colleges, roads, cities, railroads across China etc are generally useful and being used. While labor and land are cheap (for Govt infrastructure projects) it makes perfect sense to do it now. 10 years down the track it will just be too expensive. China has developed some extraordinary infrastructure. While I’m sure there’s questions about overbuild on the coast, there’s plenty more required inland (where local non-toll roads are few and far between). There will be a finance headache after the party, but hey, it’s not sub-prime or the private equity disaster in the West where vast amounts of debt were created to recycle existing assets. At least China got some bang for their buck.

  • Ben

    Dan – Great anecdotal post on what – for even the best of experts – remains a difficult issue to think about rationally. I actually wrote a column today on the topic of China’s over-investment and what happens when the inevitable structural shock occurs (you can read it here: http://atimes.com/atimes/China_Business/MG14Cb01.html).
    As I say there, for every sector specific critic of an area of seeming over-capacity or un-necessary infrastructure stands a long line of generalists who point to the hundreds of millions of aspirational Chinese as the justification behind the investment. It becomes difficult to argue with such sweeping generalizations but I suspect we’ll soon see that these aggrandizing investments have a lot of light to shed on China’s developing political challenges.

  • Jinxin

    It was built at the widest part of the bay so that it would be the longest ocean span bridge in the world, same with the tunnel. The Chinese government loves “prestigious project” and everything that is the longest, the biggest, the highest etc. is considered to be prestigious. You could compare them with those people who would do absolutely anything just to be name in the Guinness book of world records. The act has no purpose at all but hey they are named! Neither the tunnel nor the bridge is useful but hey they have the longest!

  • linda

    It is typital in China for three reasons,
    1. economic benefit: without these projects, those officials have no chances to get direct or indrect benefits from his position.
    2. political achievement: those top officials always want to achieve something visiable during their tenures whereever they are. So it is not strange to see new buidlings are under constrcution everywhere and some almost brand-new projects are torn down and re-built.
    3.face: we call many projects as “Mianzi Project”.

  • Twofish

    Steve: Nobody is even sure why either the bridge and the tunnel were built, much less the two of them.
    I know why the bridge was built. Keeping people building bridges keeps them from demonstrating. As long as people are busy pouring concrete, they aren’t going to be throwing bricks at government officials.
    Also……
    One has to be careful about symbols.
    First of all, you can point to stuff that seems to be a waste of time and money, and then use that as an argument against everything else that might be useful or might be debatable.
    Second, the meaning of symbols can change and change pretty rapidly. Things that look like boondoogles turn out to be brilliant and things that look brilliant turn out to be boondoogles, and then you end up with things that no one knows the impact of.
    Also, there is a political reason for tolls. The Chinese government has been trying for the last decade and a half to pass a gas tax so that road expenditures are funded from user fees rather than from tolls, but every time they do it, the National People’s Congress says no.
    The other thing is that bridges and other infrastructure are funded through special corporate structures so that the bridge is supposed to be profitable. It may be that the bridge will require external funding, but if that happens someone is going to lose their job so there is an effort to recover costs from the funding.
    To Ben – Pointing to the US in the late-1800′s seriously undermines your argument because people have argued that the massive capital investment that the US had massive benefits in the future. Also the big question is whether China is overinvesting or the US is not underinvesting, and I’m in the former camp. You can argue that capital is being wildly misallocated, but bridges don’t have families or feelings, and I’d much rather have capital-misallocation than labor-misallocation which is what the US has with a 9% unemployment rate that won’t go do.
    One thing that makes China different from the US is that the Chinese government simply cannot withstand a 9% unemployment rate for an extended period of time, so this provides a huge incentive for the government to keep people busy. By contrast, while a 9% unemployment rate may pose a threat to the party in power it doesn’t pose a threat to the US governmental system.

  • Twofish

    One other thing. It’s pretty much pointless to argue much about this now. The major decisions were made in 2008, and arguing about them now is too late. Let’s suppose you were right and the bridge never should have been built. Well then, what do we do now, blow up the bridge?
    Part of the decision that the Chinese government made was to go Keynesian and Keynes suggested hiring people to burying a ton of money so that other people could dig it up. The bridge itself is not important. It’s giving people money to do something so that they can spend it on other goods that is key.
    Now lots of people think this is bad economics, but the decisions were made, and lot of this is just a matter of waiting to see what happens next.
    What I think will happen is that over the next few years, it will become increasingly obvious that China is not massively overinvestment but that the US is massively underinvesting, and that because of massive underinvestment that the US has entered a period of Japanese style stagnation while China is pulling ahead.
    Something to point out is that China is no longer in recession, whereas in the US there seems to be no end to the bad news in sight. Right now there is no way you can argue, US policy good, China policy bad. The only thing that you can plausibly argue now is that US policy bad, China policy even worse.
    However, if China *doesn’t* suffer a big blowup in the next few years, even that isn’t going to work. For the anti-Keynesian arguments to work, you must not merely have China muddle through, but you need things huge economic catastrophe.
    Also before someone brings up Japan, there is this thing about general’s fighting the last war.

  • http://laowaiblog.com Lior Paritzky

    I would like to offer a response to Steve about why the bridge and the tunnel were built in the first place: China wants to show the world that it is the most powerful global superpower. Building massive infrastructure projects (such as this one and the high speed train network) creates many headlines in the world about how impressive China is and how advanced and progressive it is.
    These projects are not about creating economic value, especially in the case of the Qingdao bridge and the high speed rail from Beijing to Shanghai. They are only meant to demonstrate China’s strength and to emphasize how China appears in the eyes of the world.
    http://laowaiblog.com/bullet-train-empire/

  • greg

    Jinxin: It was built at the widest part of the bay so that it would be the longest ocean span bridge in the world, same with the tunnel.
    In fact, the tunnel is built at the narrowest part of the bay.
    The question is why not built the bridge at the narrowest part? The biggest reason is that there are North Sea Fleet base within the base with submarines and other ships stationed there. When a war breaks out, the enemy is likely destroy the bridge at the narrowest part, which happens to locate at the mouth of the bay.
    The bridge cuts the distance between Qingdao and Huangdao by 30 km.

  • gregorylent

    i am going with Jinxin

  • Brosna

    Lior says-These projects are not about creating economic value, especially in the case of the Qingdao bridge and the high speed rail from Beijing to Shanghai. They are only meant to demonstrate China’s strength and to emphasize how China appears in the eyes of the world.
    I’d say, maybe the economic value is showing off what Chinese engineers can do.
    Since China industrial policy lately calls for moving up the value chain, and since international high-profile civil engineering projects could be an interesting market to sell into, the value of these two flashy projects as a showcare could be worth the cost.
    Maybe the people of Qingdao don’t really need them. It’s like the baker’s children may eat more cake than they really need, when new recipes are being developed.

  • Brosna

    Twofish says: What I think will happen is that over the next few years, it will become increasingly obvious that China is not massively overinvestment but that the US is massively underinvesting.
    That’s what Keynes would tell you now, and the few sane economists I read, such as Krugman and DeLong, say Keynes was right. So whether the bridge and tunnel are cost-effective for transport over their lifetimes, or whether they have value as trade samples for potential civil engineering business abroad, the contribution to stabilizing the economy may be justification enough. I’ll be fascinated to watch this play out.

  • Andeli

    Twofish “I know why the bridge was built. Keeping people building bridges keeps them from demonstrating. As long as people are busy pouring concrete, they aren’t going to be throwing bricks at government officials.”
    In this case the opportunity cost of the bridge is investments in agriculture business, social benefits, loans to private business or increased adult education. Any of these alternatives will also keep people from demonstrating. And they are more long-sighted as the problem of demonstrating will come back as soon as the bridge is finished.
    As for China’s investment in fixed assets. In todays society the opportunity cost is different from the US in the late-1800′s. Today, when building a bridge, you give up investments in the agricultural sector, in social welfare, in consumption, in education and in loans to small business etc. Many of these opportunities where not on the table in the late 1800′s US. The return on fixed assets back than was much higher than the return today taking into account the alternatives.
    So no more housing, no more roads and no more brigdes from now on. China needs to move up the value chain, and it needs to invest in allocating resources correctly as scarcity will be the main issue in the next 100 years.
    So yes with regards to opportunity cost we know that the bridge is a bad choice, because the alternatives are better, but they are way more complicated to do, and thats why this bridge was build.

  • Jinxin

    @Greg: Sorry English is not my mother tongue. What I meat with “same with the tunnel” is that the tunnel was built because it is the longest undersea tunnel.

  • Eagle

    Two issues – This project is a prime example of the ponzi scheme that is China. This is being repeated over and over again and again on investments big and small. All speculating that, in the future, it will be worth something. No matter how unique or magical they are, “Chinese Characteristics” cannot defy the laws of nature.
    Secondly – the practical implementation of such projects (whether a good idea or not) are horrendous. Who makes a 41 km land bridge and only had 3 toll collection booths for a three lane bridge. So any benefits that might be made by the time consumption saved by this route has just been completely lost. Who thinks these things through?
    I also refer to the Beijing Subway System or which I am a frequent traveler (of which I compare to the HK system, which I consider the best in the world for efficiency and the moving of largest amounts of people). Granted, line 1 and 2 were built in the 80′s, they are currently insufficient for the amount of people they move today. Ok, they were built 30 years ago, so some leeway here. But take all the new lines that were build in the last 5 years. They are as impracticable for the amounts of people they move already (they were the day they were open). There are not enough escalators to move people quickly up and down levels of the stations. And take for instance the connection tunnel at Goumao from Line 10 to Line 1 – The traffic flow is horrendous at both ends where it was built with the knowledge of high flows of foot traffics crossing each other. When you enter the line 10 station coming from line 1, you are automatically forced to fight your way through the throngs of commuters who are coming up from line 10 station transferring to line 1. Its unavoidable.
    The many of the stations on the new lines capacity is already obsolete to handle the volums of commuters, especially at interchange stations.
    In Hong Kong, with a few exceptions of stay HK station and Central Station, almost all the trasfer stations were designed for the most efficient transfer of passengers from one line to the other. Basically, you get off one train and walk 10 meters across the platform to the other train on the other line. Easy!
    It takes little common scene to anticipate these types of things. Why go spend the money when the infrastructure of inadequate and obsolete the day it opens. Talk about a clear sign of a disaster in the making.

  • Twofish

    There are also reasonable answers for all of Steve’s questions:
    Steve: The high toll for the tunnel means that it will not be used for normal surface transport (private cars and taxis).
    Tolls aren’t set in stone, and if you get more usage with fewer tolls, then the company that runs the bridge has an interest in reducing tools to increase volume. Also, if the financing arrangements change (i.e. if the NPC passes a gas tax) then the tolls could drop over night.
    Steve: Why was the bridge built at the WIDEST part of the bay?
    Draw the bay as a circle. If you want to maximize the decrease in travel time, then you add a bridge right through the center. Also, I don’t know if this is true with bridges, but in a lot of engineering projects the big costs are fixed so it may cost roughly the same to build a 10 km bridge as a 20 km one.
    Steve: It appears that these two massive projects are typical of so much of the infrastructure being built in China. Liittle attention was paid to the human element in actually putting the infrastructure to work.
    That’s because it turns out to be easier to build first and then fix the problems later. Now that you have a bridge (or high speed rail) you now have political pressure to fix the surrounding roads and make everything work. If you try to make everything work before you build the bridge then it’s never going to get built.
    Maybe “this time it’s different” but the history of highway and railroad infrastructure projects in China is that people complain about roads to nowhere but in a very short time, people then complain about the roads being overloaded.
    Steve: Why was it built with no attention to access and exit?
    Steve: Why were the connecting highways not improved?
    Because you can’t do everything at once, and there is likely another $$$$ project to work on that.
    Steve: Why was it built when it only provides a 10 minute improvement in travel time?
    Because bridges will last for centuries and people think that the difference won’t be 10 minutes in a decade or so. Also if you build an expressway on land, pretty soon that expressway is going to get choked with local traffic going to the places that are next to the expressway. Building a bridge over the water isn’t going to cause that problem.

  • DaMn

    On the scales of “China is a superpower definitively going to rule the world” vs. “China has nothing to teach the world and is going to hit negative growth yesterday and implode” I admittedly sit further to the former side. I actually think both sides of the “pond” are going to face significant challenges over the next ten years yet I see both doing, on the balance, quite well (ok, the US will get ugly and the structure of government will come under assault) and coming out of this period with a fresh lease on life and business which means a healthy dose of self reflection and growth that comes from rolling up one’s sleeves and getting real.
    Having said all that, I have noticed a trend here of basically questioning whether China is on a roll and asking “Is China making this all up?” Indeed there appears a faint sense of frustration with “how well” it’s going in China and that it cannot continue so easily.
    I understand business minds focused on the “here and now” of product delivery and so called economic rules and cycles are aghast at some of the massive holes in these theories China represents. I mean, if China not only survives but thrives despite breaking these (tried and true?) economic theories what does it mean to us, the planet, and capitalism? I mean, isn’t it true that China is just run by crony communists with no business mind and prone to self indulgent ignorant decisions bound to fail? Just making a point, of course, that there certainly can be an underlining western belief system that rears its head (emotionally justified superior position) that, when in doubt, goes hyperbolic doing ad-homonym attacks (not spoken in public of course).
    I grew up in the birth age of Costco, wholesale buying, home businesses, warehouse buying, catalogue shopping and logos. (This completely leaves out tons of other developments such as rating agencies and lying, er I mean, accounting agencies.) This was not that long ago and I will tell you what…loads of that crap did not make sense to me, meaning the weird behaviors and identities people accepted and took on to be part of the growth and action of consumption and business. They suspended reality big time.
    America has virtually stopped investing in infrastructure. Is that any more rational than China overinvesting? Is China finding its own way through the twisted maze of human identity through the lens of business and capitalism? Yes. Can Americans get it that it is an almost entirely parallel process with new learning and new dimensions with, yes, excesses and waste just like America and not on a linear line with theirs? Maybe not. Why? Because it calls into question their future and the presumption that it always gets better. Well it doesn’t. Wages haven’t gotten better for a while.
    What gets many Americans is that they do see what I am saying, they do see it is a new birth of capitalism and it will have its own learning and experiences and when it is done, or at least had America’s 30 years or even less to develop from this point forward, it will have 4x as many people behind it etc. etc. etc.
    We are entering a new world of spontaneously occurring and regenerating systems. Soon we will look not on to the systems for direction but to people, and that is saying something isn’t it?

  • Tue

    Twofish : “One thing that makes China different from the US is that the Chinese government simply cannot withstand a 9% unemployment rate for an extended period of time, so this provides a huge incentive for the government to keep people busy. By contrast, while a 9% unemployment rate may pose a threat to the party in power it doesn’t pose a threat to the US governmental system.”
    Good observation. We know what the motivation of the CCP is: to perpetuate itself. Same intention as with the political/financial class in the US by the way. The point that these two countries present different challenges to their respective power elites is a good one.
    What’s interesting is that the challenges have the same root cause, which is why Andeli’s point – “China needs to move up the value chain, and it needs to invest in allocating resources correctly as scarcity will be the main issue in the next 100 years.” – is a good one too.
    Scarcity will be the issue – heck, scarcity already is the issue. Just take a look at IEAs World Energy Outlook 2010 and check out the World oil production by type in the New Policies Scenario…and grok the significance of what you see.

  • DaMn

    If scarcity is what you are looking for you will certainly find it. If abundance is what you are looking for…
    The current “systems” dictate profit is “found” where scarity “lies.”
    “scarcity already is the issue” – really? already? has the news cycle just caught up to you?
    9% doesn’t pose a threat yet what about 15% or 18% or 22% with real unemployment double those figures?

  • DaMn

    Well, twofish, you got doubled today. Not more than 24 hours post the sigh of relief of 9.5% GDP growth comes the reality check that bad loans are actually in the $1T range says Standard Chartered, double twofish’s $500B and quadruple my (ha ha actually Moody’s) $250B.
    http://ftalphaville.ft.com/blog/2011/07/14/622216/on-the-matter-of-misvalued-chinese-land/
    Twofish called it. When will it reach $2T? Days, weeks, or hours?
    High speed trading systems now accept 1M trades / second without cost.
    How much can your news buffer hold? Make reality. Make the news cycle.

  • Twofish

    I don’t think that China is going to rule the world. I also don’t think that Chinese politicians are smarter or better people than US politicians. I also curiously think that the US has a better political system. One thing that you have to remember is that US politicians end up acting like idiots in front of cameras, whereas when Chinese politicians act like idiots, no one sees that.
    Having said that one thing that I also believe is that between 2008-2009, the Chinese government made some very wise economic decisions whereas the US made decisions that were less wise. Also, the economic theories that China uses weren’t invented in China. John Maynard Keynes was British. For that matter Karl Marx was German.
    One thing that makes economic decision making difficult is that you can come up with good arguments against anything. You can point to a dozen examples of stupid infrastructure, and if you have a political environment that’s hostile to infrastructure spending pointing to bad projects is enough to kill good projects. In the case of China, it *will* have an NPL issue, and a great number of projects will turn out to be duds, but the big question is the total number.
    You have about US$2 trillion in local infrastructure spending, and my best guess is that you’ll end up with about US$250-$500 billion in dud projects and things that have to be bailed out, but IMHO that’s a good trade. The reason for that is that it’s clear that the Chinese economy is “out of the ditch” and so you’ll be able to pay down the US$250-500 billion bill with new tax revenue, whereas if you didn’t do this you’d have zero growth, high unemployment and riots all over the country.
    People knew all of this going into this effort.

  • http://www.qingdaohhh.com ChrisQD

    Why was it built?
    To give all the Chinese another place to take photos at. Seriously, on that bridge there were lots and lots of cars parked on the side (on the 6 lane highway) and the people were happily taking family photos on the bridge.
    Soon we’ll have the wedding photo people on there as well….

  • Chris

    @ Eagle: “This project is a prime example of the ponzi scheme that is China.”
    The rest of your comment regarding the Beijing subway disproves the “ponzi scheme” claim. A “ponzi scheme” would be entirely fictional or of zero value. In fact your Beijing subway examples or the 3 toll booths on the Qingdao bridge demonstrate only weak design with human factors poorly researched by the construction engineers.
    There is no question of commuter demand for the Beijing subway or any of the subways being built across Chinese cities. They are packed, excessively and sometimes dangerously so. Some of the designs do poorly manage human traffic flow – on this I don’t disagree. By “obsolete” “the day it opens” you actually mean it cannot handle the massive demand for the service, and that poor design makes conjestion even worse.
    This is absolutely not a “ponzi” scheme or “obsolete”. Indeed it demonstrates that China’s investments have been focused in areas of demand but that design issues make usage inconvenient or inefficient. Indeed it is a good problem to have and relatively easy to fix.
    I don’t disagree that there is indeed poor design and overinvestment in some projects. However, my view is that the vast majority of infrastructure projects are needed, useful and worthwhile. Cities of 5 million+ populations need subways and now is a great time to build them while costs remain relatively low. The kindergartens, schools, universities, hospitals, subways, railways and roads that make up the vast bulk of Chinese infrastructure investment are needed, are useful and socially valuable. Design issues can be addressed cheaply and problems fixed (new toll booths, new access tunnels in subways etc).
    I agree with Twofish’s point that post GFC while the rest of the world went into austerity mode (bailing out only the banks), China’s focus on infrastructure was sensible and will reap short, medium and long term benefits. As tax revenues grow (up 31% in H1 2011) and with the State owned banks bolstered by the world’s best margins, China does have the capacity to pay for these projects, even if the projects do not pay for themselves (which is the most likely outcome).
    There are issues with overinvestment, poor returns or projects whose revenue will not exceed operating costs, poor design and poor quality. Corruption in these projects exists, but does not drive the rationale behind them. The much cited corruption in the high speed rail system amounted to less than 1% of the investment. The Chinese media highlights these issues every day. However, an advanced, modern economy requires infrastructure. China has built a modern infrastructure very quickly, at a good time and without excessively loading up the Govt or the economy with debt. The public facilities I see are generally well used and their development tied to genuine demand. Where that is not the case, a very vocal Chinese public and media are not shy about pointing out problems.
    The frequently cited debt load of the local government financing platforms (which have funded much of the infrastructure development at a local level) only demonstrates weakness in the distribution of the tax system between the local and national governments. Local governments fund the bulk of services delivered and infrastructure costs with only 30% of the tax take, while Beijing takes 70%. This will result in debt at the local government level. It is a structural tax distribution problem, that does not demonstrate the lack of need for new infrastructure. It is a problem that can be fixed through a better tax distribution formula and mechanisms.
    It appears that viewed through certain ideological prisms that any government investment is necessarily inefficient and wasteful. Having twice worked for Western private equity owned firms, the only investment I ever witnessed was associated with financial engineering rather than the type that uses concrete and builds actual new facilities. The great periods of development in Western countries in which infrastructure was developed either through direct government investment or through active industry policy designed to spur private investment appears to have been forgotten.

  • MS

    Fascinating post. Thanks for running this. It will be interesting to see if the government gets to work on resolving the obvious problems you saw with the bridge. I hope you keep us up to date on this.

  • tue

    Sure, “abundance” and profits are to be found by a privileged few.
    The current overarching capitalistic system is fuelled by debt though, which in turn was fuelled by abundant flows of cheap and easy oil. The era of cheap and easy oil has definitively come to an end, even if most people fail to realize it. It’s quite simple really: economic work requires input energy of the right quality, reduce the input and you reduce the amount of economic work.

  • Verteth

    The original post uses anecdotal evidence to argue the ergonomic daffiness of the projects. So thats a nice fit between argument and evidence. But then alot of the responses use economic arguments with no pertinent evidence. I mean, the word ‘japan’ doesnt work as an example of anything. In situations like this, we all need to ask ourselves, ‘what would michael pettis say?’ or perhaps, ‘what would victor shih do?’ i think pettis would highlight the extent of the debt racked up by these projects and argue that this represents lost future productivity and that someone’s got to pay for all this debt and that its probably going to be households, as the government refinances banks over the next decade by shifting losses onto the little guy through low interest rates. And shih would at least name the construction company behind the bridge and give a rundown of the company’s connectedness with key political interests. Etc.

  • Glad to be Home

    I lived in China for six years. Only someone who has lived in China can fully appreciate all that Steve had to go through to just cross this bridge. I don’t miss it.