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China Turns to $503B Rail Expansion to Boost Growth
- muninn_ 10y agoWell. It's probably better than other things they spent their money on. Like empty cities.
- deleted 10y ago[deleted]
- JoeAltmaier 10y agoCuriously, one difference with planned economies like China is they can build ahead of demand. Here in the USA there has to be a demand for housing before it gets built. I.e. folks have to be crowded and homeless. So those 'empty cities' build for 10M people were not as senseless as they seem. 10M people in China is less than 1% after all.
- __derek__ 10y agoThat's an interesting point. I just checked, and China is about 56% urbanized, whereas the United States sits above 80%. If we assume that China will reach the same levels, that leaves another 250 million people yet to move to urban areas. Even with the aging population, then, it may be able to use those spaces. Otherwise, it may be able to take advantage of anti-immigrant sentiment in the developed world. That's what intrigued me about your point. China has started to invest in African infrastructure, so why not leverage that to supplement its population when the aging curse kicks in?
- coldtea 10y ago>China has started to invest in African infrastructure, so why not leverage that to supplement its population when the aging curse kicks in? Perhaps because the entity is not "China", a state, but China, a culture and a specific population with a shared history etc? So arbitrarily supplementing the population as a means to keep it going doesn't make sense?
- __derek__ 10y agoIt seems that you're assuming that there is some Real Chinese Culture that has never evolved or integrated another population or culture. Maybe I've heard wrong, and there are in fact no substantial differences between Beijing, Shanghai, and Hong Kong (let alone Xinjiang[1]). That seems incorrect, though. Edit: Anyway, it's besides the point: we were clearly talking about China the state (the same one that built those empty cities). [1]: https://en.wikipedia.org/wiki/Xinjiang https://en.wikipedia.org/wiki/Xinjiang
- coldtea 10y ago>It seems that you're assuming that there is some Real Chinese Culture that has never evolved or integrated another population or culture. I'm only recognizing that there is a Chinese culture that has been shaped by various forces (including population migration, trade, and even war and invasion) over long historical periods (keyword: long). Which doesn't translate to some "Since we had e.g. the Mongols in the 13th century, and they are now part of Chinese culture, it's no biggie to just get some hundreds of millions of people that don't share our culture to replace our aging population" -- any more than "Since we were subjects to the Queen before 1776 it's no biggie to subject ourselves to being a UK colony again". >Maybe I've heard wrong, and there are in fact no substantial differences between Beijing, Shanghai, and Hong Kong That only matters if they are also more substantial than those between "Beijing, Shanghai, and Hong Kong" to Berlin, Phoenix, Santiago, Accra or London. Otherwise, all, or almost all, countries have regional differences within the country's culture. Beijing and Shanghai are not more different than, say, New York and Savannah or New Orleans and the Quad Cities. As for Hong Kong that has been, for over a century, shaped from being a UK colony.
- shock-value 10y agoI definitely dispute the idea that homelessness is what drives construction in the United States. And I'd argue that in some cases building goes on "ahead of demand" in the USA as well, though it admittedly takes a lot of capital to do so, and of course it doesn't occur to the extent that China's planned economy allows for. (It also faces the same pitfalls; see Atlantic City, NJ for example.) I'd also submit that constructing buildings which never get occupied (or don't get occupied until they begin falling into a state of disrepair) is totally senseless regardless of scale.
- rufusroflpunch 10y agoThat's completely wrong. Entrepreneurs develop products ahead of demand all the time.
- JoeAltmaier 10y agoIf they are even a few months ahead of demand, then they have a name: failed startups. In a free market, you have to have a demand the second you have a supply, else bankrupt.
- Symmetry 10y agoYou can't really talk about China being a planned economy at this point. I mean, planning goes on but it's like economic planning in Japan - something the government does through incentives and persuasion rather than commands and production quotas. You can read the Wikipedia page on these for the actual reasons they happen[1]. It's all about Chinese local governments selling property to speculators to raise revenue and the speculators having to build to hold them rather than just sitting on the lots like regular capitalist speculators can. This does represent an inefficient use of resources but not a huge one, past ghost towns have all been filled eventually. Rapid growth covers a multitude of sins. Goodness knows what'll happen when the growth slows, as it must, but there's no particular reason to think that'll happen soon. This is yet another way that China looks like early 19th century US. Not only are they copying industrial designs a la Samuel Slater and industrializing rapidly, they're financing local government via land speculation the way we did in the US back then. Hopefully when they have their equivalent of the panic of 1839 they'll make similar reforms. [1]https://en.wikipedia.org/wiki/List_of_under-occupied_developments_in_China https://en.wikipedia.org/wiki/List_of_under-occupied_develop...
- muninn_ 10y agoCities in the US are not crowded by any metric. Homelessness is typically not because of lack of housing either (I know that sounds weird to say) but more so disease, mental health problems, lack of employment opportunities or in some cases employment desire. At first glance your comment sounds great, yeah China is just anticipating demand, but it seems much more likely it was a wonton spending spree to help the economy continue on. With that spending spree coming to a halt, now China has millions of steelworkers, miners, construction works, etc... out of work. Nobody is going to want to live in those cities because they want to live in established cities. Ask yourself, if the goal was to anticipate demand, why wouldn't you do all of this construction alongside established cities? Why would you often times do it in the middle of nowhere?
- JoeAltmaier 10y agoMost are filled (already). An estimated 250M will be moving to cities in the next decade. The few much-publicized empty cities are due to bad planning of course. But that doesn't mean they didn't have great success with others. And the new plan going forward is to 'urbanize' already-existing places, which means building an urban center around an existing town. So it can expand outward, starting with a core of city services and administration.
- crdoconnor 10y agoThose empty cities weren't the result of state planning, they are simply the savings accounts of people who don't trust banks. You can see the same thing happening in central London, Vancouver and New York on a smaller scale. Plenty of housing in upscale neighborhoods bought as an investment and left empty.
- melling 10y agoWhich cities are currently empty? China has 160 cities with over a million people. The US has 10. They seem to be doing a good at getting people there. http://www.cnn.com/2012/01/20/world/asia/china-florcruz-urban-growth/ http://www.cnn.com/2012/01/20/world/asia/china-florcruz-urba...
- maxerickson 10y agoAre strict administrative cities the right comparison? We have 50 MSAs with 1 million+: https://en.wikipedia.org/wiki/List_of_Metropolitan_Statistical_Areas https://en.wikipedia.org/wiki/List_of_Metropolitan_Statistic... I think they aren't the right comparison either but quite a few cities are at the center of a larger built up area.
- ytNumbers 10y agoHere's some chilling photos of a few of those empty cities: http://www.businessinsider.com/these-chinese-cities-are-ghost-towns-2016-2/ http://www.businessinsider.com/these-chinese-cities-are-ghos...
- melling 10y agoChina is moving people into the cities: http://www.forbes.com/sites/wadeshepard/2016/04/23/chinas-largest-ghost-city-is-now-90-full-but-theres-a-twist/#3f376b1a76f4 http://www.forbes.com/sites/wadeshepard/2016/04/23/chinas-la... Sounds like they build them first then move in the people. Probably cheaper and faster that way? They do have 1.3 billion people.
- niels_olson 10y agoThey are building ahead of the collapse of their labor pool as the population greys to an precedented degree.
- notyourwork 10y agoDoes anyone else find it fascinating that over time larger numbers mean less and less? Growing up it was unheard of to hear a project of that size. 1/2 of a trillion dollars is a lot of money, now we are discussing projects of that cost.
- myth_drannon 10y agoIraq war cost around 1 to 2 trillion dollars ? Proping up the the failed banks in 2008 cost as much. If you can just print the money(or add zeros in computer systems ) it's not that expensive.
- obstinate 10y agoYou're right about Iraq, but I thought TARP actually turned a profit? http://money.cnn.com/2014/12/19/news/companies/government-bailouts-end/ http://money.cnn.com/2014/12/19/news/companies/government-ba...
- Symmetry 10y agoIt did but there was no guarantee it would. So you could say the Iraq war cost trillions but TARP put most of a trillion at risk.
- youngtaff 10y agoTARP might have made a profit but the impact of very low interest rates has been detrimental for some and huge benefit to others
- djsumdog 10y agoIt doesn't matter that it turned a profit. That wasn't the point; and in some ways that makes it worse! PNC bought National City for $5 billion. National City (an Ohio only bank) was not allowed to apply for TARP. Then PNC got a $5 billion tax credit. They bought a bank for free. http://www.newsproject.org/node/181/ http://www.newsproject.org/node/181/ All the consolidation meant that banks gained a lot of money, and the US government bought debt $1 for $1. Instead of TARP, the US government could have done something for...the people you know? The attorney general could have pushed prosecuting all the people who committed fraud (forging income documents for home loans was rampant, lying to people about home loans, etc.) from the top to the bottom. Banks should have been forced to sell loans back to consumers for quarters on the dollar (you know, what the homes were actually worth now). We saved some retirement accounts, and everyone above 50 at the time was very thankful for that, but young people lost their homes, tons of money and the banks didn't take a hit at all. They just got stronger and swallowed other banks.
- kensai 10y agoThe new silk-road project with Germany is also very interesting. https://www.thelocal.de/20161229/german-rail-giant-steps-up-silk-road-freight-line-to-china https://www.thelocal.de/20161229/german-rail-giant-steps-up-...
- ricardonunez 10y agoWouldn't this put Germany at the mercy of Russia? edit: Downvoted for asking a question. It seems people forgot that Russia is always threatening with cutting the gas supply.
- betaby 10y agoAny reputable media with 'Russia is always threatening with cutting the gas supply'? Especially Germany which has direct Nord Stream and upcoming Nord Stream2 ? It's other way around, Germany harass other countries,like Bulgaria and prevent them to build South Stream. Looks like you are victim of anti-Russia propaganda. Russia WANTS to expand it gas export.
- zimzam 10y agoRussia has cut gas supplies the Ukraine multiple times: https://en.m.wikipedia.org/wiki/Russia–Ukraine_gas_disputes https://en.m.wikipedia.org/wiki/Russia–Ukraine_gas_disputes
- cnlevy 10y agoWestern European countries are the best gas client of Russia; Ukraine often didn't have money to pay Russia, as well as political disputes.
- PerfectDlite 10y ago> Ukraine often didn't have money to pay Russia But Russia cut _all_ gas supply, stopping gas flow to Germany and other customers.
- kitschshrine 10y agoChina won't be able to afford this; China's pretty broke already in 2016. It's approaching 300% debt ratio in combined corporate + government + individual. Its gross reserve is down to 3T (IMF believes China needs at least 2.5T to operate). Its net reserve (gross - debt) is down to 1.7T. It had a capital outflow of 1T again in 2016. Yuan fell the most in 2016, since 1994. Next year, Japan/US/EU is going to impose import tariff on China, and further crash China's economy.
- coldtea 10y agoDon't hold your breath for al this "crash". US/EU are tied to China with very strong threads.
- djsumdog 10y agoExactly. When you owe the bank a million, the bank owns you. When you owe the bank several billion, you own the bank.
- beachstartup 10y agothis is such a tired internet cliche. in reality the bank will force you into bankruptcy, seize all your assets because they're at the top of the payback list, and blacklist you from ever running a business or borrowing money again. in other words, you lose.
- evgen 10y agoExcept if you owe the bank a billion it is unlikely you actually have a billion in assets they can get their hands on. A bank that tried this to someone who owed them that much would soon find the auditors coming to visit and setting up shop for quite a while. The former management of this bank that went bust and was shut down by banking regulators is unlikely to have much leverage when it comes to blacklisting you...
- coldtea 10y ago
- Kapura 10y agoI think this is super cool contrast with the US government's decision to expand the interstate highway system after WWII. While highways certainly were able to connect American cities in ways which were never before possible, the bet on cars has had long-term repercussions, arguably contributing to the failing of many American metro commuter rail systems which, in turn, created the traffic problems that plague places like New York and LA. I would be shocked if this doesn't improve the lives of the average Chinese citizen, and I think it likely that a long-term move towards public transportation will help China meet its carbon emissions goals.
- greglindahl 10y agoChina is also betting on cars.
- kalleboo 10y agoIt also helps China's train industry develop - they're pushing heavily to win contracts to build rail in other Asian countries
- UnoriginalGuy 10y agoChina building road and rail in neighbouring countries is MASSIVE both geopolitically and economically. This helps China on at least three fronts: - Make "friends." - Countries now owe China money over 30+ years. - Makes it easier for China to ship products into these countries helping China's economy.
- oblio 10y agoI wonder if this will have the side effect of enriching and stabilizing the Central Asian countries. Many of them were quite rich in the days of the Silk Road and basically starved when China went down and most trade moved over to ships.
- djsumdog 10y agoThe state of American rail is tragic. People continually make excuses about how America isn't structured for rail, but that happened systemically over the course of decades. Most small cities had street cars, but they were removed around the 1950s or 60s. Interstate highways barrelled their way though the hearts of cities, destroying poor/low-income neighbourhoods. If at any time US policy makers decide to push for rail, we could see dramatic turnarounds over the course of the next two decades. Seattle is building ST3 and California is building its high speed network. It's a start, and we're still ahead of Australia when it comes to inter-city rail, but no where near close for urban/light rail (which every Australian state capitol has except Darwin and Hobart). By comparison, Russia is less densely populated, yet they have a both better high speed rail and last-leg commuter rail between/in major cities and they are actively expanding their high speed systems. Self driving cars are realistically a decade away and they cannot solve the capacity problem: http://penguindreams.org/blog/self-driving-cars-will-not-solve-the-transportation-problem/ http://penguindreams.org/blog/self-driving-cars-will-not-sol... ..and they can only solve the last leg problem if we have better inter-city rail infrastructure.
- ocschwar 10y agoMeanwhile, we're stuck with a ruling party that is absolutely against anything involving steel tracks, so we have to spend similar amounts just to maintain our roads.
- UnoriginalGuy 10y agoCan you clarify the context of this comment? Which country are you talking about?
- fma 10y agoProbably the United States of America. http://thehill.com/policy/transportation/263782-obama-high-speed-rail-stuck-in-station http://thehill.com/policy/transportation/263782-obama-high-s... "His stimulus offer was rebuffed by Republican governors in states including Ohio, Wisconsin and Florida, who rejected the money."
- caminante 10y agoDoes the US need more railway lines? The US already has ~2 times the railway lines of China with virtually identical area (~3.7M square miles). FTA: "At the end of 2015, China had 121,000 kilometers of railway lines, including 19,000 kilometers of high-speed tracks, according to a transportation white paper issued Thursday. The U.S. had 228,218 kilometers of rail lines as of 2014, according to latest available data from the World Bank."
- bsaul 10y agothe sidenote being that they'll probably develop nuclear power to power all those trains, and become the first nuclear powered economy. they'll both developp energy,transportation and reduce their pollution.
- seanmcdirmid 10y agoThere is no evidence for that. Coal in plants without decent scrubbers still reigns supreme in china; nuclear has been slow to develop because even the Chinese don't trust themselves enough to do it. Successfully developing nuclear power requires not only lots of capital, but also a culture of honesty, transparency, and non corruption (heck even Japan has screwed that up).
- crdoconnor 10y agohttps://cleantechnica.com/2016/03/06/china-renewable-growth-soars-fossil-fuel-use-declines/ https://cleantechnica.com/2016/03/06/china-renewable-growth-... “IEEFA forecasts that China will install an additional: * 22GW of wind * 18GW of solar * 16GW of new hydro * 6GW of nuclear.
- Ericson2314 10y agoDamn I wish the US would do this. Both because I've been taught that infrastructure spending is a good idea, and because I fucking love riding trains. Seriously, is a 2 day sleeper HSR from SF to new York with damn good internet really less productive meams of emloyee transport than trains? You spread out the pain of time zone shifts, avoid all the bullshit at airports, an and work much more effectively. I think I rather take a train for any trip short of being intercontinental, and would be a more productive worker because of it.
- fma 10y agoI live in Atlanta but originally from South Florida. Spent 13+ hours (lots of stops with a baby) driving for the holidays to see family. I would have much rather done a train and rent a car for a few days. Unfortunately, the Republican governor of Florida rebuffed any thought of high speed rail because it's from Obama. Trump has an infrastructure plan, maybe he'll see that China and Europe has better trains and that would spur him to propose HSR (being cynical, but he can power it by coal since he wants to bring back coal to the US :) )
- crsmithdev 10y agoBoost growth, boost growth, boost growth...have to keep growing more, and faster, otherwise the whole thing breaks down, no? Seems sustainable.
- codecamper 10y agoUS could do that too. Iraq war bill 2 - 6 trillion. Oops! Nevermind!
- tomohawk 10y agoFascist government with zero transparency or accountability announces big public works project. This is just what fascists do.
- corv 10y agoAre you talking about the US or China?
- kumarski 10y agoThey're super smart for funding high speed rail at the federal level. High speed rail is the solution, not a pipe dream, the issue in the USA from what I've observed is that we don't fund it at the federal level.
- Cerium 10y agoAgreed! I've gone 1000 miles by Chinese high speed rail in 6 hours with 6 stops. Super smooth and convenient.
- CalChris 10y agoAgreed. In the US, our lack of infrastructure spending has been a Republican effort to stymie Obama. Now suddenly they want to spend on infrastructure.
- shawn-furyan 10y agoI would challenge that narrative, because Trump clearly wasn't "The Party's candidate". He was a populist candidate, and populists gon spend (or at least say they are). There still seem to be deep misgivings within his cabinet about the spending, but Trump seems to tend to get what he wants, and is quick to fire people who aren't making it happen, so...
- ww520 10y agoOne theory is that China spends heavily now to build up the infrastructure while the labor cost is cheap. Once labor cost has reached certain level, these kinds of projects will be prohibitively expensive, just like in Japan or in U.S.
- mrep 10y agoThat makes sense. Seattle is spending 54 billion dollars over the next 25 years for a mere 62 miles of light rail.
- fapjacks 10y agoIt makes sense, but I also wonder how much they're really saving by building the infrastructure now and then having to maintain it. One of the greatest lessons SimCity teaches about infrastructure is that you've got to pump a minimum amount of money into the transportation department for your roads -- with very little wiggle room -- or everything seizes up and goes to shit. Even not being used, that stuff costs money, and I can't imagine that a half-trillion-dollar rail project won't need a ton of maintenance. I guess the rights-of-way issues would be much easier to sort out now rather than later, too.
- alphacome 10y agoGermany in 1939 = China in 2017
- deleted 10y ago[deleted]