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Sep 22, 2016

INFRASTRUCTURES * China - Beats the U.S. but at a heavy cost

* Shanghai - Is China building a road to ruin?

(Video From: The Daily Conversation - Feb 9, 2016: China is embracing megaprojects at an unprecedented rate and will - over the course of a few decades - complete a phase of infrastructure that will rival what the United States has built in its entire history) 

 --- Even the harshest critics of authoritarian rule generally concede that when it comes to building infrastructure China wins hands down over the rich democracies... China recently finished the sixth ring road around Beijing, construction crews are now working on a seventh—100 miles out in some places—part of plans to merge the capital with surrounding municipalities to create a “supercity” of 130 million people, slightly larger than the population of Japan. The national high-speed rail network, nonexistent a decade ago, is now more extensive than the European Union’s—and expanding rapidly. New dams, bridges, tunnels and subways are all in a day’s work for state planners... But at what cost? A report by four academics at the University of Oxford’s Saïd Business School has created a stir by arguing that what outside observers often hail as a towering strength of the Chinese system has instead led to colossal waste. All this construction, they say, has produced cost overruns equal to one-third of China’s $28.2 trillion debt pile in 2014, and unless China scales back it is “headed for an infrastructure-led national financial and economic crisis” with global ramifications... Examining data on 95 road and rail projects, the authors say cost overruns are typically about the same as in democracies, and although China handily wins on speed it comes at the expense of quality, safety and the environment... Most of the finished routes carry paltry traffic; a few are clogged. Either way, the outcome is grossly inefficient... If these failures are representative across the board, they not only suggest a Chinese financial blowup but challenge a conventional belief that the more you build the more you lower costs for businesses and households and add to economic growth. In China’s case, infrastructure may be the road to ruin... What is indisputably clear is that in the realm of infrastructure, China has far too much of a good thing, while America and other Western democracies don’t have nearly enough. Both extremes threaten long-term growth, human well-being and financial fragility...
Shanghai, SH, China - The WSJ, by ANDREW BROWNE - Sept. 20, 2016

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