Many analysts present China as the poster child for transportation investment but as recent problems reveal, China may be building its infrastructure too quickly with insufficient quality and safety checks. I have provided links to different articles written during the past three months that highlight many of China’s problems.
Earlier this week Forbes detailed the potential economic crisis created by rail in Chinese Ministry Saved from Default. Last week The Wall Street Journal reported that Chinese Rail Projects Grind to a Halt as Funds Dry Up (Subscription Required). Two weeks ago The Washington Post wondered In Booming China, how much Infrastructure is too Much? In High-Speed Trains in China to Run Slower, Ministry Says The New York Times reports that the Railways Ministry has reduced trains’ top speeds and offered discounts on tickets to fill empty trains. In September, The New York Times reported that a subway train in Shanghai collided with the back of another train on a transit line that opened last year — this followed an incident two months ago in which a train on the same line travelled in the wrong direction due to failed communication. A series of accidents over the past three months have included a high-speed rail crash that killed 39 people, exploding wind turbines, and four bridges that collapsed in the space of five days.
More in depth stories detail a variety of problems. How Fast Can China Go?, in Vanity Fair details an American’s ride on the Beijing to Shanghai line. In China’s High-Speed Rail System: Boom or Bust?, The Huffington Post describes falling growth and profits. China Bullet Trains Trip on Technology in The Wall Street Journal explains that Chinese trains were built with imported components that Chinese engineers did not know how to use. Chinese media also have reported on the rail crash but because of government rules, they must be careful what they report.
A significant part of the problem is corruption. According to the Telegraph in Chinese Rail Crash Scandal: ‘Official Steals $2.8 billion’, Liu Zhijun, the former Railways minister, was accused of skimming $152 million from the railway program. Zhang Shugang, another official, was dismissed for corruption. Meanwhile some $28 million has been embezzled from the Beijing to Shanghai line.
In a commonly reported statistic from The Economist, the United States spends 2.4 % of its GDP on infrastructure, Europe spends five percent and China spends nine percent. While a good case can be made that the U.S. should spend somewhat more on infrastructure, China’s problems reveal that the amount of money is not the only thing that matters: ensuring that infrastructure projects conform to good standards is essential.
My colleague Sam Staley has written extensively about high-speed rail:
President Obama, China, High-Speed Rail and the Sputnik Moment
The Economic Geography of High Speed Rail: China and the U.S.