Finding the ‘silk thread’ in China’s rail projects

May 19, 2015 2:06 PM (UTC+8)

 

Finally, the mystery of the 33.2% jump in April’s fiscal spending has been solved. We’re not saying it was a mystery keeping us up at night, but you have to admit, the Ministry of Finance’s news of April’s jump, compared with the 4.4% rise seen in March, left a lot of unanswered questions.

It turns out that China has given the green light to about 250 billion yuan ($40.30 billion) of railway and subway projects, the country’s top economic planner said on Monday, Reuters reported. China’s National Development and Reform Commission (NDRC) said on its website it had approved six projects. Five were approved in January and February, while the final one received approval this month, according to the NDRC.

Reuters also missed a nuance in reporting the big jump in China’s rail spending. It merely characterized the huge rail outlay as an attempt by Beijing to boost economic growth amid a wider slowdown.

Rather than just busy work to spark China’s economy, Asia Unhedged sees some of this rail spending as laying the groundwork for the country’s ambitious Silk Road project.

If you consider the new projects as building transportation infrastructure to bring China’s goods and services to central Asia and Europe, instead of just putting people to work, you can appreciate the investment China is making in its future. It would be nice if the U.S. could pull its head out its butt and make a similar investment in its railroad, which the recent Amtrak tragedy in Philadelphia proves is desperately needed.

With a 46.7 billion yuan subway system in Chengdu, this bolsters the ability of the largest city in southwest China to move and accommodate workers at a key industrial caravanserai of the Silk Road. New rail connections are also planned between cities in Inner Mongolia.

The New Silk Road has a maritime leg that links China by sea with western markets. So Asia Unhedged sees more than one angle in a 60 billion yuan rail project that will connect the coastal cities of Qingdao and Jinan. The existing Beijing-Shenyang high-speed railway will get another infusion of cash.

Building new rail lines also dovetails with government plans to boost development in more rural parts of China and encourage people to move away from congested urban centers like Beijing.

 

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