To get the economy back : building infrastructure?

During the subprime crisis in 2008, China stemmed the domino effect on its economy with a huge 4 trillion yuan stimulus package, 585 billion dollars focused on infrastructure, and an opening of the credit floodgates, which prevented a collapse and enabled sustained growth. From 14.6% in 2007, growth had fallen to 9.65% in 2008, 9.4% in 2009 and 10.64% in 2010. The world economy, now battered by the Covid 19 epidemic, is more affected than in 2008. China’s GDP fell by 6.8% in the first quarter. Huge infrastructure projects have already been announced or specified.

Infrastructure project in the Yangtze River Delta
The Trend Analysis Office, Zhiguqushi, 智谷趋势, reports on projects in the Yangtze Jiang Delta 长江三角, an area that includes Shanghai, Zhejiang, Jiangsu and Anhui provinces with a total area of 358,000 km2.

Delta du Yangzi Jiang

On 17 April, the Zhejiang authorities announced a 3.6 trillion yuan plan to strengthen provincial transport. There are 10 projects worth 100 billion or more, including infrastructure for a high-speed train along the seaand a ring road system in Hangzhou. 
The Jiangsu province has provided details of its investments. By 2035, it wants to have an additional 5,000 km of track for high-speed rail and 1,700 km for rail transport.
Magnetic levitation technology has been the subject of much debate in recent years. A metro train, since 2004, already exists in Shanghai, from Pudong airport to the heart of the Pudong area over a short distance of 30.5 km at an average speed of 245.5 km/h and a peak speed of 435. During the meeting of April 16, the authorities confirmed the project to build a road between Hangzhou and Shanghai, allowing to link the capital of Zhejiang to Shanghai (160 km) in 20′ against 45′ currently! Everything goes fast in China!

The supporters of a continued Chinese “construction” will face numerous consequences from the health crisis. Will this forced march be enough to turn the tide and regain a sustained rhythm?
The session of the two assemblies, starting on May 21, should give more indications on the measures to support the Chinese economy (see article on the subject).

Article consulted: 史无前例的大竞赛:千亿元磁悬浮高铁背后的新一轮基建狂魔

7 May 2020

Posted on Categories Economy

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