Sunday 25 Sep 2022 | 21:59 | SYDNEY
Sunday 25 Sep 2022 | 21:59 | SYDNEY

Is China making good decisions?


Sam Roggeveen


20 January 2011 11:48

Here's Francis Fukuyama in the FT:

The most important strength of the Chinese political system is its ability to make large, complex decisions quickly, and to make them relatively well, at least in economic policy. This is most evident in the area of infrastructure, where China has put into place airports, dams, high-speed rail, water and electricity systems to feed its growing industrial base.

Maybe. But it can take years, decades even, to really know the effects of large infrastructure decisions. So with something like the Three Gorges Dam (pictured), it is surely too soon to tell.

What's more, you do get occasional reports about China's empty airports, and this analysis suggests the high-speed rail push is a serious misallocation of resources. The theory goes that HSR will relieve stress on China's roads and free up standard rail for freight. But most Chinese can't afford the HSR tickets, so with standard passenger rail being cut back to make way for HSR, they're taking buses instead:

Rather than capturing lower-end traffic from slower trains and buses, it appears the new high-speed lines are drawing higher-end traffic away from China’s airlines...It may be that China’s airlines could use a bit of competition, but that certainly wasn’t the intent behind the high-speed rail build-out.The intent was to relieve the congestion of China’s existing rail system, thereby opening up lower-end capacity to handle more freight, and relieving stress on roads.  It was supposed to bump passengers up-market (from slow trains to fast trains) not down-market (from slow trains to buses, from planes to fast trains).

Photo by Flickr user hughrocks.