Counterparties: Should we envy China?
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If you‚Äôve been paying attention to the US spending cuts which are scheduled to take place automatically on January 1, the Chinese Ministry of Railways has a glimpse of a utopian parallel universe: $32 billion in spending in November and December alone. Even for an organization with an annual budget of approximately $100 billion, that‚Äôs a huge spike. As Quartz‚Äôs Naomi Rovnick puts it, it’s the latest example of the ‚Äúmoney-go-round that is China‚Äôs state-owned economy‚ÄĚ.
The spending isn‚Äôt limited to trains: There‚Äôs also the $157 billion in broad infrastructure investment that was approved last month. From the perspective of a deadlocked DC, it‚Äôs easy to envy China‚Äôs vast infrastructure budget. But while Chinese policymakers are good at building trains that run between cities, in urban areas they are repeating many of our¬†car-centric mistakes and all the construction is arguably making its cities even less livable.
As Michael Schuman argues in Time, the myth of an efficient, far-sighted China is believed largely by those inside its business-class cocoon. ‚ÄúLive here for a while‚ÄĚ, he says, and economics, politics, and daily life look much more messy and complex.
The perception that China is ruled by wise leaders adhering to neo-Confucian ideals has been contradicted by revelations of the massive wealth accumulated by its elite: an estimated $2.7 billion by the family of Prime Minister Wen Jiabao; $376 million by the family of incoming president Xi Jinping; $89 billion by just the 70 wealthiest members of the National People‚Äôs Congress; $136 million by the family of the now ostracized Bo Xilai.
FT Alphaville‚Äôs Kate Mackenzie smartly identified the reality of much of China‚Äôs infrastructure projects — large-scale fixed assets are gleaming yet uneconomic and corruptly constructed, while local-level projects like sewer systems and other basic safety needs are ignored. When those two problems converge, the results can be deadly and socially destabilizing, as Evan Osnos‚Äô excellent piece on China‚Äôs high-speed rail disaster illuminates. — Ben Walsh
And on to today‚Äôs links: