Deserted roads and airports, as well as the gigantic and very expensive railways. Unfinished skyscrapers, useless stadiums and new residential complexes uninhabited or already in ruins. Is this the “spectacular economic expansion” of China that so frightened the West? Upon closer inspection, over the last ten years Beijing has built hundreds of “ghost” mega-infrastructures for as many lifeless cities, built solely for the purpose of stimulating economic growth, effectively “deceiving” reality and completely missing the objective of truly modernize the country.
Let’s take the railways. Almost 500 thousand kilometers of new lines are being built at high speed, but questions emerge about the real need for such a massive expansion with colossal costs whose long-term economic sustainability is worrying. More than $500 billion has been spent on new tracks, trains and stations as the national rail operator, China State Railway Group, is nearing $1 trillion in debt and other liabilities. To repay them, 25 billion dollars a year will be needed. For what? This craze for infrastructure is to create internal connections between equally desolate cities.
It would be enough to take a trip to Kangbashi, Inner Mongolia, to see the effects of the gigantic real estate bubble that hit the former Celestial Empire hard: entire neighborhoods lie dilapidated and you rarely meet any living soul, who then turns out to be a foreign journalist which investigates the disaster that has begun to become known in Europe due to the bankruptcy two years ago of the Chinese real estate giant Evergrande, which had accumulated debts of over 260 billion dollars and which gave rise to a domino of failures and abandonments: Ordos, Yujiapu, Chenggong, Nanhui, Erenhot, Changsha and Dantu are the first cities to have paid the price. Thus Thianducheng, which in President Xi’s mind should have been the “Paris of Asia”: built in 2009 south of Shanghai, after a decade of uncertainty today has a population of just 30 thousand inhabitants, who complain of poor services and a lack of sewerage, water and logistical connections networks, when instead it should have been a shining example of the rise of the new China.
So what happens to the Dragon? It is not just a matter of having been reckless in carrying out construction sites and extravagant construction projects, which Xi Jinping claimed to see finished despite the signs of an imminent real estate crisis: it is the very approach of the Chinese economy that now worries the regime. Also because the sector has an enormous weight in the national economy: the International Monetary Fund attributes to it between 20 and 30 percent of GDP, without considering that this sector is among the main sources of tax revenue for local governments. In short, after the failure to connect to the New Silk Road, the internal market also slows down. At least judging by the pharaonic and useless construction projects carried out in China in recent years: one of these is the Sixth Pharm Factory of the Harbin Pharmaceutical Group, a state-owned company that has built a palace so luxurious and extravagant that it resembles Versailles ( sic!) that the indignation of taxpayers for the waste of money managed to pierce even the state censors.
Among the abstruse works of the Beijing government, it is worth mentioning the Olympic stadium in Loudi, Hunan province: although it has never hosted (nor will it probably ever host) the Olympics, to build it the local authorities evicted dozens of peasant families without adequate compensation, spending $185 million on a 30,000-seat arena in a city that doesn’t even have a professional sports team.
Similarly, the gigantic canal of Nanyang, Henan province, is not very functional. Conceived as part of the South–North Water Transfer Project to transport billions of cubic meters of fresh water from the Yangtze River to northern China, it has become Xi Jinping’s most colossal engineering failure, as well as one of the most flagrant wastes of public money: Costing almost 80 billion dollars, the canal currently transfers less than 5 percent of the 10 billion tons of water it would be capable of.
We could continue these resounding flops of Chinese infrastructure, citing other pleasant places: such as Luliang airport which, inaugurated in January 2014 and costing 160 million dollars, currently handles just four flights a day; while Fushan station, designed to welcome thousands of passengers every day, hosts only about twenty on the best days.
All this cannot be explained by demographic decline alone. It is true that, for the first time in sixty years, the Chinese population has fallen to 1.4 billion people in 2022, with a drop of 850 thousand units compared to the previous year (according to United Nations forecasts, it could fall to 1.3 billion by 2050). And it is true that the population is aging (to the point that the Chinese “parliament” is deciding to increase the retirement age by five years by 2055). But what has undermined the cost-benefit balance is above all the growing gap between the Chinese government’s infrastructural ambition and real demand. Added to this is the poor quality of the works carried out: too many of the projects mentioned turned out to be fragile and poorly executed, and probably also the subject of widespread corruption. All of this, put together, has contributed to the escalating infrastructure crisis that the country, despite colossal deficit spending, will struggle to sustain for at least another decade. Chinese investments abroad, meanwhile, continue to decline or perform well below expectations.
The downward curve of “major projects” began around 2016 and has never stopped. «Based on data from the Chinese Ministry of Commerce», ISPI argues, «direct capital flows abroad for non-financial investments have fallen slightly compared to 2021, and are the lowest since at least 2011». This did not stop the Belt and Road Initiative, the aforementioned Silk Road, which however derailed towards South-East Asia and stopped in Indochina (Singapore, Indonesia, Malaysia, Thailand, Vietnam, Cambodia, Laos and Bangladesh) with branches in the Middle East. Instead it has run aground in Europe, where only specific sectors such as electric batteries are resisting, where China maintains an important leverage. Aside from that, the government has increasingly imposed limits on funds investing in foreign securities. A squeeze to try to stem the crisis of the domestic stock market. Certainly not a sign of health. n
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