The malinvestments in China have reached the truly bizarre. As if empty cities, shopping malls, and skyscrapers are not evidence enough of misallocated scarce capital, the Chinese government is doubling down with proposed railroad projects outside of China.
‘The Chinese government is desperate to keep its bubble economy going, and one way it’s doing that is by spending on massive infrastructure projects. The “China Bubble,” built on huge construction projects such as subways, skyscrapers, highways, and housing, continues to astound with the sheer numbers involved, from the height of the skyscrapers to the miles of track laid.‘
‘China is looking to expand its infrastructure well beyond its borders and even into other continents. The Independent today reports that China has announced plans to build a train to the United States. That is, the Chinese state plans to build a 13,000 km railway from China to Alaska, and down into the lower 48. Whether this can possibly be done in an economical fashion is completely irrelevant, of course. It’s another jobs program and monument to the Chinese state.
The announcement for a inter-continental railway comes only a few days after the Chinese government’s announcement that it is looking to fund a transcontinental railway in Africa.‘
‘What China is proposing is building railroads across vast uninhabited or thoroughly undeveloped areas. We know from the experience of the United States that this is not a recipe for sustainable infrastructure.
As I wrote here on the history of the American transcontinentals, the American railroads made no economic sense either. From a military and nationalistic perspective, they made sense because they made politicians look good, but the railroads never made money for the first 25-30 years of their existence, and required massive infusions of cash from the federal government to stay afloat.
For the government, they were a huge success, since even people who claim to be for small government today sing the praises of the transcontinentals as some sort of grand achievement. It would have made much more sense to simply wait 30 years until it became economical for the private sector the build the railroads itself.‘