
China Turns to $503B Rail Expansion to Boost Growth - Osiris30
https://www.bloomberg.com/news/articles/2016-12-29/china-to-have-30-000-kilometer-high-speed-rail-network-by-2020
======
kensai
The new silk-road project with Germany is also very interesting.

[https://www.thelocal.de/20161229/german-rail-giant-steps-
up-...](https://www.thelocal.de/20161229/german-rail-giant-steps-up-silk-road-
freight-line-to-china)

~~~
ricardonunez
Wouldn't this put Germany at the mercy of Russia? edit: Downvoted for asking a
question. It seems people forgot that Russia is always threatening with
cutting the gas supply.

~~~
betaby
Any reputable media with 'Russia is always threatening with cutting the gas
supply'? Especially Germany which has direct Nord Stream and upcoming Nord
Stream2 ? It's other way around, Germany harass other countries,like Bulgaria
and prevent them to build South Stream. Looks like you are victim of anti-
Russia propaganda. Russia WANTS to expand it gas export.

~~~
zimzam
Russia has cut gas supplies the Ukraine multiple times:
[https://en.m.wikipedia.org/wiki/Russia–Ukraine_gas_disputes](https://en.m.wikipedia.org/wiki/Russia–Ukraine_gas_disputes)

~~~
cnlevy
Western European countries are the best gas client of Russia; Ukraine often
didn't have money to pay Russia, as well as political disputes.

~~~
PerfectDlite
> Ukraine often didn't have money to pay Russia

But Russia cut _all_ gas supply, stopping gas flow to Germany and other
customers.

------
ww520
One theory is that China spends heavily now to build up the infrastructure
while the labor cost is cheap. Once labor cost has reached certain level,
these kinds of projects will be prohibitively expensive, just like in Japan or
in U.S.

~~~
fapjacks
It makes sense, but I also wonder how much they're really saving by building
the infrastructure now and then having to maintain it. One of the greatest
lessons SimCity teaches about infrastructure is that you've got to pump a
minimum amount of money into the transportation department for your roads --
with very little wiggle room -- or everything seizes up and goes to shit. Even
not being used, that stuff costs money, and I can't imagine that a half-
trillion-dollar rail project won't need a _ton_ of maintenance. I guess the
rights-of-way issues would be much easier to sort out now rather than later,
too.

------
notyourwork
Does anyone else find it fascinating that over time larger numbers mean less
and less? Growing up it was unheard of to hear a project of that size. 1/2 of
a trillion dollars is a lot of money, now we are discussing projects of that
cost.

~~~
myth_drannon
Iraq war cost around 1 to 2 trillion dollars ? Proping up the the failed banks
in 2008 cost as much. If you can just print the money(or add zeros in computer
systems ) it's not that expensive.

~~~
obstinate
You're right about Iraq, but I thought TARP actually turned a profit?
[http://money.cnn.com/2014/12/19/news/companies/government-
ba...](http://money.cnn.com/2014/12/19/news/companies/government-bailouts-
end/)

~~~
djsumdog
It doesn't matter that it turned a profit. That wasn't the point; and in some
ways that makes it worse! PNC bought National City for $5 billion. National
City (an Ohio only bank) was not allowed to apply for TARP. Then PNC got a $5
billion tax credit. They bought a bank for free.

[http://www.newsproject.org/node/181/](http://www.newsproject.org/node/181/)

All the consolidation meant that banks gained a lot of money, and the US
government bought debt $1 for $1. Instead of TARP, the US government could
have done something for...the people you know? The attorney general could have
pushed prosecuting all the people who committed fraud (forging income
documents for home loans was rampant, lying to people about home loans, etc.)
from the top to the bottom. Banks should have been forced to sell loans back
to consumers for quarters on the dollar (you know, what the homes were
actually worth now).

We saved some retirement accounts, and everyone above 50 at the time was very
thankful for that, but young people lost their homes, tons of money and the
banks didn't take a hit at all. They just got stronger and swallowed other
banks.

~~~
prewett
When the statement was that TARP cost $1 trillion, the fact that it actually
made a profit very much IS the point. Your entire rant is what's not the point
in this discussion.

------
Kapura
I think this is super cool contrast with the US government's decision to
expand the interstate highway system after WWII. While highways certainly were
able to connect American cities in ways which were never before possible, the
bet on cars has had long-term repercussions, arguably contributing to the
failing of many American metro commuter rail systems which, in turn, created
the traffic problems that plague places like New York and LA.

I would be shocked if this doesn't improve the lives of the average Chinese
citizen, and I think it likely that a long-term move towards public
transportation will help China meet its carbon emissions goals.

~~~
djsumdog
The state of American rail is tragic. People continually make excuses about
how America isn't structured for rail, but that happened systemically over the
course of decades. Most small cities had street cars, but they were removed
around the 1950s or 60s.

Interstate highways barrelled their way though the hearts of cities,
destroying poor/low-income neighbourhoods. If at any time US policy makers
decide to push for rail, we could see dramatic turnarounds over the course of
the next two decades.

Seattle is building ST3 and California is building its high speed network.
It's a start, and we're still ahead of Australia when it comes to inter-city
rail, but no where near close for urban/light rail (which every Australian
state capitol has except Darwin and Hobart).

By comparison, Russia is less densely populated, yet they have a both better
high speed rail and last-leg commuter rail between/in major cities and they
are actively expanding their high speed systems.

Self driving cars are realistically a decade away and they cannot solve the
capacity problem:

[http://penguindreams.org/blog/self-driving-cars-will-not-
sol...](http://penguindreams.org/blog/self-driving-cars-will-not-solve-the-
transportation-problem/)

..and they can only solve the last leg problem if we have better inter-city
rail infrastructure.

~~~
protomyth
> The state of American rail is tragic.

[https://www.fra.dot.gov/Page/P0362](https://www.fra.dot.gov/Page/P0362)

The US has one of the best freight rail systems in the world. As a country we
ship freight not people. Its not tragic, its damn amazing. I'm sorry they
didn't specialize it for the use case you want.

------
kumarski
They're super smart for funding high speed rail at the federal level.

High speed rail is the solution, not a pipe dream, the issue in the USA from
what I've observed is that we don't fund it at the federal level.

~~~
CalChris
Agreed. In the US, our lack of infrastructure spending has been a Republican
effort to stymie Obama. Now suddenly they want to spend on infrastructure.

~~~
shawn-furyan
I would challenge that narrative, because Trump clearly wasn't "The Party's
candidate". He was a populist candidate, and populists gon spend (or at least
say they are).

There still seem to be deep misgivings within his cabinet about the spending,
but Trump seems to tend to get what he wants, and is quick to fire people who
aren't making it happen, so...

~~~
CalChris
By definition, Trump was the Republican Party's candidate.

~~~
zimzam
This kind of pedantry provide no insight: Trump doesn't represent the small
government wing of the party that opposed infrastructure spending

~~~
CalChris
So where did this _small government wing_ go?

You're saying that it existed before and that it _opposed infrastructure
spending_ doubtfully out of heartfelt principle. Now that the Republican Party
candidate has been elected, does this wing still exist? If it exists then
surely it can be depended on to resist any large government infrastructure
spending that a populist candidate would propose.

Surely this is the case.

~~~
shawn-furyan
With the scare quotes, I was drawing a distinction between the pre-Trump
Republican establishment [meaning the incumbent Republican leadership along
with the ideas that they stumped on to get into that position], and Trump.
Trump is very different than the pre-Trump Republican establishment, and they
clearly preferred other candidates (principally, Marco Rubio).

There were clearly vast distances between the Pre-Trump Republican
establishment, and the Republican electorate, and so it would make sense for
the post-Trump Republican establishment to move in Trump's direction. That
process is currently nascent, and the differences have, if reports are
anything to go on, yet to have shaken out.

Because of the way Trump operates, and because of the populist shift of the
Republican electorate, I'd expect Trump to win most of the internal battles on
spending. The winds are at his back. He will probably also flip many
Republicans who previously positioned themselves as staunch fiscal hawks.

~~~
CalChris
So you're saying that the principled opposition by the _small government wing_
will wilt in the face of populism, _wind at his back_ and whatnot. You're
right about this, except for the principled part.

~~~
shawn-furyan
Close. I wasn't claiming that it was principled. I was claiming that it's what
they stumped on in course to their leadership positions. Reversing themselves
on those positions violates the narrative that they've been crafting, which
probably has negative political consequences.

~~~
CalChris
It wasn't principled and so the pivot to infrastructure spending will come
without any political consequences because the Republican opposition was
strictly partisan. It wasn't against the _idea_ of improving infrastructure.
It was against _who_ was improving infrastructure.

If Colin Powell and Condoleezza Rice do something, that's OK. If Hillary does
the same thing, it's treasonous. Got it?

------
Ericson2314
Damn I wish the US would do this. Both because I've been taught that
infrastructure spending is a good idea, and because I fucking love riding
trains.

Seriously, is a 2 day sleeper HSR from SF to new York with damn good internet
really less productive meams of emloyee transport than trains? You spread out
the pain of time zone shifts, avoid all the bullshit at airports, an and work
much more effectively.

I think I rather take a train for any trip short of being intercontinental,
and would be a more productive worker because of it.

~~~
fma
I live in Atlanta but originally from South Florida. Spent 13+ hours (lots of
stops with a baby) driving for the holidays to see family. I would have much
rather done a train and rent a car for a few days. Unfortunately, the
Republican governor of Florida rebuffed any thought of high speed rail because
it's from Obama.

Trump has an infrastructure plan, maybe he'll see that China and Europe has
better trains and that would spur him to propose HSR (being cynical, but he
can power it by coal since he wants to bring back coal to the US :) )

------
bsaul
the sidenote being that they'll probably develop nuclear power to power all
those trains, and become the first nuclear powered economy. they'll both
developp energy,transportation and reduce their pollution.

~~~
crdoconnor
[https://cleantechnica.com/2016/03/06/china-renewable-
growth-...](https://cleantechnica.com/2016/03/06/china-renewable-growth-soars-
fossil-fuel-use-declines/)

“IEEFA forecasts that China will install an additional:

* 22GW of wind

* 18GW of solar

* 16GW of new hydro

* 6GW of nuclear.

------
codecamper
US could do that too. Iraq war bill 2 - 6 trillion. Oops! Nevermind!

------
crsmithdev
Boost growth, boost growth, boost growth...have to keep growing more, and
faster, otherwise the whole thing breaks down, no?

Seems sustainable.

------
kitschshrine
China won't be able to afford this; China's pretty broke already in 2016. It's
approaching 300% debt ratio in combined corporate + government + individual.
Its gross reserve is down to 3T (IMF believes China needs at least 2.5T to
operate). Its net reserve (gross - debt) is down to 1.7T. It had a capital
outflow of 1T again in 2016. Yuan fell the most in 2016, since 1994. Next
year, Japan/US/EU is going to impose import tariff on China, and further crash
China's economy.

~~~
anton_tarasenko
China's saving rate remains at 45% of GDP. Most other countries have it around
10-15%. Savings have to go somewhere, and this is why China accumulates debt.
Every yuan of savings turns into one-plus yuan of debt. The current debt ratio
adjusted for savings is comparable to the US's, for example. Unlike US, they
put it into infrastructure because people don't spend growing income on
consumption.

To put it simply, the US worker gets a salary and buys a car, while the
Chinese worker makes a deposit in a bank for a construction firm to borrow and
build a railroad. Both cases describe transportation services, but they look
very different in national accounts.

As for the exchange rate, it's not that relevant for local investments since
China's going to pay in yuans anyway.

~~~
seanmcdirmid
That is a very old number and anyways only comes from consumers who are not
consuming but saving for emergency health care, or increasingly unaffordable
housing. China desperately needs for its consumers to actually consume to move
away from an export oriented economy, which is especially sensitive to trade
friction.

So yes, you are talking about China's biggest problem (inability to consume
what they produce) that even the Chinese leadership has acknowledged is a huge
problem.

Whether china can afford this or not is less relevant than "bang for the
buck", china has already built out lots of HSR, some of it very lightly
utilized (my own trip from Beijing to a city in south Hunan, the train was
mostly empty most of the time). China builds mostly as a stimulus program,
because if consumers aren't consuming its one of the only tools they have, but
also focuses on flashy projects that they can brag about in articles like
this. However, much of this infrastructure is going to be underutilized for
decades, while really needed infrastructure, like adequate flooding drainage,
doesn't provide enough "face" to be considered instead. So every year, we see
pictures of flooded out cities...but at least you can get to them quickly on
empty trains!

~~~
crdoconnor
>That is a very old number and anyways only comes from consumers who are not
consuming but saving for emergency health care, or increasingly unaffordable
housing.

They're still saving and those savings keep a lid on Chinese inflation which
makes projects like this affordable.

>China desperately needs for its consumers to actually consume to move away
from an export oriented economy, which is especially sensitive to trade
friction.

There's a lot of talk in the CCP about shifting China's economy to becoming
more consumer driven but there isn't a lot of appetite to _actually_ do the
things which would make that happen - namely some sort of social
security/nationalized health insurance system.

The Chinese will thus continue to be terrified of getting old and sick and
will and save accordingly, and those savings will no doubt continue to get
recycled into projects like this as well as subsidizing state run SMEs with
cheap loans.

~~~
seanmcdirmid
I agree with this. Savings keep a lid on inflation but also distort money
supply and demand, just like the real estate bubble distorts supply and demand
for housing. A lot of distortions with temporary fixes to keep things going.

2017 will be very interesting. Can't wait to see what happens in Tuesday.

------
muninn_
Well. It's probably better than other things they spent their money on. Like
empty cities.

~~~
JoeAltmaier
Curiously, one difference with planned economies like China is they can build
ahead of demand. Here in the USA there has to be a demand for housing before
it gets built. I.e. folks have to be crowded and homeless. So those 'empty
cities' build for 10M people were not as senseless as they seem. 10M people in
China is less than 1% after all.

~~~
__derek__
That's an interesting point. I just checked, and China is about 56% urbanized,
whereas the United States sits above 80%. If we assume that China will reach
the same levels, that leaves another 250 million people yet to move to urban
areas. Even with the aging population, then, it may be able to use those
spaces.

Otherwise, it may be able to take advantage of anti-immigrant sentiment in the
developed world. That's what intrigued me about your point. China has started
to invest in African infrastructure, so why not leverage that to supplement
its population when the aging curse kicks in?

~~~
coldtea
> _China has started to invest in African infrastructure, so why not leverage
> that to supplement its population when the aging curse kicks in?_

Perhaps because the entity is not "China", a state, but China, a culture and a
specific population with a shared history etc? So arbitrarily supplementing
the population as a means to keep it going doesn't make sense?

~~~
__derek__
It seems that you're assuming that there is some Real Chinese Culture that has
never evolved or integrated another population or culture. Maybe I've heard
wrong, and there are in fact no substantial differences between Beijing,
Shanghai, and Hong Kong (let alone Xinjiang[1]). That seems incorrect, though.

Edit: Anyway, it's besides the point: we were clearly talking about China the
state (the same one that built those empty cities).

[1]:
[https://en.wikipedia.org/wiki/Xinjiang](https://en.wikipedia.org/wiki/Xinjiang)

~~~
coldtea
> _It seems that you 're assuming that there is some Real Chinese Culture that
> has never evolved or integrated another population or culture._

I'm only recognizing that there is a Chinese culture that has been shaped by
various forces (including population migration, trade, and even war and
invasion) over long historical periods (keyword: long).

Which doesn't translate to some "Since we had e.g. the Mongols in the 13th
century, and they are now part of Chinese culture, it's no biggie to just get
some hundreds of millions of people that don't share our culture to replace
our aging population" \-- any more than "Since we were subjects to the Queen
before 1776 it's no biggie to subject ourselves to being a UK colony again".

> _Maybe I 've heard wrong, and there are in fact no substantial differences
> between Beijing, Shanghai, and Hong Kong_

That only matters if they are also more substantial than those between
"Beijing, Shanghai, and Hong Kong" to Berlin, Phoenix, Santiago, Accra or
London.

Otherwise, all, or almost all, countries have regional differences within the
country's culture. Beijing and Shanghai are not more different than, say, New
York and Savannah or New Orleans and the Quad Cities. As for Hong Kong that
has been, for over a century, shaped from being a UK colony.

------
tomohawk
Fascist government with zero transparency or accountability announces big
public works project.

This is just what fascists do.

~~~
corv
Are you talking about the US or China?

------
ocschwar
Meanwhile, we're stuck with a ruling party that is absolutely against anything
involving steel tracks, so we have to spend similar amounts just to maintain
our roads.

~~~
caminante
Does the US need more railway lines? The US already has ~2 times the railway
lines of China with virtually identical area (~3.7M square miles).

FTA:

    
    
      "At the end of 2015, China had 121,000 kilometers of railway lines,
      including 19,000 kilometers of high-speed tracks, according to a   
      transportation white paper issued Thursday. The U.S. had 228,218 kilometers 
      of rail lines as of 2014, according to latest available data from the World 
      Bank."

~~~
qaq
You are magically ignoring the "19,000 kilometers of high-speed tracks" and
will have 30,000 kilometers while we have 0.

~~~
caminante
I'm confused. How am I "magically ignoring" that?

I was addressing "against anything involving steel tracks."

