Meanwhile, the USA will dump 1 trillion dollars at a time on things like the Obama stimulus to apparently no effect, a decade of massive subsidies to an insolvent financial sector, billions of dollars on failed school districts... China might overpay, eventually, if they actually invest their claimed amount of money (doubtful), but they do appear to at least get a road when they pay for a road.
> the USA will dump 1 trillion dollars at a time on things like the Obama stimulus to apparently no effect
What? The economy recovered, it could have gotten much more worse if Obama did nothing. Even Bush realized that, whatever became Obama's stimulus was planned before Obama took office, and passed with bipartisan support. It only became a whipping boy later because the Republicans saw and took the political opportunity.
> but they do appear to at least get a road when they pay for a road.
Yes, but the villages who live on the road probably can't pay the high tolls to use it.
Yeah, people keep saying China is a house of cards, but they're spending their money on things you can see and use. The train I take to work is 40 years old, and the tracks are over a 100. I'm envious of all the new things they're building with all their 'fake' growth.
> Yeah, people keep saying China is a house of cards
No they don't, that is completely a red herring.
> I'm envious of all the new things they're building with all their 'fake' growth.
We could have HSR also if we were willing to pay for it...if we thought it made sense to our economic growth. And the Chinese have taken out a lot of debt to pay for it, it wasn't free, and the only profitable line ATM is the one between Beijing and Shanghai. HSR might work out in the future, HSR might lead to economic growth, but these are bets like anything else.
I've taken HSR between Beijing and almost Guangzhou (my wife's hometown doesn't have an airport but has an HSR station). It was fairly empty much of the way during the 6 hour or so trip.
The profitable model does not always work everywhere. For these high speed railroad, I see no reason they should be profitable as a whole.
I mean, better is better. Let's not pretend that USA can still build the infrastructure as it needs, better than China.
On the other hand, China's infrastructure project are funded by cheap labors. That's maybe more relevant than financial models. Also they have little resistance from the locals affected by the projects. Here we cannot even build apartments higher than certain number...
> For these high speed railroad, I see no reason they should be profitable as a whole.
They were paid for by investors and bank loans. The governments direct contribution is not that large. If HSR isn't going to pay off, those investors are losing their shirts.
> Let's not pretend that USA can still build the infrastructure as it needs, better than China.
The USA takes advantage of cheaper goods from other countries. It can totally survive without that, but we like more stuff.
HSR don't need to be profit individually, that's why it's funded by the government. HSR will stimulate the economy which it connected. So in a big picture, it brings a huge positive impact for the economy, just like the highway.
HSR wasn't funded by the government however, at least not completely. Well, this is where it gets complicated:
China Railway is a SOE, so it is technically the government. It took out a lot of debt to do HSR, and technically that isn't considered public debt and is rather listed as corporate debt (if SOE debt was considered public debt, China's public debt would obviously be much higher than the USA). Anyways, see https://www.ft.com/content/ca28f58a-955d-11e8-b747-fb1e803ee... for a better read.
Highways in China are mostly financed in similar ways actually, which is why all of the newer ones have pretty high tolls.
I am very aware that, as I am native Chinese. CRS is SOE, but when they constructed each individual HSR project, they got the investment from local governments, as each local governments knew that HSR would greatly benefit the economy. Just like HSR project between Beijing and Shanghai, which got the investment from seven local governments, if you can read Chinese: https://zh.wikipedia.org/wiki/京沪高速铁路
The whole project has 12 major shareholders, including 7 local governments.
And also a whole lot of loans that have to be paid back somehow....they didn’t bond this, they got huge loans from all of the state banks. If the government is just going to pay for HSR, they haven’t put that money on the books yet.
The US hasn't balanced a budget in decades. You would think that during an economic boom they would at least try. I am quite shocked nobody even seems to care- creditcard culture.
They tried under Clinton, the Republicans didn’t like it. There is a good point about takin on debt being good for USD liquidity, but the debt should be productively invested somehow so that it can pay off later.
